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City Officials Warned About Energy Program: Miss One Payment, Lose Your Home

Published on Monday, June 16, 2014 | 4:13 am

Supervisor Michael Antonovich. File photo by Rachel Young

Los Angeles County Supervisor Michael D. Antonovich has sent an open letter to Pasadena City Manager Michael Beck cautioning the latter of an approved energy program with alleged relatively high interest rates and administrative fees that may result to the foreclosure of properties among homeowners.

Antonovich said in the letter dated May 28 that the provisions in the Home Energy Renovation Opportunity/Property Accessed Clean Energy (HERO/PACE) program is incompatible with the standards of the Federal Housing Finance Agency.

“The county recently approved a program, which I voted against, to provide loans to homeowners for home energy efficiency upgrades,” Antonovich said in the letter. “It sounds reasonable until you read the fine print. Homeowners can lose their homes with just one missed payment.”

Antonovich said that unlike taxes due to a municipal agency which cannot initiate a tax sale until taxes have not been paid for five years, the bondholders of the HERO/PACE loans are able to initiate foreclosure proceedings after missing one payment, and no provisions are available for making a repayment plan.

The county supervisor added that the program’s historical loan interest rate of nine percent on a 20-year loan, with an additional seven percent administrative fee on closing is “much higher than equity lines of credit for homeowners.”

In addition, the Federal Housing Finance Agency prohibits the purchase or refinancing of mortgages that are restricted with PACE loans, Antonovich said.

“While home energy efficiency upgrades are important, I hope your city does not pass the HERO/PACE program,” Antonovich said in the letter. “Just like the homeowners who lost their properties after taking adjustable rate mortgages, this program has the potential for abuse if the proper consumer protections are not in place.”

“Losing a home for one missed payment in a high-interest rate loan program opposed by the Federal Housing Finance Agency is not worth the perceived benefits,” he added.

Pasadena Water and Power (PWP) department presented its “HERO Residential Financing Program” report to the City’s Municipal Services Committee in August 2013, citing similar concerns such as cost structure and potential adverse impacts on residential property owners. As a result, the program was not adopted by the city.

Beck said on the City Manager’s Weekly Newsletter published on Thursday that there are many alternative means for Pasadenans to finance energy and water efficiency projects or solar installations at their houses or businesses.

PWP customers may explore other financing options available to support energy efficiency and renewable energy projects through the department’s Clean Energy Finance Guide which can be viewed online at

For more information about the HERO/PACE program, call Joseph Kelly, chief deputy for Los Angeles County Treasurer-Tax Collector’s office, at (213) 974-2184 or

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