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Green Loans Begin To Show Brown Spots

Los Angeles County was caught in a consumer class action submitted this past Tuesday, November 1, in California state court which accused the municipality of participating in a home improvement loan program that unlawfully overcharged low and middle income homeowners throughout its process.

L.A. County resident Michael Richardson received a home improvement loan through California’s residential property assessed clean energy (PACE) program, administered by Renovate America Inc. as part of the for-profit company’s Home Energy Renovation Opportunity (HERO) loan program.

Mr. Richardson alleges that Renovate uses false and deceptive means to fulfill its program. This includes the act of imposing excessive fees and costs based on inflated interest rates and failing to credit borrowers for making payments in a timely manner.

The complaint states: “Defendant Renovate America overcharges virtually every cost, fee and amount due from borrowers in the HERO loan program to maximize its own profits at the expense of HERO loan borrowers, i.e., plaintiff and the other class members.”

These excessive administrative fees charged under the HERO program are shared with L.A. County, which are a “necessary participant” in the loan program, but due to the HERO loans’ status as part of the PACE program, said loans are assessed through the county tax collector and have priority over other loans; such as mortgage payments.

The complaint goes on to state, “Unlike the subprime mortgage crisis that almost caused the collapse of the U.S. economy in 2007, the PACE bonds are practically risk-free because the bonds are secured by the unpaid contractual assessments and have first-lien status over each borrower’s pre-existing mortgage(s).”

The case highlights numerous violations of the Truth in Lending Act and the Home Ownership Protection Act among other causes of action, and has an end goal of establishing a class of borrowers who signed a contract with L.A. County for a HERO loan for use at their principal residence (which is estimated at more than 5,000 people.)

If you are concerned about this case, or think you may be a part of its class, please contact us by email at considertheconsumer@gmail.com or simply comment below to let us know more about your situation.

We plan to provide updates on this pending case.

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