Lenders target California seniors with costly clean-energy loans

Elderly homeowners who have built a sizable nest egg over many
years are being targeted by financial lenders to take
energy-efficiency home improvement loans that become impossible to
repay.

Homeowners across the state have complained to prosecutors and
legal aid groups about the so-called Property Assessment Clean
Energy loans. Thousands of PACE borrowers have said they did not
understand the terms of the loans and cannot afford to pay them
back, according to consumer advocacy groups.

Robert Unser is a 74-year-old cancer survivor with cognitive
disabilities from San Diego. He has four PACE loans and four liens
on his home.

Katy Box, a San Diego Legal Aid Society lawyer representing
Unser, said the high-interest, high-fee loans are peddled door to
door and financed through a first-priority tax lien on a
homeowner’s property. “That means that the lien gets priority
above any mortgage, above basically any other lien on the
property,” Box said.

PACE is a government program, dating back to 2009 to help
private property owners age 55 and older to finance energy
efficient and renewable energy improvements. Legislation allowing
PACE loans has been approved in 33 states, including California,
and the District of Columbia.

Concerns about the first liens and inability of some homeowners
to repay the loans have been raised by Congress and the U.S.
Department of Housing and Urban Development. Since its inception,
the Federal Housing Administration has refused to back mortgages
with PACE liens attached unless the FHA loan remained the first
priority.

Unser has almost lost his home once and the California Dream he
worked hard to achieve. He lives on $11,000 in annual Social
Security income. But because of the PACE loans, he has seen his
annual property tax payments jump from $300 to $17,000.

Unser appeared uncertain about how he ended up with four PACE
loans.

“I don’t know where it came from,” he said haltingly.
“There was one 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.”

California Attorney General Xavier Becerra said the elderly are
easy targets for unscrupulous lending.

“They’re essentially sitting on a gold mine,” Becerra
said. “Chances are they probably paid off most of the mortgage,
and so they have a great amount of equity in that home.”

San Diego County prosecutor Valerie Tanney said repayment of
PACE loans through property taxes backed by liens puts the elderly
especially at risk.

“With seniors to the extent they have less capacity to
understand what this will cost them, then they’re in a danger of
losing their homes,” she said.

Box has filed a lawsuit on behalf of Unser against PACE loan
providers Renovate America and Renew Financial, alleging fraud and
breach of contract. The complaint is one of several that have been
filed against the two loan providers, including class actions on
behalf of Los Angeles County homeowners.

Colin Bishopp , Renew Financial vice president of corporate
communications, said in a written statement, “Over the past
decade, we’ve helped more than 90,000 homeowners to make critical
home upgrades that enable their families to live more efficiently,
comfortably and securely.”

“Customer complaints represent a small fraction of the many
thousands of homeowners who choose our home improvement financing.
When we receive a complaint, we do our best to resolve the matter
as quickly as possible. We are dedicated to serving our customers
and proud of our track record.”

Renovate America also released the following statement: “PACE
financing has always been subject to underwriting criteria
established by the state of California, and we have consistently
complied with those standards. In fact, Renovate America led
efforts to pass new laws that strengthened PACE financing by
requiring income verification as part of the approval
process.”

Representatives from both institutions declined to comment
specifically on the Unser case because it’s in litigation,
although Renovate America called Unser’s lawsuit meritless.

Box disagreed.

“It’s very apparent from speaking with (Unser) that he
doesn’t understand these loans,” she said. “He doesn’t
understand the contracts he entered into. He doesn’t understand
who he owes money to. He doesn’t know why he owes the
money.”

And Box said Unser did not need the renovations to his home that
the PACE loans were meant to cover.

“He had kitchen remodeling done, and he doesn’t even
cook,” she said. “He gets Meals on Wheels. He got solar panels.
He lives in his living room, his bed and his chair and his TV are
in his living room so I can’t imagine he uses that much power to
have a need for solar panels.”

Box said Unser is the one who brought the PACE loan contractors
into his world.

“He is lonely and everyone that knocks on his door, he invites
in,” she said. “And they talked him into, `Hey you need these
windows replaced. You need your kitchen remodeled.’”

Box said Unser’s PACE loans were finalized with electronic
signatures on documents sent to non-existent email accounts. Unser
doesn’t have an email address, an internet connection or a
cellphone, she said.

“They literally made up a fake email address for him,” she
claimed in a lawsuit against Renew Financial and Renovate
America.

State law took effect this year requiring more state oversight
of PACE providers. They will have to consider a person’s ability
to repay before approving the loans. In January, the state
Department of Business Oversight will regulate the state’s PACE
program.

But it’s too late to help Unser, who is angry and stressed as
his lawsuit plays out.

“This thing has taken a very bad toll on me,” he said.
“They’re not helping me. They’re hurting me. They might as
well just bury me and be done with it.”

Amita Sharma is a reporter for KPBS. The California Dream series
is a statewide media collaboration of CALmatters, KPBS, KPCC, KQED
and Capital Public Radio with support from the Corporation for
Public Broadcasting and the James Irvine Foundation.

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Source: FS – All – Real Estate News 1
Lenders target California seniors with costly clean-energy loans