PACE loans, like those offered by Renovate America (HERO program), Renew Financial (California First), and Ygrene Energy (YGRENE) provide you with money for energy efficient home improvements.  In exchange, you agree to pay back that money over time, with interest, for 10 to 20 years in some cases.  The money is paid back along with your regular property taxes.  If you don't pay it, your home is foreclosed on and sold.


These loans cause allot of problems.  One major problem is that until very recently (January 1, 2019) the lenders made these loans without having to look into whether or not the homeowner could afford to pay them back.  The only requirement for lending was whether or not there was enough equity in the home to get back from foreclosure if the borrower could not or did not pay.


The lenders of these PACE loans all rely on home improvement contractors to take the application from the homeowner when applying for the loan.  The contractor is paid directly by the program.  So, as you can imagine, contractors marketed these types of loans aggressively, often times downplaying the costs, and exaggerating the benefits.  Often they would exaggerate the availability of tax credits to help pay for them.


These same contractors would target any homeowner with enough equity to qualify.  Who has allot of equity?  Senior Citizens of course.  Having worked their whole lives and paid toward their mortgage, many seniors are equity rich, but "income poor".  This combination leads to a disaster when these seniors are aggressively sold PACE loans.  They simply can't afford the payments.  Then they lose their homes.

Even non-seniors fall victim to the aggressive sales practices.  Often times there is a disconnect between what the contractor tells the homeowner what the deal is, and what ends up getting into the contract with the lender.  The contracts are often electronically signed by homeowners on tablets owned by the contractors, the terms of which are never actually read by the homeowner.  

What can you do about it once you have the loan and can't pay?

There are options:

1.  Negotiate a subordination of the PACE assessment.  This means you get them to agree to let another loan go first.  This is so you can borrow more from the first lender to pay off the PACE loan and get out of this mess.  Why would they let you do this?  Well, so you don't sue them would be one good reason.

2.  Sue the PACE lender.  Suit can be for fraud, or for violation of different consumer protection statutes. There are laws that make it illegal for a contractor to take a lien on a senior citizens home unless the senior citizen signs the contract at the contractors place of business.  There are laws that require the lender to pay the homeowner and contractor by joint check and NOT to pay the contractor directly, which these lenders always do.

3.  File an arbitration claim.  Sometimes there is an arbitration clause that requires you file any claim against them in arbitration rather than in Court.  This can be a good tool for leverage.  Oftentimes the company that requires arbitration can be forced to pay the ENTIRE cost of hiring the arbitrator, which can be VERY expensive.  Moreover they can't get that money back form you even if you LOSE your case.  This situation can help you leverage a favorable settlement.

4.  Sue the contractor.  Fraud, breach of contract and violations of consumer protection laws are possible bases, depending on the facts of your case. 

Feel free to contact me about your PACE related dispute.  I can help almost anyone.  Consultation is free.  Let me come up with a solution for you.


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