The Federal Trade Commission and the California Department of Justice have reached a proposed settlement against Ygrene Energy Fund Inc. based in Novato over allegations that a home improvement financing company misled consumers about the potential impact of its financing.
In a 4-0 vote, the commission filed a complaint in the U.S. District Court for the Central District of California, seeking a final and injunctive relief against the company, which was formerly based in Petaluma. The charges include recording liens on consumers’ homes without their consent.
Friday’s announcement said the company agreed to a settlement that could include setting up a $3 million fund to release liens placed on consumers’ homes without their consent. If approved by a District Court judge, the order would have the force of law.
The company released a statement saying the complaints date back to 2015, the “early days” of marketing the Ygrene service and using third-party vendors.
“Since then, Ygrene has taken significant steps to protect consumers by reviewing and modifying protocols and procedures, particularly with respect to how we work with suppliers,” the company said in an email to the Business Journal.
“We deeply regret any negative consequences the customer may have experienced, as even one dissatisfied customer is too many. Consumer protection and satisfaction has always been one of Ygrene’s top priorities, which is why we’ve prioritized creating industry standards to implement stronger consumer protections—often stronger protections than required by federal and state governments—to increase accountability and transparency within Residential-PACE programs.
Ygrene said it plans to continue working with regulators to “fully resolve all outstanding customer issues and ensure that all consumer complaints are resolved.”
According to the California Department of Consumer Affairs, Ygrene has two licenses to operate in California. As of last week, the headquarters listed in those documents changed from Petaluma to Novato, according to department records.
Ygrene’s website said on Friday: “All Ygrene PACE funding has been suspended.”
In a press release Friday, the FTC and California allege that Ygrene and its suppliers falsely told consumers that the financing would not interfere with the sale or refinance of their homes, in many cases relying on high-pressure sales tactics or outright forging signatures on consumers. up.
“Ygrene and her sales team lied to consumers about home financing and then placed consumers in liens that made it difficult to sell their homes,” said Samuel Levine, director of the FTC’s Office of Consumer Protection. “Our order would require Ygrene to clean up its business, monitor its sales force and help defrauded consumers eliminate their liens.”
California Attorney General Rob Bonta said, “Ygrene Energy Fund took advantage of hard-working California families and put their most valuable assets at risk in the process. Today’s settlement holds Ygrene accountable for its misconduct and creates a guardrail to protect property owners from future fraud.”
Property Appreciation Clean Energy (PACE) loans are provided through a private financing program designed to provide property owners with a way to borrow money for clean, energy-efficient home improvements using renewable energy sources (such as solar panels or improved insulation) and repay loans on their property taxes.
However, failure to pay these taxes could expose the consumer to foreclosure on the property itself, as the PACE financing becomes a first priority lien against the consumer’s home.
“PACE funding was supposed to help families make important home improvements, but the dishonesty of companies like Ygrne has caused some homeowners to lose their homes,” Bonta said. “Before signing on to PACE, I encourage all Californians to familiarize themselves with the program and take the time to understand what it is and, most importantly, what it is not.”
The FTC and California allege that Ygrene hired and authorized home improvement contractors that Ygrene did not adequately train or supervise to sell its financing, resulting in many consumers being defrauded during the sales process and unfairly subject to liens on their homes without their express, informed consent.
The injunction sought by the FTC and California would require the company to do the following:
• Stop misleading consumers about the transferability of the PACE financing obligation to a new owner in the event of a sale, the impact of the PACE financing on the sale or refinance of the home, or whether the home will be used as collateral for the PACE financing. Many mortgage lenders will not finance a home purchase or approve a refinance unless the PACE lien is completely paid off and removed.