Feds, California settle lawsuit claiming Marin County’s Ygrene Energy Fund put customers ‘at risk of losing their homes’
The Federal Trade Commission and California Department of Justice have reached a proposed settlement against Novato-based Ygrene Energy Fund Inc. over allegations that the home improvement financing company deceived consumers about the potential impact of its financing.
By a vote of 4-0, the commission filed the complaint with the U.S. District Court for the Central District of California seeking a final order and injunction against the company formerly based in Petaluma. The accusations include recording liens on consumers’ homes without their consent.
The announcement Friday stated that the company has agreed to a settlement, which could include establishing a $3 million fund to release the liens placed on consumers homes without their consent. If the order is approved by a district court judge, it would have the force of law.
The company released a statement noting that the complaints date back to 2015, the “earliest days” of Ygrene’s marketing the service and using indepdent contractors.
“Since that time, Ygrene has taken considerable action to safeguard consumers by reviewing and altering protocols and procedures, in particular, with regard to how we work with contractors,” the company said in an email to the Business Journal.
“We deeply regret any negative consequences any customer may have experienced, as even one unhappy customer is too many. Consumer protection and satisfaction have always been one of Ygrene’s top priorities, which is why we have prioritized creating industry standards to implement stronger consumer protections — often stronger protections than federal and state governments require — to enhance accountability and transparency within Residential-PACE programs.”
Ygrene said it plans to continue working with regulators to “fully resolve any remaining customer issues and ensure all consumer complaints are addressed.”
According to the California Department of Consumer Affairs, Ygrene has two licenses to operate in California. As of last week, according to department records, the headquarters location shown on these documents had been changed from Petaluma to Novato.
The Ygrene website Friday said, “All Ygrene PACE funding has been paused.”
In news release Friday, the FTC and California allege that Ygrene and its contractors falsely told consumers that the financing wouldn’t interfere with the sale or refinancing of their homes, in many instances relying upon high-pressure sales tactics or outright forgery to sign consumers up.
“Ygrene and its sales force deceived consumers about home improvement financing and then stuck consumers with liens that made it difficult to sell their homes,” said Samuel Levine, director of the FTC’s Bureau of Consumer Protection. “Our order would require Ygrene to clean up its business, monitor its sales force, and help defrauded consumers remove their liens.”
California Attorney General Rob Bonta said, “Ygrene Energy Fund took advantage of hardworking California families, jeopardizing their most valuable asset in the process. Today’s settlement holds Ygrene accountable for its misconduct and establishes guardrails to protect property owners from future deception.”
Property assessed clean energy (PACE) loans are made through a private financing program designed to give real estate owners a way to borrow money for clean, energy-efficient renewable energy home improvements (such as solar panels or upgraded insulation) and repay the loans on their property taxes.
However, failure to pay these taxes could subject a consumer to foreclosure on the property itself, since PACE financing becomes a first-priority lien against the consumer’s home.
“PACE financing was meant to help families make important home improvements, but the dishonesty of companies like Ygrne has left some homeowners at risk of losing their homes,” Bonta said. “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 isn’t.”
The FTC and California allege that Ygrene recruited and authorized home-improvement contractors, whom Ygrene did not adequately train or oversee, to sell its financing, leading to many consumers being deceived during the sales process and being unfairly subject to liens on their homes without their express, informed consent.
The court order being sought by the FTC and California would require the company to do the following:
• Stop deceiving consumers about the transferability of the PACE financing obligation to the new owner in the event of a sale, the impact of PACE financing on the sale or refinancing of a home, or whether a home will be used as collateral in PACE financing. Many mortgage lenders will not provide financing to buy a property, or approve refinancing, unless the PACE lien is paid off in full and removed.
