California Payday Loans – Tinigard http://tinigard.info/ Fri, 04 Jun 2021 19:26:45 +0000 en-US hourly 1 https://wordpress.org/?v=5.7.2 https://tinigard.info/wp-content/uploads/2021/05/default1-150x150.png California Payday Loans – Tinigard http://tinigard.info/ 32 32 Best Buy Now, Pay Later Apps of 2021 https://tinigard.info/best-buy-now-pay-later-apps-of-2021/ https://tinigard.info/best-buy-now-pay-later-apps-of-2021/#respond Wed, 02 Jun 2021 19:12:03 +0000 https://tinigard.info/best-buy-now-pay-later-apps-of-2021/ Company Number of installations Interest rate Amount due on purchase Late fee Popular brands To affirm Best overall Varied 0%; 10% to 30% Varied Nothing Walmart.com, Peloton, Expedia, Pottery Barn Sezzle Ideal for flexible payment plans 4 0% 25% $ 10 Umbro, GameStop, Altitude sports, Public recreation After payment Ideal for students 4 0% 25% […]]]>


Company Number of installations Interest rate Amount due on purchase Late fee Popular brands
To affirm

Best overall
Varied 0%; 10% to 30% Varied Nothing Walmart.com, Peloton, Expedia, Pottery Barn
Sezzle

Ideal for flexible payment plans
4 0% 25% $ 10 Umbro, GameStop, Altitude sports, Public recreation
After payment

Ideal for students
4 0% 25% $ 10 Old Navy, Bed Bath & Beyond, Forever 21, adidas
Separate it

Great for no credit check
3 to 24 0% Varied Nothing Echelon Fitness, EyewearUSA, REST, Instasmile
Pay

Best for bad credit
Varied 0% Varied $ 35 Samsung, Apple, Beats, Nintendo, Michael Kors
PayPal Pay in 4

Ideal for small purchases
4 0% 25% Varies according to the state of residence Fossil, Bed Bath & Beyond, Lands’ End, ALDO
Klarna

Ideal for large purchases
Up to 36 months 0% to 29.99% Varied The first attempt is $ 0; The second attempt costs $ 7 Sephora, Bed Bath & Beyond, Nike, Tommy Hilfiger


How to choose the Best Buy Now, Pay Later app

There are many BNPL applications to choose from when purchasing goods and services. However, most retailers partner with a single BNPL app, so their partner may be the easiest service to work with to complete your purchase.

Assuming you have a choice of which service to use, here’s how to pick the best buy now, pay for the app for your purchase later.

  • Take your credit score into account. If you have bad credit or a poor credit history, it may be a good idea to select a BNPL app that does not check your credit score.
  • Will he report to the credit bureaus? People working on their credit will get their payments on time if the BNPL app reports their activity to major credit bureaus.
  • Where is the BNPL application accepted? When you apply for a BNPL account, choosing one that is accepted at most stores you shop at will prevent you from opening multiple accounts.
  • What credit limit will you receive? BNPL application credit limits vary from company to company. Depending on the size of your purchase, having a higher credit limit can make the difference between being able to complete your transaction or not.
  • What are the fees and interest rates charged? Review the account details to determine if there are any charges for using the service, paying, or other activities. Also, will you be charged interest if you make your payments on time? If so, what are the prices?


When to use a Buy Now, Pay Later app vs. a credit card

While buy-it-now and check-out apps are similar to credit cards, they each have a role to play for consumers today. When paying, you will need to decide which method you want to use to complete your transaction. Here are some situations where you might want to use one payment method over another.

When to use a BNPL application:

  • Make purchases without a credit check
  • Simple request with instant decision for a new loan
  • Pay over time without paying interest
  • Pay for your purchases with minimum payments
  • Build credit without getting a secured credit card

When to use a credit card:

  • Special discounts for using a store brand retail card
  • Earn cash back, miles or points on your purchase
  • Meet a minimum spending requirement to earn a welcome bonus
  • Earn benefits based on your total annual spend
  • Benefits of Price, Returns and Purchase Protection
  • Receive a free warranty extension
  • Flexibility of lower minimum payments

Not all credit cards offer these benefits, so check your credit card benefits guide or call customer service to see if your card does. If not, it might be time to replace your credit card with one that offers better benefits.


Frequently Asked Questions (FAQ)

How do the Buy Now, Pay Later apps work?

BNPL applications work in coordination with the merchant you are purchasing from. Most don’t charge interest as long as you make your scheduled payments on time. If you miss a payment, you may be charged interest and late fees. The BNPL app collects a fee from the merchant for processing the transaction, much like a credit card transaction works. This is a win-win situation because the customer receives their product today, the merchant makes a sale that might not have happened otherwise, and the BNPL app collects a fee for managing the funding.

Can Buy Now, Pay Later help you build credit?

If your BNPL application reports to the credit bureaus, your positive payment history will help you build your credit score. For example, Perpay customers increase their credit rating by 39 points on average. However, many of these BNPL loans are short term in nature and therefore do not create a payment history long enough to be reported to the credit bureaus.

What credit score do you need to use a Buy Now, Pay Later service?

No credit score is required to use a BNPL application. There are many BNPL applications to choose from. While some do a gentle investigation to check your credit, many others do not require a credit check. Even if you have bad credit, services that don’t require a credit check allow you to shop today and pay over time using alternative methods to determine your credit limit.

For example, Zebit has a two-step subscription process. First, they verify your identity, income, and employment to establish your initial spending limit. Then each purchase attempt is subscribed at checkout to determine whether or not you can complete the transaction.


Methodology

To find the best buy now, pay later apps, we’ve researched over 20 BNPL services to find the ones that work best for a variety of buying purposes. For our analysis, we compared ease of purchase, interest rates, fees, credit checks, how payments are processed, and other relevant features. These data points were scored and weighted according to their importance for each type of consumer. We continuously monitor BNPL service data to update our rankings to provide our readers with accurate recommendations.



Source link

]]>
https://tinigard.info/best-buy-now-pay-later-apps-of-2021/feed/ 0
Paycheck Advance apps: Reading the fine print https://tinigard.info/paycheck-advance-apps-reading-the-fine-print/ https://tinigard.info/paycheck-advance-apps-reading-the-fine-print/#respond Sun, 30 May 2021 05:58:01 +0000 https://tinigard.info/paycheck-advance-apps-reading-the-fine-print/ Paycheck advance apps allow users to borrow a small amount of their expected income, usually for a small fee, and repay it on their next payday. It sounds like a great deal if you need some extra cash between paychecks, and millions of users have accepted it. While it is possible to use these apps […]]]>


Paycheck advance apps allow users to borrow a small amount of their expected income, usually for a small fee, and repay it on their next payday.

It sounds like a great deal if you need some extra cash between paychecks, and millions of users have accepted it. While it is possible to use these apps without harming your finances, some consumer advocates say they can lead to a cycle of debt.

If you’re considering using a paycheck advance app, here’s what you need to know before you download.

When Jose Polanco uses the Earnin app to borrow against his next paycheck, the app asks if he wants to leave a tip.

The school administrator says he gives the app $ 8 for the $ 100 he usually borrows. He says he’s convinced by the app’s message that leaving a larger tip helps pay users who can’t afford to tip at all.

Optional tips are a common way for these apps to reframe fees. Although they are generally not mandatory, they are often encouraged.

Earnin CEO Ram Palaniappan explains that tips allow the user to decide the value of the service to them rather than charging a fee that they might not be able to pay.

Some advances are accompanied by additional fees. Dave, another paycheck advance app, has three optional fees: a $ 1 monthly subscription, an express fee to get your money faster, and a tip.

For a few hundred dollars – the maximum amount you can borrow from most apps – the fees aren’t as high as most payday loans or overdraft fees.

But asking the user to decide how much to pay doesn’t give them the ability to assess the total cost of the loan like an annual percentage rate would, says Marisabel Torres, California policy director at the Center for Responsible. Lending.

“Not calling it a fee and presenting it as a tip is actually dishonest for the user, because then it is confusing how much this product is actually costing you,” she says.

To sign up for a paycheck advance app, users normally need to provide proof of their payroll schedule and income, and often access their bank accounts so that the app can withdraw the money. ‘they owe when they get paid.

Some apps say they will monitor your bank account and try to avoid a debit if your balance is too low. Debiting a balance that’s too low can result in overdraft fees – a fee that some apps sell as an alternative – and you might need to borrow again.

It is not yet clear how often the use of the apps triggers overdraft fees, says Alex Horowitz, senior research officer at Pew Charitable Trusts.

But an April report from the Financial Health Network found that 70% of consumers who used a service to access their income early returned to use it consecutively – a common behavior with payday loans, he says.

“It’s not just that they use it several times a year, it’s that they use it several times in a row,” says Horowitz. “This indicates that they couldn’t pay it back without taking another advance soon after to cover their bills.”

You may have cheaper alternatives if you need to borrow money, Torres says.

Credit unions and some banks offer small loans that are repaid in affordable monthly installments. A friend or family member may be able to lend you money and allow you to pay it back over time.

There isn’t enough research to know whether getting a lead from an app improves or weighs consumers down, says Nakita Cuttino, a visiting assistant professor at Duke University School of Law whose research focuses on financial services and the financial inclusion.

In 2019, the New York Department of Financial Services – along with several other states and Puerto Rico – announced an investigation into the Earned Wage Access industry, of which these types of apps are a part, to determine if they violate state loan laws.

When used to resolve a one-time emergency, Cuttino says, an advance can be cheaper and more convenient – and reduces the risk of excessive borrowing due to their low dollar amount.

If you borrow from any of these apps, understand how it will affect your budget and plan to pay it back, she says. And if you find yourself borrowing every pay period or having to pay frequent overdraft fees, this may not be right for you.



Source link

]]>
https://tinigard.info/paycheck-advance-apps-reading-the-fine-print/feed/ 0
Advance Paycheck applications: advantages and disadvantages https://tinigard.info/advance-paycheck-applications-advantages-and-disadvantages/ https://tinigard.info/advance-paycheck-applications-advantages-and-disadvantages/#respond Tue, 25 May 2021 15:29:22 +0000 https://tinigard.info/advance-paycheck-applications-advantages-and-disadvantages/ Paycheck advance apps allow users to borrow a small amount of their expected income, usually for a small fee, and repay it on their next payday. It sounds like a great deal if you need some extra cash between paychecks, and millions of users have accepted it. Although it is possible to use these loan […]]]>


Paycheck advance apps allow users to borrow a small amount of their expected income, usually for a small fee, and repay it on their next payday.

It sounds like a great deal if you need some extra cash between paychecks, and millions of users have accepted it. Although it is possible to use these loan applications without hurting your finances, some consumer advocates claim they can lead to a cycle of debt.

If you’re considering using a paycheck advance app, here’s what you need to know before you download.

Fees presented as tips

When Jose Polanco uses the Earnin app to borrow against his next paycheck, the app asks if he wants to leave a tip.

The New York school administrator says he gives the app $ 8 for the $ 100 he usually borrows. He says he’s convinced by the app’s message that leaving a larger tip helps pay users who can’t afford to tip at all.

Optional tips are a common way for these apps to reframe fees. Although they are generally not mandatory, they are often encouraged.

Earnin CEO Ram Palaniappan explains that tips allow the user to decide the value of the service to them rather than charging a fee that they cannot afford.

Some advances are accompanied by additional fees. Dave, another paycheck advance app, has three optional fees: a $ 1 monthly subscription, an express fee to get your money faster, and a tip.

For a few hundred dollars – the maximum amount you can borrow from most apps – the fees aren’t as high as most payday loans or overdraft fees.

But asking the user to decide how much to pay doesn’t give them the ability to assess the total cost of the loan like an annual percentage rate would, says Marisabel Torres, California policy director at the Center for Responsible. Lending.

“Not calling it a fee and presenting it as a tip is actually dishonest for the user, because then it is confusing how much this product is actually costing you,” she says.

The risks: overdrafts, chronic borrowing

To sign up for a paycheck advance app, users normally need to provide proof of their payroll schedule and income, and often access their bank accounts so that the app can withdraw the money. ‘they owe when they get paid.

Some apps say they will monitor your bank account and try to avoid a debit if your balance is too low. Debiting too low a balance can result in overdraft fees – a fee that some apps sell as an alternative – and you might need to borrow again.

It is not yet clear how often the use of the apps triggers overdraft fees, says Alex Horowitz, senior research officer at Pew Charitable Trusts.

But an April report from the Financial Health Network found that 70% of consumers who used a service to access their income early returned to use it consecutively – a common behavior with payday loans, he says.

“It’s not just that they use it several times a year, it’s that they use it several times in a row,” says Horowitz. “This indicates that they couldn’t pay it back without taking another advance soon after to cover their bills.”

Not a permanent solution

You can have it cheaper alternatives if you need to borrow money, Torres says.

Credit unions and some banks offer small loans that are repaid in affordable monthly installments. A friend or family member may be able to lend you money and allow you to pay it back over time.

There isn’t enough research to know whether getting a lead from an app improves or weighs consumers down, says Nakita Cuttino, a visiting assistant professor at Duke University School of Law whose research focuses on financial services and financial inclusion.

In 2019, the New York Department of Financial Services – along with several other states and Puerto Rico – announced an investigation into the Earned Wage Access industry, of which these types of apps are a part, to determine if they violate state loan laws.

When used to resolve a one-time emergency, Cuttino says, an advance can be cheaper and more convenient – and reduces the risk of over-borrowing due to their low dollar amount.

If you borrow from any of these apps, understand how it will affect your budget and plan to pay it back, she says. And if you find yourself borrowing every pay period or having to pay overdraft fees frequently, this may not be right for you.

This article was written by NerdWallet and was originally published by The Associated Press.



Source link

]]>
https://tinigard.info/advance-paycheck-applications-advantages-and-disadvantages/feed/ 0
Should you use a Paycheck Advance app? | Personal finance https://tinigard.info/should-you-use-a-paycheck-advance-app-personal-finance/ https://tinigard.info/should-you-use-a-paycheck-advance-app-personal-finance/#respond Tue, 25 May 2021 07:00:00 +0000 https://tinigard.info/should-you-use-a-paycheck-advance-app-personal-finance/ Some advances are subject to additional charges. Dave, another paycheck advance app, offers three optional fees: a $ 1 monthly subscription fee, an express fee to get your money faster, and a tip. For a few hundred dollars – the maximum amount you can borrow from most apps – the fees aren’t as high as […]]]>


Some advances are subject to additional charges. Dave, another paycheck advance app, offers three optional fees: a $ 1 monthly subscription fee, an express fee to get your money faster, and a tip.

For a few hundred dollars – the maximum amount you can borrow from most apps – the fees aren’t as high as most payday loans or overdraft fees.

But asking the user to decide how much to pay doesn’t give them the ability to assess the total cost of the loan in the same way that displaying an annual percentage would, says Marisabel Torres, director of California Politics at the Center for Responsible Lending.

“Not calling it a fee and presenting it as a tip is actually dishonest for the user, because it is confusing how much this product is actually costing you,” she says.

The risks: overdrafts, chronic borrowing

To sign up with a paycheck advance app, users normally need to provide proof of their payroll schedule and income, and often access their bank accounts so that the app can withdraw the money. ‘they owe when they get paid.

Some apps say they will monitor your bank account and try to avoid a debit if your balance is too low. Charging too low a balance can result in overdraft fees – fees that some apps offer as an alternative – and you may need to borrow again.



Source link

]]>
https://tinigard.info/should-you-use-a-paycheck-advance-app-personal-finance/feed/ 0
Housing insecurity and effective COVID relief https://tinigard.info/housing-insecurity-and-effective-covid-relief/ https://tinigard.info/housing-insecurity-and-effective-covid-relief/#respond Mon, 24 May 2021 22:01:00 +0000 https://tinigard.info/housing-insecurity-and-effective-covid-relief/ Webinar presented by ACLU SoCal Economic Justice Committee Wednesday June 2, 2021, 6 p.m. to 7:30 p.m.Zoom recording: https://bit.ly/3ujmj5K According to the Eviction Defense Network, approximately 500,000 Los Angeles County tenants are currently behind on their rent. Unless our representatives are convinced to change the current law by June 31, 2021, these tenants will be […]]]>


Webinar presented by ACLU SoCal Economic Justice Committee

Wednesday June 2, 2021, 6 p.m. to 7:30 p.m.
Zoom recording: https://bit.ly/3ujmj5K

According to the Eviction Defense Network, approximately 500,000 Los Angeles County tenants are currently behind on their rent. Unless our representatives are convinced to change the current law by June 31, 2021, these tenants will be evicted. Find out how you can save your neighbors’ home.

Francisco Dueñas, Managing Director of Housing Now!
Shanti singh, Legislative Director of Tenants Together
Gary Rhoades, Deputy District Attorney for the City of Santa Monica
Michelle white, Moderator, ACLU SoCal Pasadena / Foothills Chapter

For the second time in months, California tenants are facing a tsunami of eviction caused by their loss of income during the pandemic. The Eviction Defense Network estimates that 500,000 renter households in Los Angeles County are behind on their rent and will soon be subject to eviction. In response, the California and federal governments have passed complex sets of protections designed to help low-income tenants, including a moratorium on evictions based on unpaid rents linked to Covid until June 31, 2021.

Tenants have struggled to respond to the imminent possibility of eviction during this time. Many tenants pay the minimum required by law – at least 25% of the rent they owe between April 1, 2020 and June 31, 2021. Others use savings and credit cards to stay housed; some take out expensive payday loans. In many communities, the impacts disproportionately affect households of color, as a much higher percentage of African Americans and Latinos are renters.

If tenants who pay at least 25% of their rent cannot be evicted during this period, their unpaid rents are not forgiven. Tenants just have more time to pay off their debt and avoid eviction. However, landlords can sue tenants in small claims courts to convert past due rent debts into judgments.

Conversely, many homeowners who have been affected by their tenants’ inability to pay have the option of extending their mortgage. Additionally, landlords can accept 80% of the amount of rent owed by tenants, if they are willing to give up the remaining 20%. There is currently no option available for the government to pay 80% of renters’ rents and tenants to pay the remaining 20% ​​- an alternative that would be manageable for many.

Unless the federal and state governments adopt permanent solutions to the current situation, tenants will become even more unstable. The June 2, 2021 forum is designed to address these issues so citizen advocates can make their voices heard in Sacramento and City Hall.

Please join us in ensuring that low income tenants, especially households of color, are not displaced from their communities.

Cosponsors: LA Progressive, ACLU SoCal Pasadena / Foothills Chapter, Occidental College Critical Theory & Social Justice Department….

Questions: Dick Price dick_and_sharon@laprogressive.com



Source link

]]>
https://tinigard.info/housing-insecurity-and-effective-covid-relief/feed/ 0
Paycheque Advance Apps: What You Should Know Before Downloading California Dave New York Email Puerto Rico https://tinigard.info/paycheque-advance-apps-what-you-should-know-before-downloading-california-dave-new-york-email-puerto-rico/ https://tinigard.info/paycheque-advance-apps-what-you-should-know-before-downloading-california-dave-new-york-email-puerto-rico/#respond Wed, 19 May 2021 07:00:00 +0000 https://tinigard.info/paycheque-advance-apps-what-you-should-know-before-downloading-california-dave-new-york-email-puerto-rico/ Payday advance apps allow users to borrow a small amount of their expected earnings, usually for a small fee, and pay it back on their next payday. It seems like an attractive offer if you need the extra cash between paychecks, and millions of users have accepted it. While it is possible to use these […]]]>


Payday advance apps allow users to borrow a small amount of their expected earnings, usually for a small fee, and pay it back on their next payday.

It seems like an attractive offer if you need the extra cash between paychecks, and millions of users have accepted it. While it is possible to use these apps without harming your finances, some consumer advocates say they can lead to a cycle of debt.

If you’re considering using a paycheck advance app, here’s what you need to know before you download.

COSTS FRAMED AS TIPS

When Jose Polanco uses the Earnin app to borrow on his next paycheck, the app asks him if he wants to leave a tip.

The New York school administrator says he gives the app $ 8 for the $ 100 he usually borrows. He says he is convinced by the message displayed by the app that leaving a larger tip helps pay users who cannot afford to tip at all.

Optional tips are a common way for these apps to reframe fees. Although they are generally not mandatory, they are frequently encouraged.

Earnin CEO Ram Palaniappan says the advice allows the user to decide the value of the service to them rather than charging a fee that they may not be able to afford.

Some advances are subject to additional charges. Dave, another paycheck advance app, has three optional fees: a $ 1 monthly subscription fee, an express fee to get your money faster, and a tip.

For a few hundred dollars – the maximum amount you can borrow from most apps – the fees aren’t as high as most payday loans or overdraft fees.

But asking the user to decide how much to pay doesn’t give them the ability to assess the total cost of the loan in the same way that displaying an annual percentage would, says Marisabel Torres, director of California Politics at the Center for Responsible Lending.

“Not calling it a fee and presenting it as a tip is actually dishonest for the user, because it is confusing how much this product is actually costing you,” she says.

THE RISKS: DISCOVERIES, CHRONIC LOANS

To sign up with a paycheck advance app, users normally need to provide proof of their payroll schedule and income, and often access their bank accounts so that the app can withdraw the money. ‘they owe when they get paid.

Some apps say they will monitor your bank account and try to avoid a debit if your balance is too low. Charging too low a balance can result in overdraft fees – fees that some apps offer as an alternative – and you may need to borrow again.

It’s not yet clear how often using the app triggers overdraft fees, says Alex Horowitz, senior research manager at Pew Charitable Trusts.

But an April report from the Financial Health Network found that 70% of consumers who used a service to access their income earlier returned to use it consecutively – a behavior that is common with payday loans, says. -he.

“It’s not just that they use it several times a year, it’s that they use it several times in a row,” says Horowitz. “This indicates that they couldn’t pay it back without taking another advance soon after to cover their bills.”

NOT A PERMANENT SOLUTION

You may have cheaper alternatives if you need to borrow money, Torres says.

Credit unions and some banks offer small loans that are repaid in affordable monthly installments. A friend or family member may be able to lend you the money and let you pay it back over time.

There isn’t enough research to know whether getting a lead from an app leaves consumers better or worse, says Nakita Cuttino, visiting assistant professor at Duke University School of Law whose research focuses on financial services and financial inclusion.

In 2019, the New York Department of Financial Services, along with several other states and Puerto Rico, announced an investigation into the salary access industry, of which these types of apps are a part, to determine if they violate state loan laws.

When used to solve a one-time emergency, Cuttino says, an advance can be cheaper and more convenient – and reduces the risk of over-borrowing due to their low dollar amounts.

If you borrow from any of these apps, understand how it will affect your budget and make a plan to pay it off, she says. And if you find yourself borrowing every pay period or incurring frequent overdraft fees, this may not be right for you.

__________________________________

This article was provided to The Associated Press by the NerdWallet personal finance website. Annie Millerbernd is a writer at NerdWallet. Email: amillerbernd@nerdwallet.com.

RELATED LINKS:

NerdWallet: Alternatives To Payday Loans To Consider In A Crisis: http://bit.ly/nerdwallet-payday-loans



Source link

]]>
https://tinigard.info/paycheque-advance-apps-what-you-should-know-before-downloading-california-dave-new-york-email-puerto-rico/feed/ 0
NFL players’ investments funded controversial high-interest loans https://tinigard.info/nfl-players-investments-funded-controversial-high-interest-loans/ https://tinigard.info/nfl-players-investments-funded-controversial-high-interest-loans/#respond Tue, 18 May 2021 06:43:48 +0000 https://tinigard.info/?p=586 INVESTMENTS FROM AT least 15 current and former NFL players, including Von Miller, Nick Foles and Mark Brunell, were used in a complex investment program designed to profit at the expense of low-income borrowers, according to civil and bankruptcy court documents obtained by ESPN. The players invested in a now-defunct company that funded a separate […]]]>


INVESTMENTS FROM AT least 15 current and former NFL players, including Von Miller, Nick Foles and Mark Brunell, were used in a complex investment program designed to profit at the expense of low-income borrowers, according to civil and bankruptcy court documents obtained by ESPN.

The players invested in a now-defunct company that funded a separate business targeting Texans with troubled credit ratings who needed quick cash and would put up their cars as collateral on loans averaging $1,000. Because of fees and interest in excess of 300%, borrowers would agree to pay hundreds of additional dollars to repay the loans. The so-called auto title loans are legal in Texas but prohibited in many states because they prey on people who lack access to traditional banking sources.

Yet it turned out to be a bad deal not just for desperate borrowers. The orchestrator of the investment, longtime financial adviser Joseph “Joey” Feste, claimed in court filings that the venture was in default of promises to pay investors some $40 million. It’s not known how much the athletes lost, although millions linked to NFL players helped fund the title loans, according to documents Feste filed. Feste, owner of KM Capital Management, an Austin, Texas-based private wealth management firm that caters to athletes, ultimately lost his status as an NFL Players Association-registered financial adviser, in part for failing to disclose to the union the civil litigation related to the title loans.

Today, Feste still acts as a financial adviser to NFL players, though without the union’s official blessing, with a client list featuring recently retired Drew Brees and current talents such as Patrick Mahomes and Tua Tagovailoa.

Neither the players who invested nor Feste were charged with any crimes, though ESPN has learned Feste was the subject of a whistleblower complaint filed in late 2019 with the U.S. Securities and Exchange Commission. Feste declined multiple interview requests for this story, and his attorneys declined to answer specific questions related to the investments which were part of a bankruptcy proceeding that ended last October.

“My client’s reaction is that this is an old story about an old investment that has been vetted by several regulatory entities charged with the responsibility of doing so,” said attorney Andrew Kim, who represents Feste. “It was completely cleared of any problems. It was a totally legal business.”

Kim noted: “And the court documents describe it all. It is all there in the court documents.”

The players’ involvement in a business that targeted low-income borrowers puts them at odds with recent statements and actions by the league and the NFLPA on issues of inequality and social and racial injustice. “The Players Coalition has led the efforts of players and clubs to engage with leaders at all levels of government … on issues like bail and criminal justice reform; [to] promote education reform and economic opportunity in disadvantaged communities,” among other efforts, the league and union said in a joint statement last September.

When contacted by ESPN, some players said they did not know how their money had been invested or whether they made or lost money. “I am not sure of the particulars,” said former NFL backup quarterback Ken Dorsey, now the Buffalo Bills’ quarterbacks coach. “I am not as good as I hope to be with some of this stuff. Part of my problem is I don’t understand a lot of it. I kind of trust the people.”

Other current or former players, including Foles and Miller, did not respond to questions from ESPN or declined to discuss their investments.


THE DETAILS OF the title loan investment involving the athletes have largely been buried in nondescript civil and bankruptcy case files in the federal court system. Though the file has been publicly accessible for years, the athlete connections have not been made public prior to ESPN investigating the case.

In 2011, Feste founded Storehouse Lending LLC, which had a purpose of funding title loans offered by a partner company called KJC Auto Title Loan, the court documents show. Storehouse funded KJC Auto, in part, by getting clients of Feste’s KM Capital and other investors to buy high-yield promissory notes — financial promises that weren’t registered with federal or state regulators. The players’ notes ranged from less than $10,000 to more than $500,000, court documents show. Storehouse then partnered with KJC Auto to invest the raised cash into title loans, with Storehouse appearing on titles as the lien holder.

From 2011 to 2014, at least $6 million linked to NFL players funded KJC Auto’s title loans, according to the documents filed by Feste. The players and other Feste clients were typically paid a return of between 9% and 20% on their investments that funded the title loans, the documents say. Records show Storehouse typically received returns of up to 22% on capital it provided to KJC Auto.

At the other end of the arrangement were borrowers who signed up for loans stacked with fees and charges, some with annual percentage rates in excess of 300%. For example, in 2013, an Austin-area woman put up her 2002 Mercury Mountaineer as collateral to borrow $1,039.99. With a $2,426.64 finance charge, she agreed to pay $3,466.63 back to KJC in principal and interest over 17 payments, according to court documents. It’s unclear from the documents if the woman was able to repay the loan.

Such loans have come under increasing scrutiny for furthering the wealth gap by targeting people in desperate financial straits. A 2019 survey by the Federal Deposit Insurance Corporation found minorities made up a disproportionate number of auto title loan consumers in Texas. In Texas, one in five borrowers are unable to repay the loans and get their cars repossessed, according to Texas Appleseed, a nonprofit that seeks social and economic justice in the state.

“It was, in my mind, criminal because the ones who were taking out the loans were generally poor people who could least afford to repay, and who were not necessarily financially savvy,” said Marilyn Garner, the trustee who oversaw KJC Auto’s eventual bankruptcy. “And the problem is, it is not illegal.”

The Storehouse arrangement started to collapse in 2014, after Texas regulators began an investigation into KJC Auto. Investigators uncovered numerous violations, including that the company was evading established interest rate limits by paying additional fees to Storehouse. The state audit also found loans exceeding laws limiting their duration to 180 days, citing some that extended 18 months.

The investigation led KJC Auto to shutter stores across Texas. Feste’s Storehouse promptly filed a civil lawsuit against KJC Auto, claiming, among other allegations, breach of contract and fraud. KJC Auto responded by filing for Chapter 7 liquidation bankruptcy.

KJC Auto chief financial officer Ken Phillips and chief executive officer Clifton Morris III declined comment.

The bankruptcy case dragged on for nearly five years. In 2017, the bankruptcy trustee awarded Storehouse KJC’s files and loan documents as a way to recoup some of its losses. Rather than attempt to repossess vehicles, Storehouse sold the liens to 13,000 auto title loans to a Texas collection firm for $75,000, according to documents.

In civil and bankruptcy court documents, Feste said Storehouse was at the time in default of about 74 promissory notes, totaling $40 million. The final bankruptcy report issued this past October reveals Storehouse Lending asserted a claim of $37,592,043 — all of which was allowed by bankruptcy trustee Garner. However, the report indicates the trustee was able to pay Storehouse only $431,808 — about 1 percent of its claim.

Kim declined to discuss the amount awarded by the trustee or whether the athlete investors lost any of their principal investments. “OK, it’s a monetary difference,” Kim said. “So, a business that didn’t work out. I just don’t see where the story is.” Feste formally dissolved Storehouse in 2018.

Garner told ESPN she was unaware that professional athletes had invested in the title loan venture but said not all investors could be made whole in the case.

“There was not enough money ever collected to repay their claim in full,” Garner said. “So, it was a loss all the way around. They got what they got from the estate and that was it. Whatever else may have been owed to them based on their documentation was just a general unsecured claim, and was not paid.”


FESTE, 56, is the senior managing partner as well as chief compliance officer of KM Capital Management, which recently disclosed in U.S. Securities and Exchange Commission documents having $245 million in assets under its control. “We pay bills, we negotiate leases, we buy cars and insurance, we touch nearly every part of their financial lives so that nothing falls through the cracks,” he said in an interview with an entrepreneurship website last year. His son, Joey Feste Jr., is a vice president at the firm.

A handful of the elder Feste’s NFL clients either grew up or played college football in Texas, where Feste graduated from the University of Texas. Feste is also the co-founder and senior leader of Kingdom Life San Antonio, a Christian congregation, alongside his wife, Kelley, and has “strived to base his business on strong Christian values,” according to his personal blog.

During an hour-plus Sunday sermon on March 21, Feste described himself as a “recovering control freak.” Mixed in with his message, titled “De-Church-ifying the Church,” was a reference to his day job as financial adviser to the stars.

“People have been feeling used outside our culture,” Feste said. “I manage some of the highest-profile players in the world. And I build relationships with them. And my hope and prayer is, if they are even watching this, that they know that they can associate me with the way, because I love them in spite of. I love them because of. And I love them, period. And each one of my clients are in different levels of maturity in their life.”

ESPN has attempted since mid-March to speak with Feste. An initial phone message was returned by two of his attorneys, who said he was unavailable due to a health issue. At the last minute, Feste was not on a scheduled March 24 call because it was “not conducive to a recuperative process,” said Andrew Kim, one of the attorneys. The attorneys declined to address questions about the title loan investment and whether investors, including NFL players, lost any of their investments in Storehouse. They noted that Feste was a plaintiff and not a defendant in civil lawsuits around the investments.

“What’s in the court documents is what we’re providing in terms of answers,” said attorney Rebecca Riley.


IN ADDITION TO Foles, Miller and Brunell, investors in the Storehouse-funded loans included former Tampa Bay Buccaneers linebacker and Hall of Famer Derrick Brooks, via his limited liability company, and Kansas City Chiefs all-time rushing leader Jamaal Charles. Former Green Bay quarterback Matt Flynn and former New England Patriots running back Shane Vereen also were listed as investors, as was Rice assistant coach Marques Tuiasosopo.

Other since-retired players listed in documents as Storehouse noteholders included: running back Justin Forsett, linebacker Sean Weatherspoon, defensive end Renaldo Wynn and wide receiver Damian Williams.

Brunell, the former Jaguars quarterback, had the largest investment listed among the named athletes, according to documents filed by Feste, with three accounts totaling at least $1.9 million. Flynn contributed about $1.5 million, while Miller invested about $700,000.

Multiple messages left for Miller’s agent, Joby Branion of Vanguard Sports Group, went unanswered. California-based attorney Kim, along with representing Feste, is employed as Vanguard’s general counsel. He also previously represented Miller in legal proceedings. Players reached for comment typically said they remain loyal to Feste, but most declined to comment on the title loan investment or say if they lost money. Some never responded to messages left by ESPN.

Matt Flynn said he hooked up with Feste after leading LSU to a national title in the 2007 college season. In the NFL, Flynn backed up Aaron Rodgers in Green Bay and later signed a reported three-year, $26 million free-agent deal with the Seattle Seahawks. Flynn made at least 10 investments in Storehouse over about two years, according to documents filed by Feste.

In an interview, Flynn described Feste as doing a “great job” for him and being up front. He said he invested less than $1 million in the Storehouse investment, but declined to say how much. Asked if he lost money on the deal, Flynn said, “Well, I’d have to go back and look at everything. That’s all I know right now.”

Asked about profiting from a business that has come under scrutiny for preying upon low-income communities, Flynn said, “Yeah, again, I don’t really know enough about it. When you’re playing, you don’t take a deep dive into everything where your money is at. But you understand everything from a pretty decent perspective.”

Dorsey, who led the University of Miami to the 2001 national championship, also said he met Feste as he entered the NFL. Documents show he had two investments totaling $100,000. Dorsey recalled knowing the Storehouse deal had troubles resulting in a lawsuit, but not much else. As for if he and the players got their money back, he said, “I just don’t want to get into it.”

Brooks, who documents show invested at least $75,000 through his limited liability company, Hit 55 Ventures, told ESPN his dealings with Storehouse went through Ben Renzo, a California attorney who is among the founders of Argent Pictures, a film company that lists Brooks and other athletes as partners. Renzo, who wrote “Hall of Fame: How to Manage Financial Success as a Professional Athlete,” was listed as receiving finder’s fees for investments by Brooks and former NFL lineman Eric Steinbach, according to documents.

Brooks said he got his money back from the Storehouse investment. “All of my dealings with the company was through [Ben Renzo],” he said before cutting off the interview. “So, again, I didn’t have much interaction with that. He’s more the guy that can give you more information than I can.” Neither Renzo nor Steinbach responded to multiple messages seeking comment.

Nick Foles’ agent, Justin Schulman, said the Super Bowl-winning quarterback had “no interest in talking about it.”

Pete Roe, who is himself a financial adviser, told ESPN he was working with former NFL defensive end Demetric Evans when Feste pitched the Storehouse deal. Roe said he cautioned Evans against buying in. “My partner and myself at the time looked at it, and our comment back to him [Demetric] at the time was ethically, if for no other reason, it doesn’t look good or feel good,” Roe told ESPN.

But records show Evans, who played for Dallas, Washington and San Francisco, invested at least $46,000 in two installments. While searching files to confirm Evans’ commitment, Roe said he found an additional promissory note Evans had with Storehouse Lending from 2011 for $50,000. Evans told ESPN he has no recollection of the deal and said Roe might have invested on his behalf. Roe declined to comment further without discussing with Evans. When contacted earlier in February, Evans declined to specifically address whether he lost money, saying, “I can’t speak on it, man.”

When reached by ESPN, Brunell, who was recently named the quarterbacks coach for the Detroit Lions, declined comment, repeating, “I am not talking about that.”

At least one player involved in the Storehouse investments, Brooks, received the NFL Walter Payton Man of the Year Award, which recognizes players for their off-field philanthropy and community impact. Miller was a nominee for the award in 2018.

Even the suggestion of players being unfamiliar with the investment and blindly trusting Feste is troubling to some. “This is targeting the most desperate people and setting them up to fail,” said Ann Baddour, a project director with Texas Appleseed and a former member of the Consumer Financial Protection Bureau’s Consumer Advisory Board. “I could see perhaps [investors] could argue they don’t know. Then, I think that is a very low level of accountability.”


UNLIKE ITS RULES for player agents, who are required to be NFLPA-approved before representing players, the union allows players to employ any financial adviser they want, even if that adviser is not registered with the union. During an annual review of registered financial advisers in May 2017, NFLPA investigators discovered that Feste hadn’t disclosed the civil lawsuit he filed on behalf of Storehouse against KJC Auto, among other violations of the union’s code of conduct.

The union ended up revoking Feste’s registration partly because of his failure to disclose the matter, according to a letter obtained by ESPN that NFLPA associate general counsel Ned Ehrlich sent to Feste. Feste initially admitted the failure to disclose but argued the lapse was minor and not worthy of suspension, a union official who asked not to be named told ESPN. When the NFLPA sought additional investigation into the Storehouse investment, Feste did not produce documents or travel for an interview, the official said.

Feste’s lawyer sent the union a draft lawsuit that claimed the suspension damaged his business. The union offered Feste $10,000 to end the matter, but the official said Feste never responded to the offer and never filed the lawsuit. Interviewed on a Christian podcast last year, Feste discussed crisis in his life and opened up about his battle with the NFLPA without directly naming the union. “I was in a battle with them,” Feste said. “It was one of those things — in my business reputation is everything. I built a reputation of trust with athletes and clients for 33 years. And spotless record. And this group was coming after me with nothing. It was affecting me and my business.

“My clients were my biggest advocates against the very organization that was saying things about me, which they were a part of. So, all that started moving into play. And watching God move in that — it was just supernatural.”

The union official said Feste also was skirting NFLPA guidelines, including one that requires promissory notes and other alternative investments come with a series of disclosures in advance of the investment. Feste might be required to shed more light on the investment going forward. According to an attorney who spoke to ESPN only on the condition of anonymity, Feste is the subject of a whistleblower complaint filed in late 2019 with the U.S. Securities and Exchange Commission, which accuses Feste of committing “multiple securities violations and fraud on his clients” in connection to Storehouse Lending. The complaint further alleges Feste failed to register more than $40 million of high-yield promissory notes, failed to disclose he was the owner of Storehouse and was therefore “materially conflicted” in the sale of the notes, and likened Feste’s actions to a Ponzi scheme, accusing him of having “fraudulently used payments due to some Promissory Note holders to pay off other ‘VIP CLIENT’ Promissory Note Holders.”

The attorney said his law practice filed the original complaint on behalf of a whistleblower who didn’t reveal his identity to the SEC. Realizing investigators wouldn’t have a means of following up with the whistleblower if they sought additional information, the attorney said his firm filed a duplicate complaint in its name and subsequently received a reference number from the SEC acknowledging receipt. ESPN reviewed the complaint as well as an automated response from the SEC confirming its receipt of the complaint.

The attorney said he has not heard from the SEC. There is no indication an investigation has begun, and an SEC spokesperson told ESPN the regulator doesn’t comment on whistleblower complaints.

Despite not being registered with the NFLPA, Feste continues advising some of the NFL’s marquee players through KM Capital, including Tagovailoa and Mahomes, who last July signed the most lucrative contract in NFL history: a 10-year extension deal reportedly worth up to $503 million. Mahomes and Tagovailoa, who were still in high school during most of Feste’s title loan arrangement and weren’t listed in court documents in the case, are both represented by player agent Leigh Steinberg. The California-based agent also had clients who were noteholders in the title loan venture, including Brunell and Dorsey. “Joey is one of the financial planners some of our guys use,” Steinberg said. “I don’t know much about the specifics.”

Steinberg said his agency doesn’t have an investment service and isn’t involved in players selecting a financial adviser. He said financial advisers actively recruit players, and that Feste was already part of Tua’s team before his agency landed the former Alabama star.

The union official said NFLPA investigators with concerns about Feste spoke directly to players and to agents who had clients using Feste as a financial adviser in 2017, but the union did not issue a general alert about its decision to decertify Feste. Why an alert wasn’t distributed remains unclear. When first approached by ESPN, the official insisted one had been issued in May 2017 but when pressed for a copy said it had only been drafted but never sent out. The official said alerts typically target financial advisers who are not registered in the union’s program, and Feste had been.

However, a review of NFLPA alerts revealed at least three issued in recent years for financial advisers who were part of the union’s registered program. Several years prior to the Feste case, the union distributed an alert on a financial adviser, Jinesh Brahmbhatt, who, like Feste, had declined to cooperate with an NFLPA investigation. In 2016, the union issued an alert about another adviser, Jonathan Schwartz, after his business dealings were the subject of a civil lawsuit, and a third adviser, Ash Narayan, was suspended after the SEC took action against him and others over their handling of client accounts.

Securities experts interviewed by ESPN noted other red flags in the Feste case. Chase Carlson, a securities litigator who has represented dozens of professional athletes, said financial advisers shouldn’t recommend investments — in Feste’s case, the Storehouse promissory notes — in which they also have a financial interest. “To the extent an adviser is going to hand over client assets, he needs to do a damn good job of making sure that it is a sound investment,” Carlson said.

Feste is also both the president and chief compliance officer of the financial advisory firm — KM Capital Management — that had clients invested in auto title loans. Thus, as the firm’s compliance officer, he essentially polices himself, Carlson said.

The Storehouse arrangement is indicative of unconventional financial instruments often offered to wealthy clients and athletes.

“Young athletes have supreme confidence, so they don’t think it will happen to them. But when the real money comes in, athletes are fish out of water,” said David Byrne, a former financial regulator at the Financial Industry Regulatory Authority (FINRA) who specializes in monitoring and auditing pro athletes’ finances. “They have no other option than to give their money to a financial adviser, many times who was recommended by their agent. And there’s no oversight by the athlete because he doesn’t know right from wrong in the financial world. It’s a total mess.”

The Storehouse promissory notes were never registered with the SEC or the Texas State Securities Board, according to spokespersons for both groups. FINRA, a government-authorized nonprofit that oversees broker dealers, cautions investors to be “wary of any pitch for a promissory note,” adding that unregistered promissory notes are not subject to regulatory review.



Source link

]]>
https://tinigard.info/nfl-players-investments-funded-controversial-high-interest-loans/feed/ 0
State-Supported “Clean Energy” Loans Are Putting Borrowers At Risk of Losing Their Homes — ProPublica https://tinigard.info/state-supported-clean-energy-loans-are-putting-borrowers-at-risk-of-losing-their-homes-propublica/ https://tinigard.info/state-supported-clean-energy-loans-are-putting-borrowers-at-risk-of-losing-their-homes-propublica/#respond Tue, 18 May 2021 06:40:24 +0000 https://tinigard.info/?p=583 ProPublica is a nonprofit newsroom that investigates abuses of power. Sign up to receive our biggest stories as soon as they’re published. Diana Thomas needed a new furnace and four small basement windows for her two-story home on the east side of Kansas City. But she had little cash and bad credit. In late 2016, […]]]>


Diana Thomas needed a new furnace and four small basement windows for her two-story home on the east side of Kansas City. But she had little cash and bad credit.

In late 2016, a contractor told her about a loan program that required no money down and would let her pay off the balance over time as part of her annual property tax bill. Her first payment wouldn’t be due until the end of the following year.

Thomas, 53, knew she was in trouble when she got her 2017 tax bill. With the loan payment, her taxes had soared from $247 to $1,465. “I was like, ‘Oh my God, what have I done?’” she said.

To pay off her loan of $10,792, including fees, Thomas agreed to 15 years of payments at an annual percentage rate of 10%, for a total of $18,200. That’s more than the value of her home — $16,226, according to the county’s appraisal — when she took the loan.

Since then, Thomas has missed four years of tax payments. Jackson County, where she lives, has placed a judgment against her and, if she cannot come up with three years of taxes, will sell the house in August at a public auction, taking the proceeds to settle the debt and leaving her with nothing.

Thomas is one of about 3,000 Missouri homeowners who have borrowed money through a program known as Property Assessed Clean Energy, which was touted by then-Vice President Joe Biden in 2009 as a way to help lift the country out of the Great Recession while lowering consumers’ utility bills and fighting climate change. Through the program, local governments could borrow money at low rates and make it available to borrowers for energy-saving home improvements, allowing them to pay it back in their property taxes.

But under the management of private companies, PACE programs in Missouri have charged high interest rates over terms of up to 20 years, using the government’s taxing power to collect loan payments through tax bills and enforce debts through liens. By marketing their programs to people who need urgent repairs but have few options for credit, they have disproportionately burdened some of the state’s most vulnerable homeowners, a ProPublica investigation has found.

More than 100 homes with PACE loans in metropolitan Kansas City and St. Louis are at risk of being sold at public auctions after their owners fell at least two years behind on payments, according to a ProPublica analysis. Of those homes, at least 29 are slated for sale at auction this year.

The analysis, which examined about 2,700 loans that were recorded in five counties with the state’s most active PACE programs, found that the loans have put a disproportionate burden on borrowers in predominantly Black neighborhoods. In those neighborhoods, 28% of borrowers are at least one year behind in repaying their PACE loans compared with 4% in mostly white areas. They’re also paying a larger share of their home value toward interest and fees — sometimes more than county appraisers say their homes are worth.

What’s more, the program has operated with little accountability. State law requires that PACE loans go only to people who can afford them and who will reap energy savings at least equal to the costs of the improvement. Yet local government officials tasked with overseeing the program said that they defer to private lenders to determine if those requirements are met, and are unaware of high delinquency rates.

And while the law authorizes PACE programs to do audits to ensure that borrowers save money on their energy costs, they are not required. Officials from PACE programs in the state’s two biggest metropolitan areas said audits are not typically done.

PACE officials and its lenders said that the program provides much-needed financing for home upgrades, particularly in predominantly Black neighborhoods where traditional lenders typically don’t do much business. They said their interest rates tend to be lower than those of some credit cards and of payday lenders, and that most borrowers make their payments.

The most prominent PACE lender in the St. Louis market, the Ygrene Energy Fund, said it has beefed up its standards by making sure borrowers paid previous property taxes on time and by using more conservative property valuations to underwrite loans. It said it has also reduced its delinquency rates since the program began making residential loans.

PACE was “designed to give affordable access to financing for critical property upgrades to those who may find it harder to get other types of financing,” the company said in a statement. “Given our work to date, we are delivering on the program’s mission.”

Jim Holtzman, the chair of the board that oversees Ygrene’s lending in St. Louis County, said the board depends on lenders to make sound loans and gives them wide latitude to operate. He said PACE is meeting its goal of providing financing for home improvements that help the environment.

“It’s like taking 400,000 cars off the street,” Holtzman said. “It’s just a great program for county homeowners.”

David Pickerill, executive director for the Missouri Clean Energy District, the leading PACE program in the Kansas City area, said its loans are crucial for homeowners who need to purchase a new furnace or air conditioning system during an emergency but do not have the cash on hand. It is, he said, “primarily a way to unleash unencumbered equity in a home to pay for energy conservation and renewable energy products.”

Tom Sadowski, president of the MCED board, said its PACE program has improved since it replaced its lender. That company, Renovate America, filed for bankruptcy protection last year after several lawsuits against it in California, site of the country’s first PACE program, which served as the model for Missouri.

Since 2016, PACE has expanded its residential loan program to some two dozen Missouri counties and the city of St. Louis, in spite of a backlash against the industry in California and in Florida, the only other states with large residential PACE programs. In Florida, the program is under investigation by the state attorney general. Ohio has just started to offer PACE to homeowners.

Missouri lawmakers are considering reforms, including a bill in the legislature that would require PACE’s residential loan programs to be examined by the state finance division at least every other year and that would establish penalties for violating the law. The legislation has passed out of the House and is under consideration in the Senate.

On Tuesday, Jackson County Executive Frank White Jr. vetoed a bill that would allow a second PACE program to operate there, saying in a statement he was troubled by ProPublica’s finding of “significant differences between how the program is impacting majority white and majority black areas” of the county.

That’s cold comfort for Thomas, who said she is looking for a lawyer to help her save her home. “I can’t just let them have my house,” she said. “They just can’t take my stuff from me like that.”

Desperate people taking on debt they can’t afford and putting their homes at risk was not what the originator of Missouri’s PACE law intended when she pushed lawmakers to enact the program in 2010.

Rosalind Williams, then the planning and development director in the St. Louis suburb of Ferguson, envisioned PACE as an affordable way to help homeowners restore property value lost in the Great Recession. She and other early supporters of PACE believed local governments would control the program.

But even before legislators passed the measure, entrepreneurs were trying to build businesses around it. Today, much of Missouri’s residential PACE market is run by competing groups of executives in charge of the two institutions that established control over the market early on: MCED and Ygrene.

MCED was the state’s first PACE district, a special governmental unit empowered by state law to sell bonds and file tax liens. Pickerill and John Harris, who both have a background in investment banking, persuaded officials in Jefferson City to create it in 2011. Then Harris got the state to give MCED a dot-gov internet domain name and email addresses. Today, Sadowski is the MCED board’s president, Pickerill the district’s executive director and Harris the finance director.

With Pickerill and Harris in control, MCED’s board then awarded a no-bid contract to run the district to a company the pair owned. That company, in turn, hired other companies to make the loans.

After establishing the Mid-Missouri Clean Energy Development Board, which does business as MCED, its finance director, John Harris, asked the state of Missouri’s IT department to provide a dot-gov domain name and email. The state agreed to the request eight months later.

Pickerill and Harris said they do not take salaries from MCED. Under their company’s contracts with the district and lenders, they have collected a percentage of every loan, which they estimated was about $300,000 in total. Through their company, MCED has issued at least $31 million in residential loans since 2016, ProPublica found. The company does not report its revenue to any public body in Missouri.

Pickerill and Harris said they qualified for a government domain name because “we are a political subdivision.”

“We laid the groundwork,” Pickerill said in an interview. “We got all the legal work done. We went out and recruited the municipal members. We put five years of work into this thing to get it going, all without compensation. And so, for that work, we feel like we’re entitled to some recovery of our costs and time.”

As MCED expanded to Jackson County, which includes most of Kansas City, and St. Charles County, in the far western suburbs of St. Louis, another pair of businessmen, Tom Appelbaum and Byron DeLear, started their own PACE company. That company eventually became dominant in the city of St. Louis and St. Louis County, which abuts the city.

Appelbaum and DeLear sold their company in 2017 to Ygrene Energy Fund. DeLear is now Ygrene’s managing director for the Midwest. Appelbaum is a lawyer for St. Louis County.

Today, MCED and Ygrene compete for market share across the state. In St. Louis County, where MCED’s reach has been limited, it has lobbied county legislators to allow it to expand. Ygrene, meanwhile, has moved into MCED’s stronghold in St. Charles County and is trying to enter the Kansas City region.

In an advisory ruling in February, the Missouri Ethics Commission said PACE districts must follow the same rules as other public bodies that hire contractors: They must solicit competitive bids and the lowest bid must be accepted. District officers can’t get paid by contractors they hired.

The commission has never ruled specifically on MCED’s relationship with Pickerill and Harris’ company, and the pair said they were unaware of the commission’s ruling. They said their dual roles as both directors of the district and owners of its primary contractor were completely appropriate and said it wasn’t necessary to put the work out for bid.

“That’s how it works,” Pickerill said. “If you’re on the board of an organization, and you have a group you hire that’s been running it up to your satisfaction, are you really going to put it out for bid?”

Five years after lenders began making residential PACE loans in Missouri, neither of the legislative sponsors is still in office. House sponsor Jason Holsman, a Democrat now on the state’s Public Service Commission, declined comment. The Senate sponsor, Joan Bray, a Democrat, said she didn’t anticipate the problems that have emerged. She said she initially hoped PACE loans would help borrowers make affordable energy-saving home improvements, and that regulators would provide meaningful oversight of the program.

“I didn’t envision this as being an opportunity for a private business to charge interest rates that would put people in a financial bind,” Bray, who is retired, said in an interview.

Section break: An illustration of a furnace.

For many borrowers saddled with PACE debts they couldn’t afford, the program seemed to offer a lifeline in an emergency. When the temperature dropped to near zero in the final days of 2017, and her furnace struggled to heat her 1,100-square-foot home in the St. Louis neighborhood of Walnut Park East, Joyce Piffins had few options. She called a contractor, who told her she could finance a new heating and cooling system through a bank loan if she had good credit. If not, the contractor said, she could use the city’s PACE provider, Ygrene. A home health aide earning $11.50 per hour, Piffins had poor credit and past bankruptcies. She went with PACE.

The contractor priced the project at $11,491. Piffins, 57, agreed to pay $1,658 a year for 15 years at an APR of 12%. By the time she pays off the loan, she will have paid $24,870, including $13,379 in interest and fees. That’s considerably more than the $8,421 the city appraiser said her home was worth when she took out the loan.

Her extremely low home value was a big reason she had to turn to PACE: Few banks would have been willing to lend to her, as even basic repairs would consume a significant portion of her equity. That lack of access to credit, common in Black neighborhoods north of Delmar Boulevard in St. Louis, is partly what drew city policymakers to PACE. Otis Williams, who leads the city’s economic development agency and is secretary of its PACE board, said the program helps “get things done in a marketplace where investors are shy to invest.”

Though Piffins now can heat her home, she might lose it.

After making her first tax payment, she has fallen two years behind. If she misses a third annual payment, the city of St. Louis can list her property for sale at auction. St. Louis County and Jackson County use the same three-year cutoff, while St. Charles County can list tax-delinquent property for sale after two years.

“I didn’t feel like I had a choice,” Piffins said. “I didn’t have money right then to pay for a new furnace, and it was cold.”

PACE lenders tout their product as fair because they charge similar interest rates and fees to almost every borrower — typically around 10% APR, according to ProPublica’s analysis. In fact, that consistency places a heavy burden on neighborhoods with low property values. Because of long-standing residential segregation, those at-risk borrowers are overwhelmingly Black.

Missouri’s PACE Loans Have Burdened Some Black Neighborhoods

Interest and fees pile up for borrowers in segregated communities with low home values.

County property records, U.S. Census.


Credit:
Haru Coryne/ProPublica

Ygrene challenged ProPublica’s use of local government appraisals to measure the cost burden of its loans. The company relies on a private appraiser, whose property valuations tend to be higher than government valuations. Ygrene would not provide the data it used when underwriting Piffins’ loan, but said it will not lend more than 15% of a property’s fair market value, suggesting it had her home appraised at almost $60,000 — a value even Piffins believes is too high. MCED’s standard is 20% of fair market value.

Shawn Ordway, deputy assessor for the city of St. Louis, said that his office uses comparable neighborhood sales to appraise homes and is usually accurate within 10% of market value. Low values for some properties in St. Louis are based on low sales prices for other similar homes nearby, he said.

The assessor for St. Louis County, Jake Zimmerman, acknowledged that government valuations are occasionally wrong, but he questioned how a private company could appraise homes at many times their estimated value.

“That person is either smoking something, hiding something or lying about something,” he said.

Whether or not Piffins’ low home value reflects how much she could sell it for, she is still stuck with a loan she can’t afford, which she signed only because she lacked other options. Andre Perry, who studies racial inequality in home values at the nonprofit Brookings Institution, said that’s not the sign of a good program.

“If that product is going to put you further in a hole, then it’s really not doing the homeowner a service,” Perry said. “We actually need grants of that sort. Not loans based on interest rates where we don’t necessarily know the proper assessment.”

Accurate appraisals are critical for PACE programs because lenders rely on home equity to screen applicants more than credit scores or income. Steve Sharpe, a staff attorney with the National Consumer Law Center who has studied PACE lending, said equity isn’t always a reliable indicator of whether borrowers can pay back a loan.

“Ability to repay has to be about whether a person with a set level of income can afford this particular loan,” he said.

For more affluent borrowers, PACE has been a fast, convenient source of financing for energy-related home improvements. High property values tend to give those borrowers more financial flexibility to manage the loans. Consequently, the resulting debt is less of a burden.

Jason Osborn used PACE when the air conditioning system in his 2,500-square-foot house died in the summer of 2018. He saw that the program promised fast installation and required no money down, so he took out a loan for about $10,300 from Renovate America, which was making the loans for MCED, though its interest rate was higher than other options. He intended to keep his costs low by paying off the loan quickly.

“I knew I wasn’t going to hold this loan for the duration,” said Osborn, who owns a truck and crane company.

Last year, Osborn sold his house in the prosperous, majority-white Kansas City suburb of Lee’s Summit for $325,000 and paid off the PACE loan. In the end, the interest and fees he paid on the loan were a small fraction of the value of his home.

Piffins has almost no chance of settling her debt so easily. She could sell her house, but at its current market value she would have to use most of the money from the sale to pay off the loan. If she holds on to the property, she faces years of pricey payments. She could prepay part of the loan and shorten her term, but she’d need to come up with at least $2,500, as Ygrene and Renovate America require.

Ygrene and MCED both declined to comment on specific loans. Ygrene said in its statement that it does not discriminate in its pricing. MCED said it no longer had access to the valuations used by Renovate America but, like Ygrene, said the public appraisals used in ProPublica’s analysis were too low. Renovate America officials did not respond to requests for comment.

Section break: An illustration of a doorway.

Julie Tracy didn’t like what she was hearing. The tax collector from Worth County, a rural county in northwest Missouri, was in the audience at the annual state tax collectors’ convention in 2016 when executives from the PACE industry made a presentation.

The lenders were gearing up to begin making residential loans after launching the program with a focus on commercial property. Since homeowner loans would be repaid through property tax bills, some county collectors worried that borrowers would fall behind and default. If that happened, the collectors would have to sell borrowers’ homes at public auctions.

Tracy told the PACE executives sitting on stage that day that she thought it was fundamentally wrong for private lenders to use the government to collect debts, according to video from the event.

“I don’t want to do your dirty work for you,” she told the executives.

Steve Holt, then the collector in Jasper County, in southwest Missouri, chimed in. He predicted that PACE loans in his rural county would make the number of delinquent tax accounts go “sky high.”

“I don’t think it’s right,” he said.

John Maslowski, then an executive with MCED’s lender, Renovate America, tried to put the tax collectors at ease. The delinquency rates on PACE loans were minuscule, he said: just four-tenths of 1% in California. And he tried to clear up what he said was a misconception about the program — that the collectors worked for the lenders.

“That is not true,” said Maslowski, who has since left the company. The loans, he said, “are being made on behalf of the Missouri Clean Energy District.”

He also addressed questions about interest rates; some of the collectors were concerned they’d be too high. Maslowski said they would be between roughly 6% and 9% and wouldn’t change.

What’s more, he said, consumer protections were “the cornerstone” of his company’s product. Another Renovate representative explained how the system hinged on the fact that people tend to pay their property taxes, so folding the loan payments into property tax bills improved the likelihood of repayment. Bonds built from bad loans wouldn’t make good investments, the representative said.

Instead of easing their concerns, the meeting left many tax collectors ready to fight. Michelle McBride, the tax collector from the state’s third most populous county, St. Charles County, returned home from the conference determined to lobby the county council to bar PACE from operating there.

McBride disagreed with Renovate’s characterization of PACE as a government program. Rather, she saw it as a group of businesspeople who had figured out how to profit from the government’s power to issue bonds and collect taxes.

“It’s an appearance of a government entity,” she said in an interview. “In my opinion, it is only providing what, historically, a private industry would have done — basically, a loan company, which is not a government undertaking.”

But PACE wasn’t walking away. Renovate hired a lobbyist, Tom Dempsey, to persuade the St. Charles County Council to join MCED. Dempsey had resigned a year earlier as president pro tem of the Missouri Senate, and County Council members knew him well. With his involvement, the council enrolled in PACE that November.

Other tax collectors tried to keep PACE out of their counties. The Clay County collector, Lydia McEvoy, refused to collect PACE loans until the state appellate court in 2018 affirmed a ruling ordering her to do so. Larry Vincent, the Cole County collector, and Leah Betts, then the Greene County collector, helped persuade officials in their counties to drop their involvement in PACE. Other small counties followed suit.

Vincent said that before Cole County withdrew from MCED in 2017, he served as the county’s liaison to the board. He said he found that board members were reluctant to exercise any oversight.

“Once I got uninvolved with it,” he said, “I tried to stay as far away from it as I could.”

Section break: An illustration of a window.

State law requires the boards that oversee PACE lending to approve loans only for people who can afford them and to ensure that the estimated energy savings from each project are at least equal to its cost. But board members said they rely on their lenders to make those determinations.

MCED said it approves about two thirds of its applicants; Ygrene did not provide its approval rate, but it said in a 2019 meeting with St. Louis County board members that it approved about half of its applicants, minutes show.

With little oversight, lenders and contractors have sometimes acted in ways that are not in the best interests of borrowers, and with few repercussions. Some borrowers said in interviews that they didn’t understand what they were signing or didn’t grasp how the loans would affect their property taxes, but signed anyway.

And while some borrowers said they saw energy savings as a result of the work, others did not.

The districts and their lenders said they screen contractors to ensure they’re qualified. They say they only pay a contractor after the borrower has signed off on the completion of the work, and provide clear information up front about payment terms. They measure energy savings by the efficiency of the improvement, not what the borrower pays for the work, and said it’s up to the borrower to negotiate a price with the contractor.

But in St. Louis, an elderly widow said she had no idea she had taken on thousands of dollars in PACE debt, though she saw her property taxes rise sharply. A disabled couple in the Kansas City suburb of Raytown said they weren’t told of the impact on their property taxes; now they’re two years behind on their property taxes.

A Vietnam veteran and his wife in Kansas City are struggling to pay off a $21,658 loan for a solar panel array despite being enrolled in an energy assistance program; they said they just wanted to do something good for the environment.

In perhaps one of the most financially extreme cases, a PACE borrower in St. Louis County agreed to pay more than six times the value of his home to finance the purchase of a furnace through Ygrene.

Wasim Aziz’s 730-square-foot bungalow in the St. Louis County municipality of Wellston had no connection to gas, electricity or water and was in desperate need of other repairs. Zimmerman, the county assessor, recently described it as being in unsound condition, meaning it’s “practically unfit for use,” according to the assessor’s handbook. Its appraised value at the time was $3,900.

In early 2019, Aziz, a 63-year-old semi-retired union bricklayer, attended a fair organized by a local political leader for people interested in buying and renovating vacant properties. The goal was to connect them with contractors and lenders that came with a government stamp of approval.

Aziz, who acquired his house from a family member after spending time in prison on drug and theft convictions, wanted to fix it up. He grabbed a contractor’s flyer saying financing was available from Ygrene and called the number. When a contractor showed up at his house, Aziz said, he gave Aziz a form to sign to start the job. The contractor hauled in a furnace and connected it to the house’s ductwork.

Aziz assumed, perhaps mistakenly, that the contractor would help him get utility service restored to the house so the furnace would work. The contractor didn’t and, two years later, Aziz continues to live in a house without utilities.

“Nothing is connected,” Aziz said. “I can’t use electric. I can’t use nothing. I don’t even have a thermostat in the house.”

Wasim Aziz hired a contractor to install a furnace at his home in St. Louis County. If he pays off his PACE loan, he will pay more than six times his 2019 home value. He is two years behind on his property taxes.


Credit:
Whitney Curtis, special to ProPublica

The project cost $9,385. If Aziz makes every payment on his loan, he will pay almost $25,000 for the project over 20 years. He is two years behind on his taxes.

Holtzman, the county PACE board chairman who signed off on Aziz’s loan, said he and the other two volunteer board members don’t ask many questions of Ygrene. He does not keep track of delinquency rates in the county but was not surprised that they were so high, particularly in the county’s majority-Black 1st Council District, which includes Wellston.

“It’s not my responsibility to go hunt down that information,” he said.

Sadowski, the MCED chair, said his board also did not get involved with specific projects, allowing Renovate America to handle every aspect of the loans. He acknowledged that the company, which is no longer the district’s lender, sometimes did a poor job. Renovate America officials did not respond to a request for comment.

Sadowski said he did not know that the law requires that homeowners save as much in energy costs over the life of the loan as what they spent on the project. He said the program is upfront about interest rates.

“Apparently,” he said, borrowers “thought it was a good deal to do this.”

Section break: An illustration of a solar panel.

The official whose job it is to sell tax delinquent property in St. Louis is the city’s sheriff, Vernon Betts. A lifelong city resident, he has seen the value of homes plummet since he grew up in the O’Fallon neighborhood.

On some blocks, many homes have been abandoned. Even more have been demolished. That leaves property owners with a tough choice: either walk away or stick with a difficult investment.

“When the houses are falling down,” Betts said, “it’s going to cost you more to keep them up then it would to just let them go.”

A few blocks from where Betts grew up, one homeowner has decided to invest in her property. She is using a PACE loan, which has meant committing to pay many times what her home is worth.

V Esther Boose, 78, borrowed nearly $31,000 for a new roof, windows and siding on a home she bought in 1985 with her late husband. Though she has used it as a rental property, it’s now vacant. By the time Boose repays the loan, she’ll be 96. And on top of the cost of the work itself, Boose will have paid about $46,000 in interest and fees, more than 12 times the value of the house when she took out the loan.

Even after those repairs, the house still needs work. Squirrels come and go through the rotted soffits. The foundation has a crack, there’s no furnace and the pipe fittings have been stolen. The kitchen floor sags.

She was late with part of her first PACE payment, in 2019, but paid on time last year.

“The Lord has gifted me with the ability to come up with the payment at the end of every year,” she said. “I’m doing the best I can.”

Betts questioned whether PACE was helping the neighborhood.

“Now she’s in more debt,” Betts said, “and if she does continue to get deeper and deeper in debt messing around with this house, what do we do?”

ProPublica data reporter Irena Hwang reviewed the code and analysis.

Illustrated section breaks by Dawline-Jane Oni-Eseleh for ProPublica.



Source link

]]>
https://tinigard.info/state-supported-clean-energy-loans-are-putting-borrowers-at-risk-of-losing-their-homes-propublica/feed/ 0
“Clean energy” loans put borrowers at risk of losing their homes https://tinigard.info/clean-energy-loans-put-borrowers-at-risk-of-losing-their-homes/ https://tinigard.info/clean-energy-loans-put-borrowers-at-risk-of-losing-their-homes/#respond Tue, 18 May 2021 06:36:02 +0000 https://tinigard.info/?p=577 This story was originally published by ProPublica, the St. Louis Dispatch, and the Kansas City Star. Diana Thomas needed a new furnace and four small basement windows for her two-story home on the east side of Kansas City. But she had little cash and bad credit. In late 2016, a contractor told her about a […]]]>



This story was originally published by ProPublica, the St. Louis Dispatch, and the Kansas City Star.


Diana Thomas needed a new furnace and four small basement windows for her two-story home on the east side of Kansas City. But she had little cash and bad credit.

In late 2016, a contractor told her about a loan program that required no money down and would let her pay off the balance over time as part of her annual property tax bill. Her first payment wouldn’t be due until the end of the following year.

Thomas, 53, knew she was in trouble when she got her 2017 tax bill. With the loan payment, her taxes had soared from $247 to $1,465. “I was like, ‘Oh my God, what have I done?’” she said.

To pay off her loan of $10,792, including fees, Thomas agreed to 15 years of payments at an annual percentage rate of 10%, for a total of $18,200. That’s more than the value of her home — $16,226, according to the county’s appraisal — when she took the loan.

Since then, Thomas has missed four years of tax payments. Jackson County, where she lives, has placed a judgment against her and, if she cannot come up with three years of taxes, will sell the house in August at a public auction, taking the proceeds to settle the debt and leaving her with nothing.

Thomas is one of about 3,000 Missouri homeowners who have borrowed money through a program known as Property Assessed Clean Energy, which was touted by then-Vice President Joe Biden in 2009 as a way to help lift the country out of the Great Recession while lowering consumers’ utility bills and fighting climate change. Through the program, local governments could borrow money at low rates and make it available to borrowers for energy-saving home improvements, allowing them to pay it back in their property taxes.

But under the management of private companies, PACE programs in Missouri have charged high interest rates over terms of up to 20 years, using the government’s taxing power to collect loan payments through tax bills and enforce debts through liens. By marketing their programs to people who need urgent repairs but have few options for credit, they have disproportionately burdened some of the state’s most vulnerable homeowners, a ProPublica investigation has found.

More than 100 homes with PACE loans in metropolitan Kansas City and St. Louis are at risk of being sold at public auctions after their owners fell at least two years behind on payments, according to a ProPublica analysis. Of those homes, at least 29 are slated for sale at auction this year.

The analysis, which examined about 2,700 loans that were recorded in five counties with the state’s most active PACE programs, found that the loans have put a disproportionate burden on borrowers in predominantly Black neighborhoods. In those neighborhoods, 28% of borrowers are at least one year behind in repaying their PACE loans compared with 4% in mostly white areas. They’re also paying a larger share of their home value toward interest and fees — sometimes more than county appraisers say their homes are worth.

What’s more, the program has operated with little accountability. State law requires that PACE loans go only to people who can afford them and who will reap energy savings at least equal to the costs of the improvement. Yet local government officials tasked with overseeing the program said that they defer to private lenders to determine if those requirements are met, and are unaware of high delinquency rates.

And while the law authorizes PACE programs to do audits to ensure that borrowers save money on their energy costs, they are not required. Officials from PACE programs in the state’s two biggest metropolitan areas said audits are not typically done.

PACE officials and its lenders said that the program provides much-needed financing for home upgrades, particularly in predominantly Black neighborhoods where traditional lenders typically don’t do much business. They said their interest rates tend to be lower than those of some credit cards and of payday lenders, and that most borrowers make their payments.

The most prominent PACE lender in the St. Louis market, the Ygrene Energy Fund, said it has beefed up its standards by making sure borrowers paid previous property taxes on time and by using more conservative property valuations to underwrite loans. It said it has also reduced its delinquency rates since the program began making residential loans.

PACE was “designed to give affordable access to financing for critical property upgrades to those who may find it harder to get other types of financing,” the company said in a statement. “Given our work to date, we are delivering on the program’s mission.”

Jim Holtzman, the chair of the board that oversees Ygrene’s lending in St. Louis County, said the board depends on lenders to make sound loans and gives them wide latitude to operate. He said PACE is meeting its goal of providing financing for home improvements that help the environment.

“It’s like taking 400,000 cars off the street,” Holtzman said. “It’s just a great program for county homeowners.”

David Pickerill, executive director for the Missouri Clean Energy District, the leading PACE program in the Kansas City area, said its loans are crucial for homeowners who need to purchase a new furnace or air conditioning system during an emergency but do not have the cash on hand. It is, he said, “primarily a way to unleash unencumbered equity in a home to pay for energy conservation and renewable energy products.”

Tom Sadowski, president of the MCED board, said its PACE program has improved since it replaced its lender. That company, Renovate America, filed for bankruptcy protection last year after several lawsuits against it in California, site of the country’s first PACE program, which served as the model for Missouri.

Since 2016, PACE has expanded its residential loan program to some two dozen Missouri counties and the city of St. Louis, in spite of a backlash against the industry in California and in Florida, the only other states with large residential PACE programs. In Florida, the program is under investigation by the state attorney general. Ohio has just started to offer PACE to homeowners.

Missouri lawmakers are considering reforms, including a bill in the legislature that would require PACE’s residential loan programs to be examined by the state finance division at least every other year and that would establish penalties for violating the law. The legislation has passed out of the House and is under consideration in the Senate.

On Tuesday, Jackson County Executive Frank White Jr. vetoed a bill that would allow a second PACE program to operate there, saying in a statement he was troubled by ProPublica’s finding of “significant differences between how the program is impacting majority white and majority black areas” of the county.

That’s cold comfort for Thomas, who said she is looking for a lawyer to help her save her home. “I can’t just let them have my house,” she said. “They just can’t take my stuff from me like that.”

Desperate people taking on debt they can’t afford and putting their homes at risk was not what the originator of Missouri’s PACE law intended when she pushed lawmakers to enact the program in 2010.

Rosalind Williams, then the planning and development director in the St. Louis suburb of Ferguson, envisioned PACE as an affordable way to help homeowners restore property value lost in the Great Recession. She and other early supporters of PACE believed local governments would control the program.

But even before legislators passed the measure, entrepreneurs were trying to build businesses around it. Today, much of Missouri’s residential PACE market is run by competing groups of executives in charge of the two institutions that established control over the market early on: MCED and Ygrene.

MCED was the state’s first PACE district, a special governmental unit empowered by state law to sell bonds and file tax liens. Pickerill and John Harris, who both have a background in investment banking, persuaded officials in Jefferson City to create it in 2011. Then Harris got the state to give MCED a dot-gov internet domain name and email addresses. Today, Sadowski is the MCED board’s president, Pickerill the district’s executive director and Harris the finance director.

With Pickerill and Harris in control, MCED’s board then awarded a no-bid contract to run the district to a company the pair owned. That company, in turn, hired other companies to make the loans.

Pickerill and Harris said they do not take salaries from MCED. Under their company’s contracts with the district and lenders, they have collected a percentage of every loan, which they estimated was about $300,000 in total. Through their company, MCED has issued at least $31 million in residential loans since 2016, ProPublica found. The company does not report its revenue to any public body in Missouri.

Pickerill and Harris said they qualified for a government domain name because “we are a political subdivision.”

“We laid the groundwork,” Pickerill said in an interview. “We got all the legal work done. We went out and recruited the municipal members. We put five years of work into this thing to get it going, all without compensation. And so, for that work, we feel like we’re entitled to some recovery of our costs and time.”

As MCED expanded to Jackson County, which includes most of Kansas City, and St. Charles County, in the far western suburbs of St. Louis, another pair of businessmen, Tom Appelbaum and Byron DeLear, started their own PACE company. That company eventually became dominant in the city of St. Louis and St. Louis County, which abuts the city.

Appelbaum and DeLear sold their company in 2017 to Ygrene Energy Fund. DeLear is now Ygrene’s managing director for the Midwest. Appelbaum is a lawyer for St. Louis County.

Today, MCED and Ygrene compete for market share across the state. In St. Louis County, where MCED’s reach has been limited, it has lobbied county legislators to allow it to expand. Ygrene, meanwhile, has moved into MCED’s stronghold in St. Charles County and is trying to enter the Kansas City region.

In an advisory ruling in February, the Missouri Ethics Commission said PACE districts must follow the same rules as other public bodies that hire contractors: They must solicit competitive bids and the lowest bid must be accepted. District officers can’t get paid by contractors they hired.

The commission has never ruled specifically on MCED’s relationship with Pickerill and Harris’ company, and the pair said they were unaware of the commission’s ruling. They said their dual roles as both directors of the district and owners of its primary contractor were completely appropriate and said it wasn’t necessary to put the work out for bid.

“That’s how it works,” Pickerill said. “If you’re on the board of an organization, and you have a group you hire that’s been running it up to your satisfaction, are you really going to put it out for bid?”

Five years after lenders began making residential PACE loans in Missouri, neither of the legislative sponsors is still in office. House sponsor Jason Holsman, a Democrat now on the state’s Public Service Commission, declined comment. The Senate sponsor, Joan Bray, a Democrat, said she didn’t anticipate the problems that have emerged. She said she initially hoped PACE loans would help borrowers make affordable energy-saving home improvements, and that regulators would provide meaningful oversight of the program.

“I didn’t envision this as being an opportunity for a private business to charge interest rates that would put people in a financial bind,” Bray, who is retired, said in an interview.

For many borrowers saddled with PACE debts they couldn’t afford, the program seemed to offer a lifeline in an emergency. When the temperature dropped to near zero in the final days of 2017, and her furnace struggled to heat her 1,100-square-foot home in the St. Louis neighborhood of Walnut Park East, Joyce Piffins had few options. She called a contractor, who told her she could finance a new heating and cooling system through a bank loan if she had good credit. If not, the contractor said, she could use the city’s PACE provider, Ygrene. A home health aide earning $11.50 per hour, Piffins had poor credit and past bankruptcies. She went with PACE.

The contractor priced the project at $11,491. Piffins, 57, agreed to pay $1,658 a year for 15 years at an APR of 12%. By the time she pays off the loan, she will have paid $24,870, including $13,379 in interest and fees. That’s considerably more than the $8,421 the city appraiser said her home was worth when she took out the loan.

Her extremely low home value was a big reason she had to turn to PACE: Few banks would have been willing to lend to her, as even basic repairs would consume a significant portion of her equity. That lack of access to credit, common in Black neighborhoods north of Delmar Boulevard in St. Louis, is partly what drew city policymakers to PACE. Otis Williams, who leads the city’s economic development agency and is secretary of its PACE board, said the program helps “get things done in a marketplace where investors are shy to invest.”

Though Piffins now can heat her home, she might lose it.

After making her first tax payment, she has fallen two years behind. If she misses a third annual payment, the city of St. Louis can list her property for sale at auction. St. Louis County and Jackson County use the same three-year cutoff, while St. Charles County can list tax-delinquent property for sale after two years.

“I didn’t feel like I had a choice,” Piffins said. “I didn’t have money right then to pay for a new furnace, and it was cold.”

PACE lenders tout their product as fair because they charge similar interest rates and fees to almost every borrower — typically around 10% APR, according to ProPublica’s analysis. In fact, that consistency places a heavy burden on neighborhoods with low property values. Because of long-standing residential segregation, those at-risk borrowers are overwhelmingly Black.

Ygrene challenged ProPublica’s use of local government appraisals to measure the cost burden of its loans. The company relies on a private appraiser, whose property valuations tend to be higher than government valuations. Ygrene would not provide the data it used when underwriting Piffins’ loan, but said it will not lend more than 15% of a property’s fair market value, suggesting it had her home appraised at almost $60,000 — a value even Piffins believes is too high. MCED’s standard is 20% of fair market value.

Shawn Ordway, deputy assessor for the city of St. Louis, said that his office uses comparable neighborhood sales to appraise homes and is usually accurate within 10% of market value. Low values for some properties in St. Louis are based on low sales prices for other similar homes nearby, he said.

The assessor for St. Louis County, Jake Zimmerman, acknowledged that government valuations are occasionally wrong, but he questioned how a private company could appraise homes at many times their estimated value.

“That person is either smoking something, hiding something or lying about something,” he said.

Whether or not Piffins’ low home value reflects how much she could sell it for, she is still stuck with a loan she can’t afford, which she signed only because she lacked other options. Andre Perry, who studies racial inequality in home values at the nonprofit Brookings Institution, said that’s not the sign of a good program.

“If that product is going to put you further in a hole, then it’s really not doing the homeowner a service,” Perry said. “We actually need grants of that sort. Not loans based on interest rates where we don’t necessarily know the proper assessment.”

Accurate appraisals are critical for PACE programs because lenders rely on home equity to screen applicants more than credit scores or income. Steve Sharpe, a staff attorney with the National Consumer Law Center who has studied PACE lending, said equity isn’t always a reliable indicator of whether borrowers can pay back a loan.

“Ability to repay has to be about whether a person with a set level of income can afford this particular loan,” he said.

For more affluent borrowers, PACE has been a fast, convenient source of financing for energy-related home improvements. High property values tend to give those borrowers more financial flexibility to manage the loans. Consequently, the resulting debt is less of a burden.

Jason Osborn used PACE when the air conditioning system in his 2,500-square-foot house died in the summer of 2018. He saw that the program promised fast installation and required no money down, so he took out a loan for about $10,300 from Renovate America, which was making the loans for MCED, though its interest rate was higher than other options. He intended to keep his costs low by paying off the loan quickly.

“I knew I wasn’t going to hold this loan for the duration,” said Osborn, who owns a truck and crane company.

Last year, Osborn sold his house in the prosperous, majority-white Kansas City suburb of Lee’s Summit for $325,000 and paid off the PACE loan. In the end, the interest and fees he paid on the loan were a small fraction of the value of his home.

Piffins has almost no chance of settling her debt so easily. She could sell her house, but at its current market value she would have to use most of the money from the sale to pay off the loan. If she holds on to the property, she faces years of pricey payments. She could prepay part of the loan and shorten her term, but she’d need to come up with at least $2,500, as Ygrene and Renovate America require.

Ygrene and MCED both declined to comment on specific loans. Ygrene said in its statement that it does not discriminate in its pricing. MCED said it no longer had access to the valuations used by Renovate America but, like Ygrene, said the public appraisals used in ProPublica’s analysis were too low. Renovate America officials did not respond to requests for comment.

Julie Tracy didn’t like what she was hearing. The tax collector from Worth County, a rural county in northwest Missouri, was in the audience at the annual state tax collectors’ convention in 2016 when executives from the PACE industry made a presentation.

The lenders were gearing up to begin making residential loans after launching the program with a focus on commercial property. Since homeowner loans would be repaid through property tax bills, some county collectors worried that borrowers would fall behind and default. If that happened, the collectors would have to sell borrowers’ homes at public auctions.

Tracy told the PACE executives sitting on stage that day that she thought it was fundamentally wrong for private lenders to use the government to collect debts, according to video from the event.

“I don’t want to do your dirty work for you,” she told the executives.

Steve Holt, then the collector in Jasper County, in southwest Missouri, chimed in. He predicted that PACE loans in his rural county would make the number of delinquent tax accounts go “sky high.”

“I don’t think it’s right,” he said.

John Maslowski, then an executive with MCED’s lender, Renovate America, tried to put the tax collectors at ease. The delinquency rates on PACE loans were minuscule, he said: just four-tenths of 1% in California. And he tried to clear up what he said was a misconception about the program — that the collectors worked for the lenders.

“That is not true,” said Maslowski, who has since left the company. The loans, he said, “are being made on behalf of the Missouri Clean Energy District.”

He also addressed questions about interest rates; some of the collectors were concerned they’d be too high. Maslowski said they would be between roughly 6% and 9% and wouldn’t change.

What’s more, he said, consumer protections were “the cornerstone” of his company’s product. Another Renovate representative explained how the system hinged on the fact that people tend to pay their property taxes, so folding the loan payments into property tax bills improved the likelihood of repayment. Bonds built from bad loans wouldn’t make good investments, the representative said.

Instead of easing their concerns, the meeting left many tax collectors ready to fight. Michelle McBride, the tax collector from the state’s third most populous county, St. Charles County, returned home from the conference determined to lobby the county council to bar PACE from operating there.

McBride disagreed with Renovate’s characterization of PACE as a government program. Rather, she saw it as a group of businesspeople who had figured out how to profit from the government’s power to issue bonds and collect taxes.

“It’s an appearance of a government entity,” she said in an interview. “In my opinion, it is only providing what, historically, a private industry would have done — basically, a loan company, which is not a government undertaking.”

But PACE wasn’t walking away. Renovate hired a lobbyist, Tom Dempsey, to persuade the St. Charles County Council to join MCED. Dempsey had resigned a year earlier as president pro tem of the Missouri Senate, and County Council members knew him well. With his involvement, the council enrolled in PACE that November.

Other tax collectors tried to keep PACE out of their counties. The Clay County collector, Lydia McEvoy, refused to collect PACE loans until the state appellate court in 2018 affirmed a ruling ordering her to do so. Larry Vincent, the Cole County collector, and Leah Betts, then the Greene County collector, helped persuade officials in their counties to drop their involvement in PACE. Other small counties followed suit.

Vincent said that before Cole County withdrew from MCED in 2017, he served as the county’s liaison to the board. He said he found that board members were reluctant to exercise any oversight.

“Once I got uninvolved with it,” he said, “I tried to stay as far away from it as I could.”

State law requires the boards that oversee PACE lending to approve loans only for people who can afford them and to ensure that the estimated energy savings from each project are at least equal to its cost. But board members said they rely on their lenders to make those determinations.

MCED said it approves about two thirds of its applicants; Ygrene did not provide its approval rate, but it said in a 2019 meeting with St. Louis County board members that it approved about half of its applicants, minutes show.

With little oversight, lenders and contractors have sometimes acted in ways that are not in the best interests of borrowers, and with few repercussions. Some borrowers said in interviews that they didn’t understand what they were signing or didn’t grasp how the loans would affect their property taxes, but signed anyway.

And while some borrowers said they saw energy savings as a result of the work, others did not.

The districts and their lenders said they screen contractors to ensure they’re qualified. They say they only pay a contractor after the borrower has signed off on the completion of the work, and provide clear information up front about payment terms. They measure energy savings by the efficiency of the improvement, not what the borrower pays for the work, and said it’s up to the borrower to negotiate a price with the contractor.

But in St. Louis, an elderly widow said she had no idea she had taken on thousands of dollars in PACE debt, though she saw her property taxes rise sharply. A disabled couple in the Kansas City suburb of Raytown said they weren’t told of the impact on their property taxes; now they’re two years behind on their property taxes.

A Vietnam veteran and his wife in Kansas City are struggling to pay off a $21,658 loan for a solar panel array despite being enrolled in an energy assistance program; they said they just wanted to do something good for the environment.

In perhaps one of the most financially extreme cases, a PACE borrower in St. Louis County agreed to pay more than six times the value of his home to finance the purchase of a furnace through Ygrene.

Wasim Aziz’s 730-square-foot bungalow in the St. Louis County municipality of Wellston had no connection to gas, electricity or water and was in desperate need of other repairs. Zimmerman, the county assessor, recently described it as being in unsound condition, meaning it’s “practically unfit for use,” according to the assessor’s handbook. Its appraised value at the time was $3,900.

In early 2019, Aziz, a 63-year-old semi-retired union bricklayer, attended a fair organized by a local political leader for people interested in buying and renovating vacant properties. The goal was to connect them with contractors and lenders that came with a government stamp of approval.

Aziz, who acquired his house from a family member after spending time in prison on drug and theft convictions, wanted to fix it up. He grabbed a contractor’s flyer saying financing was available from Ygrene and called the number. When a contractor showed up at his house, Aziz said, he gave Aziz a form to sign to start the job. The contractor hauled in a furnace and connected it to the house’s ductwork.

Aziz assumed, perhaps mistakenly, that the contractor would help him get utility service restored to the house so the furnace would work. The contractor didn’t and, two years later, Aziz continues to live in a house without utilities.

“Nothing is connected,” Aziz said. “I can’t use electric. I can’t use nothing. I don’t even have a thermostat in the house.”

The project cost $9,385. If Aziz makes every payment on his loan, he will pay almost $25,000 for the project over 20 years. He is two years behind on his taxes.

Holtzman, the county PACE board chairman who signed off on Aziz’s loan, said he and the other two volunteer board members don’t ask many questions of Ygrene. He does not keep track of delinquency rates in the county but was not surprised that they were so high, particularly in the county’s majority-Black 1st Council District, which includes Wellston.

“It’s not my responsibility to go hunt down that information,” he said.

Sadowski, the MCED chair, said his board also did not get involved with specific projects, allowing Renovate America to handle every aspect of the loans. He acknowledged that the company, which is no longer the district’s lender, sometimes did a poor job. Renovate America officials did not respond to a request for comment.

Sadowski said he did not know that the law requires that homeowners save as much in energy costs over the life of the loan as what they spent on the project. He said the program is upfront about interest rates.

“Apparently,” he said, borrowers “thought it was a good deal to do this.”

The official whose job it is to sell tax delinquent property in St. Louis is the city’s sheriff, Vernon Betts. A lifelong city resident, he has seen the value of homes plummet since he grew up in the O’Fallon neighborhood.

On some blocks, many homes have been abandoned. Even more have been demolished. That leaves property owners with a tough choice: either walk away or stick with a difficult investment.

“When the houses are falling down,” Betts said, “it’s going to cost you more to keep them up then it would to just let them go.”

A few blocks from where Betts grew up, one homeowner has decided to invest in her property. She is using a PACE loan, which has meant committing to pay many times what her home is worth.

V Esther Boose, 78, borrowed nearly $31,000 for a new roof, windows and siding on a home she bought in 1985 with her late husband. Though she has used it as a rental property, it’s now vacant. By the time Boose repays the loan, she’ll be 96. And on top of the cost of the work itself, Boose will have paid about $46,000 in interest and fees, more than 12 times the value of the house when she took out the loan.

Even after those repairs, the house still needs work. Squirrels come and go through the rotted soffits. The foundation has a crack, there’s no furnace and the pipe fittings have been stolen. The kitchen floor sags.

She was late with part of her first PACE payment, in 2019, but paid on time last year.

“The Lord has gifted me with the ability to come up with the payment at the end of every year,” she said. “I’m doing the best I can.”

Betts questioned whether PACE was helping the neighborhood.

“Now she’s in more debt,” Betts said, “and if she does continue to get deeper and deeper in debt messing around with this house, what do we do?”

ProPublica is a Pulitzer Prize-winning investigative newsroom. Sign up for The Big Story newsletter to receive stories like this one in your inbox.



Source link

]]>
https://tinigard.info/clean-energy-loans-put-borrowers-at-risk-of-losing-their-homes/feed/ 0
Is the Los Angeles Municipal Bank’s proposal a good idea? – Daily news https://tinigard.info/is-the-los-angeles-municipal-banks-proposal-a-good-idea-daily-news/ https://tinigard.info/is-the-los-angeles-municipal-banks-proposal-a-good-idea-daily-news/#respond Tue, 18 May 2021 05:58:57 +0000 https://tinigard.info/is-the-los-angeles-municipal-banks-proposal-a-good-idea-daily-news/ Last week, the Los Angeles City Council’s Economic Development and Employment Committee approved a motion in support of the Los Angeles City Bank. It’s a bad idea. Supporters confuse loans and expenses. The bank is backed by various special interest groups – but there is no transparency. No information on funding from Public Bank LA […]]]>


Last week, the Los Angeles City Council’s Economic Development and Employment Committee approved a motion in support of the Los Angeles City Bank. It’s a bad idea.

Supporters confuse loans and expenses. The bank is backed by various special interest groups – but there is no transparency. No information on funding from Public Bank LA – the organization that promotes the idea – is available.

Job approvals for the Los Angeles Public Bank are a red flag. According to Public Bank LA, union support includes: Los Angeles County Federation of Labor, United Food and Commercial Workers Local 770 (TUAC) (which represents grocery and retail workers retail) and Local 11 UNITE HERE (which represents workers in hotels, restaurants and airports).

One can only conclude that unions foresee influence over final funding guidelines – perhaps borrowers will have to pay union wages. This will prevent funds from going to small downtown businesses which many bank supporters believe will help and would effectively drive low-skilled workers out of jobs.

In February, Public Bank LA organized a virtual town hall to rally supporters. The town hall revealed that supporters have no idea what a public bank could or would do.

SEIU 721 President Bob Schoonover expects the bank to fund essential city services, including clean water, and improve health care and access to child care in the city. Beverly Roberts, ACCE Action and Home Defenders League, was eager to see the bank’s money being used for “housing assistance, affordable housing and housing services.” She noted that a public bank “will allow funds to be allocated to low and very low income communities”.

Roberts and board member Monica Rodriguez expect bank loans to ease the pain and tragedy associated with bank foreclosure and the “never-ending cycle of payday lenders.” Susie Shannon, policy director at Housing is a Human Right, said community investments from the public bank would serve homeless people.

These are expenses, not loans. A bank can only survive if it grants repaid loans. It cannot be used as a jar of money to be used to help those in difficulty. If enthusiasm for projects related to community improvement results in an inappropriate assessment of risk, public bank loans will lead to defaults and insolvency.

The last attempt at a community bank in Los Angeles – the Los Angeles Community Development Bank – failed in 2004 because borrowers failed to repay their loans. Loan officers at the nonprofit bank had no incentive to constantly monitor loans. Not only was the bank encouraged to favor politically linked borrowers, but the bank was actively encouraged to finance ill-conceived and high-risk projects.

The Valley Economic Development Center (VEDC), a community development finance institution (CDFI) located in Los Angeles, has promoted its efforts with annual events to mark its successes. Yet he was forced to file for bankruptcy in July 2019. According to Council member Rodriguez, VEDC “fled with millions of resources that should have been reinvested in small businesses.”



Source link

]]>
https://tinigard.info/is-the-los-angeles-municipal-banks-proposal-a-good-idea-daily-news/feed/ 0