Attorney General Bonta and FTC Announce Settlement with Clean Energy Financing Company for Misconduct Relating to PACE Program

Provides California homeowners and small businesses with information on PACE financing risks and pitfalls 

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, resolving allegations of misconduct relating to its administration of the Property Assessed Clean Energy (PACE) program. PACE is a form of home-improvement financing offered by some California local governments in partnership with private investors that can provide loans to help property owners pay for home-improvement projects, such as the installation of solar panels. The loans are paid off through an increase in the property owner'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 sale tactics, and other misconduct to induce homeowners to utilize the PACE financing option that it offered in partnership with local governments. Today’s settlement includes significant injunctive terms to address these illegal tactics and deter future misconduct. 

“Ygrene Energy Fund took advantage of hardworking California families, jeopardizing their most valuable asset in the process,” said Attorney General Rob Bonta. “Today's settlement holds Ygrene accountable for their misconduct and establishes guardrails to protect property owners from future deception. PACE financing was meant to help families make important 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 isn't.”

“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 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 financing industry. Several local governments, including Kern, Bakersfield, Calaveras, and Los Angeles Counties, have since terminated their PACE financing programs amidst consumer protection concerns.

Settlement with Ygrene Energy Fund

An extensive investigation found that Ygrene and many of its contractors failed to secure consumers' express informed consent to use their homes as collateral to secure PACE financing, instead impersonating consumers on calls or forms. Ygrene and its contractors are also alleged to have rushed property owners through Ygrene’s lengthy contract and made misrepresentations about consumers ability to refinance or sell their home before fully paying off their PACE loan. 

Today’s settlement, which remains subject to court approval, includes significant injunctive terms to substantially reform Ygrene's business practices and relief for consumers who were impacted by Ygrene’s fraudulent practices. The injunctive terms include employee training, a commitment to terminate contractors who violate the law, prompt investigation of all consumer complaints and government inquiries, notices to consumers to obtain their informed consent for PACE financing, and regular reporting to the Attorney General and FTC demonstrating compliance with the settlement terms. 

What to Consider Before Applying for PACE Financing 

• PACE is a loan that must be paid back. It is not a free government program: Homeowners and businesses must pay off their PACE loan over a 10- to 20-year period through additional payments tacked onto their property tax bill. These loans can add hundreds more dollars to your bill annually so should not be entered into lightly. 
• PACE loans may increase your risk of foreclosure: If you cannot make your monthly property tax payments due to the additional costs associated with your PACE loan, you could lose your home through foreclosure action. 
• PACE financing may make it harder to sell or refinance your house: It is often difficult to sell or refinance your home without first paying out your PACE loan because that loan takes precedence in the event of default or foreclosure.   

If you are considering signing a contract for PACE financing, get independent financial advice to make sure that you can afford it.  You should also check the license of both the vendor 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 & Innovation at: dfpi.ca.gov/file-a-complaint/. You can also file a complaint against a contractor with the Contractors State License Board at cslb.ca.gov/Consumers/Filing_a_Complaint/.

A copy of the settlement, which is subject to court approval, is available here.