Provides California homeowners and small businesses with information about the risks and pitfalls of PACE financing.
OAKLAND – California Attorney General Rob Bonta and the Federal Trade Commission today announced a settlement with Ygrene Energy Fund, Inc. (Ygrene), a clean energy financing company, that resolves allegations of misconduct related to its management of the Property Assessed Clean Energy (PACE) Program. PACE is a form of home improvement financing offered by some local governments in California in partnership with private investors who can provide loans to help homeowners pay for home improvement projects, such as installing solar panels. The loans are paid off by an increase in the homeowner’s monthly property tax bills. A PACE loan can make it more difficult for a homeowner to sell or refinance their home. Ygrene is alleged to have engaged in forgery, high-pressure sales tactics and other misconduct to induce homeowners to utilize the PACE financing option it offered in partnership with local governments. Today’s settlement includes important injunctive terms to address these illegal tactics and deter future misconduct.
“Ygrene Energy Fund took advantage of working California families, endangering their most valuable asset in the process.” said Attorney General Rob Bonta. “Today’s settlement holds Ygrene accountable for its misconduct and establishes guardrails to protect owners from future deception. PACE funding was intended to help families make major home improvements, but the dishonesty of companies like Ygrene has left some homeowners at risk of losing their homes. Before signing a PACE contract, I urge all Californians to familiarize themselves with this program and take the time to understand what it is and, most importantly, what it is not.”
“Ygrene and her sales force misled consumers about home improvement financing and then saddled them with liens that made it difficult to sell their homes.” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “Our proposed order would require Ygrene to clean up its business practices, monitor its sales force, and help defrauded consumers remove their liens.”
Beginning in 2017, the California Legislature passed legislation to license PACE program administrators and regulate the PACE financial industry. Since then, several local governments, including Kern, Bakersfield, Calaveras and Los Angeles counties, have ended their PACE funding programs amid consumer protection concerns.
Agreement with Ygrene Energy Fund
An extensive investigation found that Ygrene and many of its contractors failed to obtain consumers’ express informed consent to use their homes as collateral to secure PACE financing, instead posing as consumers on calls or on forms. It is also alleged that Ygrene and her contractors rushed homeowners through Ygrene’s lengthy contract and misrepresented consumers’ ability to refinance or sell their home before fully repaying their PACE loan.
Today’s settlement, which remains subject to court approval, includes important injunctive terms to substantially reform Ygrene’s business practices and relief for consumers who were affected by Ygrene’s fraudulent practices. Precautionary terms include employee training, a commitment to fire contractors who violate the law, prompt investigation of all consumer complaints and government inquiries, notices to consumers to obtain informed consent for PACE funding, and periodic reporting. the Attorney General and the FTC to demonstrate compliance. with the terms of the agreement.
What to consider before applying for PACE financing
- PACE is a loan that must be repaid. It is not a free government program: Homeowners and businesses must pay off their PACE loan over 10 to 20 years through additional payments added to their property tax bill. These loans can add hundreds of dollars more to your bill annually, so they shouldn’t be taken lightly.
- PACE loans may increase your risk of foreclosure: If you are unable to make your monthly property tax payments due to the additional costs associated with your PACE loan, you could lose your home to foreclosure action.
- PACE financing can make it difficult to sell or refinance your home: It is often difficult to sell or refinance your home without first paying off your PACE loan because that loan takes priority in the event of default or foreclosure.
If you are considering signing a PACE finance agreement, get independent financial advice to ensure you can afford it. You should also check the license of both the supplier and the contractor.
To report a violation of the law, please file a complaint with the Attorney General’s Office at oag.ca.gov/report or with the California Department of Financial Protection and Innovation at: dfpi.ca.gov/file-a-complaint/. You may also file a complaint against a contractor with the State Contractors Licensing Board in cslb.ca.gov/Consumers/Filing_a_Complaint/.
A copy of the agreement is available, which is subject to court approval. here.
