Ohio legislators call for stricter rules for ‘clean energy’ loans

Ohio legislators this fall Consider adding consumer protection to a “clean energy” lending program in response to concerns that it could burden vulnerable homeowners.

of testimony During State House Committee public hearing This year, some supporters of the bill noted: Reported by ProPublica As evidence that Ohio should strictly regulate lending. According to the report, Property Assessed Clean Energy (PACE) loans often put low-income Missouri borrowers at risk of losing their homes.

Two Republican congressmen from Eastern Ohio are pursuing PACE rules, but such a loan program is only offered through a pilot program in Toledo. But Litchfield Rep. Bill Romer and Canfield Rep. Al Catrona said they want companies to follow stricter rules if they want to bring statewide programs to Ohio.

PACE provides loans for energy efficient home improvement that borrowers repay with their property taxes. Unlike other types of financing, defaulting on a PACE loan may result in your home being sold in a tax sale.

Missouri, California, and Florida are the only states with active statewide residential PACE programs.Ohio last year become the fourth generationafter California-based Ygrene Energy Fund announced it would partner with the Toledo-Lucas County Port Authority to provide loans to homeowners.

But the program never started. Ygrene has since stopped all loans nationwide and agreed to settle last week. Complaint The federal government and the state of California have accused the company of harming consumers through deceptive practices.

Roemer said in an interview that he co-sponsored the move after speaking with a person. Union This included mortgage lenders, realtors, affordable housing and homeless advocates.

“It’s rare to actually see all these people together on the bill,” he said. “I did research and said, ‘This is a really bad program that takes advantage of the most vulnerable people.'”

The legislative session ends on December 31st, leaving little time to pass legislation.

“It’s going to be a lot of work,” Roemer said.

Ben Holbrook, an aide to Cutrona, said after Ygrene’s withdrawal, the bill “became more proactive rather than a passive law.”

ProPublica found that state and local officials in Missouri exercise little oversight over two organizations running clean energy loan programs in the state. Ygrene and Missouri’s clean energy district charged high interest rates and fees for as long as 20 years, collected loan payments through tax bills, and enforced debt by mortgaged property . .

Reporters analyzed approximately 2,700 loans recorded in five counties with the most active PACE programs in Missouri. They found that renters, especially in predominantly black neighborhoods, were sometimes paying more in interest and fees than their homes were worth.

PACE lenders say their program provided the necessary funding for home upgrades. This is especially true in predominantly black neighborhoods where traditional lenders typically do not do much business. They said the interest rate is lower than payday lenders and some credit cards.

Weeks after the ProPublica investigation, the Missouri Legislature passed and Governor Mike Parson signed the law oblige more consumer protection Director of PACE. In Ohio, following our report, leaders of his two most populous cities in the state, Columbus and Cleveland, said: Will not participate On any residential PACE plan.

ohio bill Limit PACE loan interest to 8% per annum and prohibit lenders from charging interest on fees. The lender ensures that the borrower can repay the loan by confirming that the borrower’s monthly debt does not exceed his 43% of his monthly income and that he has sufficient income to meet basic living expenses. it needs to be checked.

The move will also change how PACE lenders secure loans. In states where PACE has a thriving housing market, a PACE lien is paid first when a home is foreclosed on. Also, homeowners can borrow without the consent of the bank holding the mortgage. Ohio bill will pay off his PACE lien after real estate mortgage and other liens. Additionally, the mortgage lender must agree to add the PACE loan.

Ygrene officials did not respond to a request for comment. But company officials told the legislative committee that the bill would “clearly kill her pace of housing.” Her Crystal Crawford, Ygrene’s vice president at the time, told the committee in May that the bill was “a bank protection bill, not a consumer protection bill.”

Ohio’s limited experience with PACE indicates that the program, with adequate oversight, can be a low-cost option for borrowers. The Toledo-Lucas County Port Authority has implemented a pilot program that allows residents to borrow money for energy efficiency projects without paying high interest or fees. The Lucas County Land Bank, a local nonprofit, makes sure borrowers have the means to repay loans, matches homeowners with contractors, and ensures home improvements are done correctly before releasing loans. Confirmed completed.

Ygrene announced in August. Stopping Residential PACE Loans was in Missouri and California, but continued to make residential PACE loans in Florida and commercial PACE loans in more than 20 states. Commercial loans have received less attention from regulators because they are less likely to default than residential borrowers and tend to involve borrowers with greater experience and access to capital.

Recently, according to Ygrene’s website, Ygrene now allows consumers seeking personal loans for home improvement to enter their personal information and receive offers from third-party lenders rather than take out a loan directly. It operates as an online lending marketplace where you can borrow money.

Complaints filed by the Federal Trade Commission and the California Department of Justice allege that the company deceived consumers about the potential economic impact of the loan and recorded a lien on the borrower’s home without their consent. To resolve , Ygrene has agreed to provide financial relief to some borrowers, end suspected fraudulent activity, and provide meaningful oversight of contractors acting as a sales force. The settlement must be approved by a judge.

In an email, Ygrene said the complaints dated back to the “early days” when the company sold PACE loans in 2015 and has since taken “substantial steps” to protect consumers.

The company said it “deeply regrets any negative results that a customer may have experienced, as it is too much for even one customer to be dissatisfied.”

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