After booming for years, a controversial home improvement loan is on the decline

A controversial form of financing for environmentally friendly home improvements in California has plunged after reform legislation kicked in.

So-called PACE loans grew in recent years as a way to pay for solar panels and energy-efficient air conditioners. Homeowners in the state took out more than $1 billion worth of them in 2017. However, critics say unscrupulous contractors frequently signed up borrowers with loans they neither understood nor could afford. That helped lead to state legislation that sharply tightened underwriting standards.

In the first half of 2018 - the latest data available - PACE lending plunged by 32 percent from a year earlier, according to the state treasurer's office, which tracks the vast majority of the loans.

Lenders blame much of the recent drop-off on a new underwriting law they say blocks too many qualified applicants. Consumer groups say it's too early to know the exact effect. But they don't deny regulation is having an