Consumer Warns About Pitfalls in Financing Program for Home Improvement Projects – NBC 6 South Florida
Jorge Andrade and Thomas Bavota are two of more than 21,000 South Florida consumers who have funded a home improvement project through the PACE (Property Assessed Clean Energy Program). Both had different results.
In our region, consumers have funded projects valued at more than $ 140 million through the funding program.
The commercials for the PACE program do not require any upfront cost or financial review.
The money can be used to fund energy efficiency projects such as air conditioning, solar panels and broken windows.
Jorge Andrade says the funding made his roof project possible.
“Since they said they had funding for roofs, we thought it would be a good way for us to go,” said Andrade.
But Thomas Bavota says he regretted going green.
“It was here to help homeowners not hurt them,” Bavota told us. “I would never have gone through this if I had known about the lien.”
According to Bavota, a salesperson told him he qualified for $ 22,000 financing to install Impact Windows.
He had installed the windows with no problems. However, when he tried to refinance his mortgage, he found that the PACE funding for the windows appeared as a lien on his property. He says he was not given this detail beforehand.
“I should be able to refinance it and take out the money I want, sell it when I want, just do what we want to do with our house that we worked so hard for,” said Bavota.
When you finance with PACE, you sign an agreement with a private finance company that has been approved to operate in your county.
A lien is placed on your property until you pay what you owe through a special assessment of your property taxes.
Some California and Florida homeowners say the program was marketed with “deceptive” and “incomplete information”.
A federal lawsuit filed in California against PACE administrator Ygrene Energy Fund alleges that the lien makes it “nearly impossible for consumers to sell their homes without first paying off the loan and imposing a heavy prepayment penalty.”
Ygrene declined to be interviewed on camera but sent us the following statement: “Ygrene does not have any“ lending practices ”. PACE offers finance to property owners to finance energy efficient renovations, but the transactions are not “loans”. In connection with the cited case, Ygrene has and will rigorously defend the allegations in this lawsuit. The district court judge on the matter has already ruled that Ygrene’s written disclosures adequately advised property owners regarding the ability to refinance or sell their homes without repaying their PACE funding. Ygrene and the plaintiffs are currently at the discovery stage of the litigation and Ygrene is confident that the court will ultimately determine that all of the pending claims are unfounded. “
Ygrene is one of six companies approved for the PACE program in South Florida.
“I know it’s a good program. I know there are many people who have used the program, but there are also many people who have benefited from it,” said Pedro Garcia, Miami-Dade property assessor.
Garcia says homeowners should check with their mortgage lender to find out how the PACE program will affect them.
“Check the interest rates, contact the company who recommends it, and contact the bank. Take a look around and see what is the best advantage for you, ”said Garcia.
It wasn’t until our interview, at the end of his 20-year tenure, that Bavota found out that he had paid $ 24,000 in interest, which is more than the principal he owed on the window project.
“None of this has ever been explained,” said Bavota. “How the interest would work over 20 years.”
As more homeowners turn to PACE funding, the federal government adds oversight. A new law passed earlier this year directed the Bureau of Consumer Financial Protection to add regulations to the program. The new regulations are expected to require PACE financiers to determine a homeowner’s ability to repay their debts.
The Bavotas are not involved in any lawsuit against Ygrene. We asked the company about the Bavarian’s experience and in a statement they told us:
“MS. Bavota interacted directly with a representative from Ygrene throughout the process from application to project completion and funding. During this time, the homeowner completed the application, received all program and funding information, and took a” welcome call ” to confirm that they understand all applicable terms and conditions.
PACE funding has many built-in consumer protection measures, more than many other comparable types of funding. That is why we attach great importance to clearly informing our customers about the financing. We do this carefully by providing rights and obligations disclosure to property owners, explaining how the PACE lien works and which mortgage lenders may be required to repay the valuation in the event they choose to refinance or sell theirs Decide property. The details are made available to the owner in hard copy and we take a second step through a live recorded call with the owner before the contractor starts work on his property. “