Ocana v. Renew Financial

Seeking Justice for L.A. Homeowners: Challenging Predatory Home-Improvement Loans in L.A. County

Property Assessed Clean Energy (PACE) was conceived over a decade ago as a way to help homeowners access financing to install otherwise prohibitively expensive clean energy upgrades. Instead, this initiative has burdened thousands of low-income homeowners with high-interest loans that they cannot afford. Even more troubling, PACE has disproportionately been peddled to communities of color and to elderly and non-English speaking homeowners.

Homeowners who want to install energy-efficient home improvements can apply for PACE loans from finance companies or “PACE Administrators.” The loans are often sold door-to-door by contractors, who may not fully explain the financial implications or risks involved, leaving homeowners vulnerable to predatory lending practices. PACE loans require no money down but are secured by the equity in the homeowner’s property, like a traditional mortgage. However, unlike a traditional mortgage, PACE loans frequently ​do not provide the most basic consumer protections, such as checking to make sure that homeowners can afford the payment.

The PACE payment amount is added to the homeowner’s annual property tax bill as a special line-item assessment. Because these loans are paid as part of a homeowner’s property taxes, they get a “first lien” position, which means that if the home is sold or foreclosed upon, PACE loans get paid off first before any other secured loans, such as a mortgage. A homeowner who cannot afford to pay the increased property taxes—either directly to the County or as part of their mortgage payment—will face foreclosure.

In April 2018, homeowners in Los Angeles County brought two related class action lawsuits against the Los Angeles County and its PACE administrators, Renovate America (Renovate) and Renew Financial (Renew). The lawsuits alleged that, in implementing the PACE program, the County, Renovate, and Renew committed financial elder abuse, breached the contract between the County and its administrators, and entered into unlawful contracts with homeowners. The plaintiffs are represented by Hogan Lovells LLP, and the non-profit law firms Public Counsel and Bet Tzedek.

The class action lawsuit against the County of Los Angeles and Renovate America is Nemore et al. v. Renovate America et al. The class action lawsuit against the County of Los Angeles and Renew Financial is Ocana et al. v. Renew Financial et al. The class consists of all homeowners who entered into a Renew (operating the CalFirst program) or Renovate (operating the HERO program) PACE assessment contract with Los Angeles County between March 1, 2015, and March 31, 2018.

UPDATE: March 26, 2024 – Los Angeles County and Renew Financial Holdings have agreed to a $12 million settlement to pay homeowners for unaffordable PACE property liens. Under the settlement, anyone who entered into a Renew Financial (operating the CalFirst program) or Renovate America (operating the HERO program) in Los Angeles County between March 1, 2015, and March 31, 2018, qualifies if a lien was recorded against their property.  For more info about the settlement, click here. To get informed when the official settlement claim form is ready, click here.

Back to Top