UPDATE: 4:53 p.m., November 30, 2018
Robert Unser is a 74-year-old cancer survivor with cognitive impairment and a big dilemma.
He has four so-called clean energy property assessment loans that he cannot repay and four liens on his house.
“PACE loans are energy efficiency loans that are used to fund only energy efficient home projects,” said Katy Box, attorney for the San Diego Legal Aid Society, which represents Unser.
She said high interest, high fee loans are sold door to door and funded by a first priority tax lien on a homeowner’s property.
“This means the lien takes precedence over any mortgage, over any other lien on the property,” Box said.
Homeowners statewide have complained to prosecutors and groups like the San Diego Legal Aid Society about some PACE lenders. Thousands of PACE borrowers have said they don’t understand the terms and are now struggling with loans they can’t afford to repay.
California Attorney General Xavier Becerra said the the elderly are easy targets for unscrupulous loans.
“They’re basically sitting on a gold mine,” Becerra said. “Chances are, they’ve paid off most of the mortgage, so they have a lot of equity in this house.”
San Diego County Attorney Valerie Tanney said repaying PACE loans through lien-backed property taxes put seniors in particular at risk.
“With the elderly to the extent that they have less ability to understand what it is going to cost them, then they risk losing their home,” she said.
In Unser’s case, it’s both.
Unser almost lost his house once. He lives on $ 11,000 in annual Social Security income. But because of PACE loans, he saw his annual property taxes drop from $ 300 to $ 17,000.
Unser seemed unsure of how he ended up with four PACE loans.
“I don’t know where it came from,” he said hesitantly. “There was a bank that wanted me to take out a loan. I said ‘Give me a few days.’ He wanted me to sign the thing uh, uh, I forget.
Attorney Katy Box filed a lawsuit on behalf of Unser against loan providers PACE Renovate America and Renew Financial, alleging fraud and breach of contract. The lawsuit is one of many complaints filed against the two loan providers, including class actions on behalf of Los Angeles County landlords.
Colin Bishopp, vice president of corporate communications at Renew Financial, said in a written statement: “Over the past decade, we’ve helped more than 90,000 homeowners complete essential renovations that keep their families alive. more efficiently, more comfortably and safely.
“Customer complaints represent a small fraction of the thousands of homeowners who choose our home improvement financing. When we receive a complaint, we do our best to resolve the issue as quickly as possible. We are committed to serving our customers and proud of our track record. “
Renovate America also issued the following statement: “PACE financing has always been subject to underwriting criteria established by the State of California, and we have always complied with those standards. In fact, Renovate America has led the effort to pass new laws that strengthen CAPC funding by requiring income verification as part of the approval process.
Representatives from both institutions declined to comment specifically on the Unser case because it is in litigation, although Renovate America called Unser’s lawsuit unjustified.
“It is very obvious from speaking with him that he does not understand these loans,” she said. “He doesn’t understand the contracts he’s made. He doesn’t understand who he owes money to. He doesn’t know why he owes the money.
And Box said Unser didn’t need the renovations to his home that the PACE loans were supposed to cover.
“He had his kitchen renovated and he doesn’t even cook,” she said. “He receives meals on wheels. It has solar panels. He lives in his living room, his bed and chair and his TV are in his living room so I can’t imagine he uses so much electricity to need solar panels.
Box said Unser is the one who brought PACE loan entrepreneurs to his world.
“He is alone and everyone who knocks on his door invites him to come in,” she said. “And they convinced him, ‘Hey, you need these windows replaced. »You need to renovate your kitchen.
Box said Unser’s PACE loans were finalized with electronic signatures on documents sent to non-existent email accounts. Unser does not have an e-mail address, internet connection, or cell phone.
“They literally made up a fake email address for him,” she said in a lawsuit against Renew Financial and Renovate America.
Laws came into effect this year requiring more state oversight over PACE providers. They will need to consider a person’s repayment capacity before approving the loans.
But it’s too late to help Unser, who is angry and stressed as his trial unfolds.
“This thing gave me a really bad track record,” he said. “They don’t help me. They hurt me. They might as well bury me and be done with it.
San Diego senior battles loan company PACE in an attempt to save his home
The risks of energy efficient loans
Lenders sell seniors on the idea of home improvement work; Sometimes homeowners don’t realize they’ve taken on debt until it’s too late.
After this story was published, California MP Cecilia Aguiar-Curry, author a bill aimed at reforming PACE’s lending rules, issued a statement to KPBS.
“I read your excellent article on the potentially devastating impacts on consumers who are misled into signing contracts that they cannot afford under the PACE program. This year, we fought and won a battle to ensure that a potential client cannot be approved for the program in California until their ability to pay has been verified. My bill, AB 2063, co-authored by my colleague Senator Richard Roth, will protect Californian homes from unethical sales pitches from industry companies.
“Renovate America’s statement, however, puzzles me. I just can’t imagine that after repeated attempts this year to eliminate my consumer protection bill every step of the way, they have the nerve to try and convince anyone that your article’s case is. an outlier, or that they have supported anything that comes close to responsible income verification. They spent tens of thousands of dollars opposing the bill throughout, and even vetoed the governor after he passed the state Senate (37-1 ) and Assembly (79-0) with overwhelming margins.
“I support the PACE program with the increased protections we put in place for California homeowners last year. I applaud the aggressive use of the supervisory authority given to the State Department of Corporate Oversight and their partnership in crafting and adopting AB 2063. But, I must oppose the attempts. from an industry opponent to review the history of those efforts in the legislature this year. “
Here is Renovate America’s response to Aguiar-Curry’s statement:
“California passed landmark PACE legislative and regulatory reforms in 2017, and no one in the industry has fought for these laws more than us. Why did we oppose PACE legislation in 2018 when a year earlier we strongly supported it? Our objections to MP Aguiar-Curry’s PACE legislation this year concerned a number of technical aspects that have undermined the viability of PACE and have not significantly improved consumer protection. We worked productively with his office throughout the session – spending literally dozens of hours negotiating with his staff – and had a significant political disagreement that we were ready to defend and voice, not because it was the practical thing to do, but because we believed it was right.
“We strongly believe that the ability to pay according to income is imperative in determining eligibility for PACE funding. But we are now seeing unintended consequences of recent legislative and regulatory reforms that are pushing entrepreneurs to abandon PACE altogether, determining that it is too cumbersome and cumbersome as a point-of-sale offering for home improvement projects. As a result, people who could qualify for PACE and who could afford a PACE assessment simply no longer have access to it.
“We believe that it is possible to establish a strong and enforceable regulatory framework, adapted to the characteristics of PACE funding. We have sought to work with lawmakers to achieve this throughout the 2018 legislative session and are optimistic that the necessary fixes can still be made, for the simple reason that California needs PACE more than ever. . “