State-Supported “Clean Energy” PACE Loans Have Put Borrowers at Risk of Losing Their Homes; No Energy Savings for Some Either

By B.N. Frank

Last month, Activist Post reported about book and film, Bright Green Lies which expose many examples of “greenwashing”. From Investopedia:

Greenwashing is the process of conveying a false impression or providing misleading information about how a company’s products are more environmentally sound.

For example, companies involved in greenwashing behavior might make claims that their products are from recycled materials or have energy-saving benefits. Although some of the environmental claims might be partly true, companies engaged in greenwashing typically exaggerate their claims or the benefits in an attempt to mislead consumers.

Greenwashing is NOT new and has taken many forms including unsafe, environmentally UN-friendly, and privacy invasive utility “Smart” Meters (see 1, 2, 3, 4, 5, 6, 7, 8, 9, 10).

In the case of PACE loans being offered to Americans, greenwashing statements include:

“It’s like taking 400,000 cars off the street,” (Jim) Holtzman said. “It’s just a great program for county homeowners.”

David Pickerill, executive director for the Missouri Clean Energy District, the leading PACE program in the Kansas City area, said its loans are crucial for homeowners who need to purchase a new furnace or air conditioning system during an emergency but do not have the cash on hand. It is, he said, “primarily a way to unleash unencumbered equity in a home to pay for energy conservation and renewable energy products.”

Unfortunately for many borrowers, these loans have not worked out the way these gentlemen so enthusiastically promised.

From ProPublica:

State-Supported “Clean Energy” Loans Are Putting Borrowers At Risk of Losing Their Homes

Dozens of Missouri homeowners who used PACE loans to fix up their houses ended up trapped in debt and could soon see their homes sold at auction.

Diana Thomas needed a new furnace and four small basement windows for her two-story home on the east side of Kansas City. But she had little cash and bad credit.

In late 2016, a contractor told her about a loan program that required no money down and would let her pay off the balance over time as part of her annual property tax bill. Her first payment wouldn’t be due until the end of the following year.

Thomas, 53, knew she was in trouble when she got her 2017 tax bill. With the loan payment, her taxes had soared from $247 to $1,465. “I was like, ‘Oh my God, what have I done?’” she said.

To pay off her loan of $10,792, including fees, Thomas agreed to 15 years of payments at an annual percentage rate of 10%, for a total of $18,200. That’s more than the value of her home — $16,226, according to the county’s appraisal — when she took the loan.

Since then, Thomas has missed four years of tax payments. Jackson County, where she lives, has placed a judgment against her and, if she cannot come up with three years of taxes, will sell the house in August at a public auction, taking the proceeds to settle the debt and leaving her with nothing.

Thomas is one of about 3,000 Missouri homeowners who have borrowed money through a program known as Property Assessed Clean Energy, which was touted by then-Vice President Joe Biden in 2009 as a way to help lift the country out of the Great Recession while lowering consumers’ utility bills and fighting climate change. Through the program, local governments could borrow money at low rates and make it available to borrowers for energy-saving home improvements, allowing them to pay it back in their property taxes.

But under the management of private companies, PACE programs in Missouri have charged high interest rates over terms of up to 20 years, using the government’s taxing power to collect loan payments through tax bills and enforce debts through liens. By marketing their programs to people who need urgent repairs but have few options for credit, they have disproportionately burdened some of the state’s most vulnerable homeowners, a ProPublica investigation has found.

More than 100 homes with PACE loans in metropolitan Kansas City and St. Louis are at risk of being sold at public auctions after their owners fell at least two years behind on payments, according to a ProPublica analysis. Of those homes, at least 29 are slated for sale at auction this year.

The analysis, which examined about 2,700 loans that were recorded in five counties with the state’s most active PACE programs, found that the loans have put a disproportionate burden on borrowers in predominantly Black neighborhoods. In those neighborhoods, 28% of borrowers are at least one year behind in repaying their PACE loans compared with 4% in mostly white areas. They’re also paying a larger share of their home value toward interest and fees — sometimes more than county appraisers say their homes are worth.

What’s more, the program has operated with little accountability. State law requires that PACE loans go only to people who can afford them and who will reap energy savings at least equal to the costs of the improvement. Yet local government officials tasked with overseeing the program said that they defer to private lenders to determine if those requirements are met, and are unaware of high delinquency rates.

And while the law authorizes PACE programs to do audits to ensure that borrowers save money on their energy costs, they are not required. Officials from PACE programs in the state’s two biggest metropolitan areas said audits are not typically done.

PACE officials and its lenders said that the program provides much-needed financing for home upgrades, particularly in predominantly Black neighborhoods where traditional lenders typically don’t do much business. They said their interest rates tend to be lower than those of some credit cards and of payday lenders, and that most borrowers make their payments.

The most prominent PACE lender in the St. Louis market, the Ygrene Energy Fund, said it has beefed up its standards by making sure borrowers paid previous property taxes on time and by using more conservative property valuations to underwrite loans. It said it has also reduced its delinquency rates since the program began making residential loans.

PACE was “designed to give affordable access to financing for critical property upgrades to those who may find it harder to get other types of financing,” the company said in a statement. “Given our work to date, we are delivering on the program’s mission.”

Jim Holtzman, the chair of the board that oversees Ygrene’s lending in St. Louis County, said the board depends on lenders to make sound loans and gives them wide latitude to operate. He said PACE is meeting its goal of providing financing for home improvements that help the environment.

“It’s like taking 400,000 cars off the street,” Holtzman said. “It’s just a great program for county homeowners.”

Tom Sadowski, president of the MCED board, said its PACE program has improved since it replaced its lender. That company, Renovate America, filed for bankruptcy protection last year after several lawsuits against it in California, site of the country’s first PACE program, which served as the model for Missouri.

Since 2016, PACE has expanded its residential loan program to some two dozen Missouri counties and the city of St. Louis, in spite of a backlash against the industry in California and in Florida, the only other states with large residential PACE programs. In Florida, the program is under investigation by the state attorney general. Ohio has just started to offer PACE to homeowners.

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