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.
Court
Superior Court of The State of California, County Of Los Angeles
Status
Preliminary Approval Of Class Action Settlement Approved on Monday, March 25, 2024
Case No.
BC701809 [Renew Financial], BC701810 [Renovate America]
Filed
4/12/2018
Case Developments and Key Developments
Class Counsel files Motion for Final Approval of Class Action Settlement and Awarding Attorneys’ Fees and Costs
Documents
Court Grants Preliminary Approval of Settlement
Documents
Motion for Preliminary Approval of the Settlement Filed
Documents
County Board of Supervisors Approves the Settlement
LA County Board of Supervisor’s Statement of Proceedings – settlement discussion is agenda item #80, HERE.
Case with Renew Finacial Settles at Mediation
Documents
Renovate America Files for Bankruptcy
San Diego Union Tribune story here. “[Renovate America] has been the target of 56 lawsuits, including three proposed class actions, according to bankruptcy filings.”
Second Amended Complaints Filed
Documents
First Amended Complaints Filed
Documents
Twin Class Action Lawsuits Filed
A group of L.A. County homeowners filed twin class-action suits, alleging that Renovate America and Renew Financial have failed to implement basic consumer protections for their PACE financing products, burdening low- and moderate-income homeowners with home improvement loans that they cannot afford to repay. The lawsuit alleges the County of L.A. is complicit in the failings of the PACE program, leaving thousands of low-income, elderly, and non-English fluent residents exposed to predatory lending practices. The plaintiffs allege they were misled and financially harmed through their participation in the program.
Documents
Clients
- Zenia Ocana and Juan Ocana Lau
- Maria Alvarez
Legal Team
Public Counsel
Public Counsel is a nonprofit public interest law firm dedicated to advancing civil rights and racial and economic justice, as well as to amplifying the power of our clients through comprehensive legal advocacy. Founded on and strengthened by a pro bono legal service model, our staff and volunteers seek justice through direct legal services, promote healthy and resilient communities through education and outreach, and support community-led efforts to transform unjust systems through litigation and policy advocacy in and beyond Los Angeles.
- Stephanie Carroll, Directing Attorney of Public Counsel’s Consumer Rights and Economic Justice project.
- Ghirlandi Guidetti, Staff Attorney with Public Counsel’s Consumer Rights and Economic Justice project.
Bet Tzedek is an internationally recognized force in economic justice law and one of the largest legal aid organizations in Los Angeles County. With more than 100 staff members supported by more than 1,200 active volunteers, Bet Tzedek assists those most in need with some of the most pressing legal issues faced by our communities including elder abuse, employment rights violations, landlord/tenant and housing matters, real estate fraud and foreclosure prevention, basic estate planning, Holocaust reparations, probate guardianship, low-income tax advocacy, small business development, transgender advocacy, immigration, and public benefits. In addition to direct legal representation in each of these areas, Bet Tzedek staff conducts expansive outreach and education programs, and undertakes impact litigation and policy advocacy on issues of significance to our clients. To learn more, visit bettzedek.org.
Global law firm Hogan Lovells has a long tradition of supporting ground-breaking social developments, focusing on access to justice and the rule of law. As lawyers, we recognize this commitment is part of our professional practice and collectively we spend more than 156,000+ pro bono hours per year on work to achieve lasting impact for others.
Press
Press Releases
- “$12 Million Settlement Reached in Los Angeles Clean Energy Predatory Loan Case,” 3/26/24
- “Advocates Hail End Of Controversial Los Angeles County PACE Program,” 5/19/2020
- “Homeowners File Class Actions Against County of L.A., California Finance Companies, for Unleashing ‘Plague’ of Predatory Home-Improvement Loans,” 4/12/2018
Media Stories
- LA Times, L.A. County settles PACE loan lawsuits; affected homeowners to receive millions, 3/26/24
- Spectrum News 1, Years after shutdown, homeowners still dealing with lingering issues from LA County’s PACE program, 10/25/23
- Last Week Tonight with John Oliver, John Oliver explains how PACE is fundamentally flawed, 6/20/21
- Bloomberg, The Subprime Solar Trap for Low-Income Homeowners, 4/6/21
- LA Times, Some homeowners struggled to pay PACE improvement loans. The coronavirus made it harder, 6/29/20
- Medium, Op-Ed: L.A. County Must Do More for Its PACE Victims, 5/28/20
- LA Times, L.A. County ends controversial PACE home improvement loan program, 5/21/20
- LA Times, A loan program was set up to boost energy efficiency. Instead, it’s being used to build ‘granny flats’, 2/17/19
- KCRW, Effort to make LA more eco-friendly means foreclosure for one homeowner, 9/17/19
- LA Times, Homeowners were defrauded through the PACE lending program, L.A.’s city attorney alleges, 4/4/19
- KCRW, When going green brings an unexpected financial burden, 3/5/19
- LA Times, PACE lender approved ‘potentially fraudulent loans,’ ex-employee alleges, 3/1/19
- LA Times, After booming for years, a controversial home improvement loan is on the decline, 12/21/18
- Daily Democrat, Seniors buying clean energy loans victimized, 12/10/18
- Courthouse News Service, Homeowners Call California Program a Magnet for Fraud, 10/24/18
- LA Daily News, Homeowners sue L.A. County, lenders over PACE loans, 4/25/18
- LA Times, Lawsuits filed against L.A. County, lenders over green energy program, 4/12/18
- Vice, I Tried to Make My Home Energy-Efficient and It’s Ruining My Life, 12/19/17
- LA Times, FHA to no longer insure new mortgages with PACE loans, 12/7/17
- LA Times, The FBI is reportedly looking into practices of largest lender of PACE home-improvement loans, 9/26/17
- LA Times, These loans were created to help homeowners, but for some they did the opposite, 6/4/17
- CBS2, Goldstein Investigation: How Going Green Might Have You Seeing Red In The End, 4/30/16
Settlement Information
UPDATE: The October 4 continued hearing on the Motion for Final Approval of the Settlement has been continued again to November 14, 2024.
UPDATE: The hearing on the Motion for Final Approval of the Settlement began on September 24 and is continued to October 4, 2024.
UPDATE—September 3, 2024: On August 30, 2024, Class Counsel filed the Motion for Final Approval of Class Action Settlement and Awarding Attorneys’ Fees and Costs. You can find the Motion on the Case Developments and Key Developments section of our litigation webpage. As explained in the Motion, the Settlement Administrator received 5,623 timely claims and has determined that approximately 3,538 claims are valid. The Settlement Administrator has mailed postcards to the claimants whose claims were denied.
The Court is scheduled to hold a hearing on the Motion on September 24, 2024, at 9:00 a.m. At or after the hearing, the Court may grant final approval of the settlement or order Class Counsel to provide additional information or evidence before granting final approval. Assuming the Court grants final approval, the Settlement Administrator will begin issuing payments to, and on behalf of, the Class Members who submitted valid claims. Under the terms of the settlement agreement, the Settlement Administrator will pay Class Members in Level One directly. For Class Members in Levels Two, Three, and Four, the Settlement Administrator will make payment on behalf of the Class Member towards the Class Member’s existing PACE assessment(s), up to the amount of any existing PACE assessment, before remitting the remainder of any settlement amount for that Class Member directly to that Class Member.
We currently estimate that it will take at least 60 days after the Court’s final order before the Claims Administrator can begin to process payments.
UPDATE—August 2, 2024: The June 13, 2024, deadline to submit claims, objections, and exclusions has passed. The claims administrator is no longer accepting claims, objections, or exclusion requests. The claims administrator is in the process of validating and processing claims. If you submitted a claim or exclusion request and the administrator needs more information, you will receive a notice by mail. These notices began being mailed on August 1, 2024.
Once Class Counsel has all of the information needed a Motion for Final Settlement Approval will be submitted to the court. Due to the high number of submissions, the parties agreed and the court has approved an extension of time for the final approval Motion to be filed, which is now August 30, 2024. A hearing on the Motion is now set for September 24 at 9:00 a.m. The Court’s most recent order is available here.
SETTLEMENT OVERVIEW—March 26, 2024: If you entered into a Renew Financial (operating the CalFirst program) or Renovate America (operating the HERO program) PACE loan as part of the Los Angeles County program between March 1, 2015, and March 31, 2018, and had a lien recorded against your property, you may be qualified for compensation under the settlement in Ocana, et al. v. Renew Financial Holdings, Inc., et al.
The FAQ on the website is the best place to get information about the settlement and completing the claim form. The website is also available in Spanish: https://www.pacelasettlement.com/es
Class Members can contact the claims administrator at 1‑888‑825‑1218 or info@PACELASettlement.com with any questions or for assistance completing the claim form. It is the claims administrator’s job to help class members with the process.
