L.A. County Must Do More for Its PACE Victims
L.A. County is rightfully getting praise for abandoning its flawed Property Assessed Clean Energy (PACE) program. However, as the COVID-19 pandemic threatens homeowners across the county, there are hundreds, if not thousands of PACE victims who need help before they lose their homes at a time when shelter has never been more essential.
PACE loans are high-cost loans for “green” home improvements, paid back through an addition to your property taxes. Since the beginning of the L.A. County PACE program in 2015, our office has been flooded with calls from low income homeowners with a litany of serious complaints about the program: many were told it was a free government program and did not know that they would have to repay tens of thousands of dollars; some had their signatures forged; and a startling number were saddled with huge loans even though no work was done on their homes. When homeowners can’t afford to repay the loan, their mortgage servicers will step in to pay it, subsequently increasing the homeowner’s mortgage payments. Homeowners who cannot keep up with their payments will face foreclosure. The PACE program has become a way to steal home equity, rather than deliver on its promise of energy efficiency.
Public Counsel is the largest provider of direct legal services to PACE victims in the state and our low-income clients are often elders and monolingual Spanish speakers. Despite consumer protections that went into effect in 2018, over half of the loans we have seen since then were for non-energy efficient projects that should never have been funded under the PACE program. What’s more, none of those projects were completed. In fact, in nearly a third of cases, no work was done at all, but the homeowner remains stuck with tens of thousands of dollars in debt. For example, one of our elderly monolingual Spanish-speaking clients with a monthly household income of $2,800, and a mortgage payment of over $2,000, is now supposed to pay an additional $550 each month for 20 years because of a $65,000 PACE loan for work that was never started.
Even if homeowners received home improvement work, a staggering 93% of contracts we have examined were over-priced when compared with the County’s own guide for home improvement project pricing. And of the small fraction of our low-income clients who received work they were happy with, half are in immediate threat of foreclosure or have already lost their homes because of the increase in their property taxes.
We presented this data — and more — to the L.A. County Board of Supervisors before the County ended its program. We are glad the County has decided to halt the program and we encourage cities with ongoing PACE programs to do the same. But the County can’t stop there. They have acknowledged that their PACE program has been “subject to increasing criticism and concern” and conceded that it “cannot be certain” its consumer protection measures could “provide sufficient protection” to homeowners. Now it needs to do the hard work of canceling liens and compensating victims to put right the devastation wrought on L.A. County homeowners in its name. Without that, hundreds if not thousands of low income Angelenos will lose their homes.
Stephanie Carroll is a Senior Staff Attorney in Public Counsel’s Consumer Rights & Economic Justice project.
