A loan program that critics say misleads homeowners with promises of energy savings before saddling them with unaffordable debt will no longer be offered by a Riverside-based public agency.
The Western Riverside Council of Governments (WRCOG), an alliance of 18 western Riverside County cities, county government, two water districts and the county schools superintendent, will start winding down the residential component of its Property Assessed Clean Energy loan program.
Known as PACE loans, they are homeowner loans secured through property liens that can be used to pay for solar panels, new windows and other energy improvements. The council’s executive committee gave administrators the directive Dec. 7.
Advocates for homeowners who felt taken advantage of by PACE loans praised the decision.
“Although it appears that WRCOG ended their program primarily for financial reasons, this is a victory for consumers nonetheless, and one step further to achieving clean energy justice,” Stacey Tutt, director of UC Irvine’s Consumer Law Clinic, said in a news release.
Riverside County Supervisor Kevin Jeffries, a WRCOG board member and critic of the loan program, said via email: “It’s absolutely great news that the elected leaders of WRCOG are actually breaking away from the smoke-filled back room deals that WRCOG staff had previously hitched them to.”
“The exclusive monopoly that WRCOG had arranged and entered into to maximize profits on the backs of homeowners should never have happened,” he added.
Casey Dailey, WRCOG’s director of energy and environmental programs, declined to respond to Tutt’s and Jeffries’ comments. Agency officials have said their executive board had full oversight of the program.
The agency’s move came after Renovate America, the San Diego company that offered a PACE loan through WRCOG known as Home Energy Renovation Opportunity, got out of the clean energy loan business, Dailey said via email. PACE’s commercial component, which lends money to businesses for energy-related projects, will continue.
The number of homeowners seeking PACE loans has been declining since 2016, a WRCOG report read. By 2023, the agency could have fewer than 10,000 outstanding PACE loans, according to the report.
Los Angeles County stopped offering the loans in May, saying it couldn’t be sure that safeguards at the state and county level were enough to protect homeowners. Versions of PACE loans are offered nationwide.
How It All Began
WRCOG, seeking to boost the local contracting industry while promoting energy efficiency, started offering them in 2014 and hired Renovate America to oversee its program, which eventually offered loans to homeowners throughout California.
PACE loan assessments are recorded as property liens and paid with the tax bill. But complaints arose from homeowners who said they weren’t told the loans had to be repaid in full before they could sell or refinance their properties.
Consumer advocates said the program allowed unscrupulous contractors to deceive unsuspecting homeowners with inflated promises of energy savings into signing up for unaffordable loans.
Low-income, non-White, elderly and non-English speaking homeowners were especially harmed, with many at risk of losing their homes, according to lawyers who say PACE lacks crucial consumer safeguards.
In 2018, Renovate America, which did not respond to requests for comment on WRCOG’s decision, was hit by a class-action lawsuit accusing the company of
“(overcharging) virtually every cost, fee, and amount due from borrowers in the HERO Loan program to maximize its own profits.”
While Renovate America denies any wrongdoing – a company executive has insisted its consumer protections are “the gold standard for the industry,” the company agreed to settle the case for $2.55 million.
Consumer Protection Laws Violated
In 2019, Renovate America, while not admitting wrongdoing, agreed to pay $4 million to settle a civil complaint brought by Riverside County District Attorney Mike Hestrin and five other California district attorneys’ offices that accused the company of violating state consumer-protection laws by not disclosing important information about HERO loans.
Starting next year, PACE critics are launching the Clean Energy Justice campaign, “to focus legislator and policy maker attention on the problems with PACE and how the state can achieve similar goals in a way that doesn’t put homeowners at risk,” according to a news release.
The release quoted Santa Ana homeowner Alma Marquez’s testimony to WRCOG’s executive board from earlier this month. According to the release, Marquez “is saddled with a $70,000 loan for an accessory dwelling unit that was never built.”
“Now my mortgage has almost doubled to $3,200 per month – the only reason I am still in my home is due to COVID-related mortgage forbearance,” she was quoted as saying. “The strain on me and my family has been enormous – I now can’t sleep, suffer from anxiety attacks and my hair is falling out. I need someone to help me.”