OAKLAND (KPIX 5) — It’s a tempting offer, especially if you’re on a fixed income: make your home more energy-efficient with no money down. But the program is getting many elderly homeowners in very serious trouble.

“It was cruel, it was disrespectful and they should not treat people like that,” said Melba Walker. The 80-year-old Oakland resident is legally blind and bedridden. But she was determined to do a zoom interview with KPIX 5 to warn others about her terrible experience.

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She says it started when two men knocked at the door of her home of 34 years in Emeryville. They told her they were from a company called Quality Air and could remove asbestos from her basement for no money down, work she knew had to be done.

“They said well you don’t have to pay anything. The government pays for everything,” said Walker.

In a wheelchair and unable to see, Walker could only listen to the workers.

“I heard them down in the basement and I assumed everything was done and done well,” said Walker.

It wasn’t until a few months later that she discovered through a different contractor that the work had not not been done at all.

“I felt violated, uncontrolled. Very, very, very uncontrolled,” said Walker.

When asked if she felt taken advantage of, Walker replied, “Yes, totally. Totally took advantage of me because they knew I couldn’t see.”

Her troubles weren’t over. A few months after the bogus asbestos job, Walker’s mortgage payment suddenly shot up. A company called Ygrene Energy had put a tax lien on her home. The additional assessment added $500 dollars a month to her mortgage.

“I didn’t have enough to pay that money,” said Walker.

Walker managed to hold on to her home thanks to help from her brother, but homeowners Bill Shive and Leon Bacchues weren’t able to. They lost their home after a very similar experience.

“My thought was we were going to end up in a tent, you know,” said Bacchues.

In their case, a company called California Platinum Properties gave the no-money-down pitch at their neighborhood church, touting a program known as Property Assessed Clean Energy (PACE).

“He shared that the PACE program is a program whereby seniors can get work done on their home. They don’t have to put any money up front,” said Bacchues.

Their house badly needed a new roof, so they signed up.

“I thought it was a wonderful thing, it really was a godsend,” said Bill Shive.

One thing led to another.

“Once he saw the roof, he said, ‘Well, it looks like this section of wall has to be replaced as well,’” said Bacchues.

Then it was the floor.

“He says, ‘Well, this wall is connected to this floor. I think there’s some damage there,'” remembered Bacchues.

The problems became even more serious a few months later.

“All of a sudden our mortgage payments went up $600 a month,” said Shive. “We were astounded, because we couldn’t afford that.”

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A tax lien had been put on their property by the same company that put the lien on Walker’s property: Ygrene Energy.

“So life began to unravel at that very moment,” said Bacchues.

These are not unique stories. KPIX 5 has discovered thousands of mostly minority and senior Californians are falling prey to unscrupulous contractors peddling the PACE program, which is intended to help low-income homeowners make their properties more energy efficient. But the collateral damage has been great.

“The vast majority of the practices we’ve seen have been actually corrupt, through kickbacks, through shoddy work, unpermitted work, uninspected work,” said Omar Krishna, Walker’s attorney in a class-action lawsuit that alleges the PACE program’s structure encourages abuse.

It starts with solicitors and/or contractors going into the community, targeting low-income homeowners who otherwise may not qualify for a conventional loan. The more equity in the home, the more PACE financing is available.

Once the homeowner is qualified, the contractors get paid through PACE fund program administrators. For homeowners there’s no upfront cost, but the program is not free, because the program administrator immediately places a tax lien on the property.

“There are rogue contractors who were encouraged to overprice and over sell products because the resulting liens benefit the program administrators and the program in general,” said Krashna.

But the program usually does not benefit the homeowners themselves.

“I tried to convince Bill, ‘We got to pay the mortgage. We got to pay the mortgage.’ … and he says we can’t do it,” said Bacchues.

Shive and Bacchues, who have filed a separate lawsuit against Ygrene, say they were told lies when they signed up, and never got a copy of the contract, according to their complaint.

“They were told they wouldn’t have to pay the costs until the house was sold, or that they passed away,” said their attorney Jeremy Golden. “That’s a lie.”

We were able to locate the CEO of California Platinum Properties Henry Russell, who worked on Shive and Bacchues’ former home. We asked him if he ever confirmed whether the two men had the ability to pay, since this is an older couple on fixed income.

“I don’t qualify people, PACE qualifies people. What you should do is talk to Ygrene, who had the contract with them. You are asking me about something I had nothing to do with,” said Russell.

Ygrene turned down our request for an interview, but provided the following statements:

Regarding the Class Action Lawsuit

“Ygrene does not comment on pending litigation, but it’s important to note that Ygrene does not select contractors, property owners do, and Ygrene does not make payment to a contractor until the property owner, like Ms. Walker, signs the ESS (completion certificate), which states that the work is completed to the property owner’s satisfaction.

The class action lawsuit is a purely lawyer-created case against Ygrene, and we feel confident that we will be vindicated as this case moves forward.  This case started on March 26, 2019, when a contractor sued plaintiff, Barbara Warren, for unpaid work.  On April 30, 2019, plaintiffs’ counsel brought a class action cross-complaint against the contractor and PACE Funding Group.  More than a year later, on August 11, 2020, plaintiffs’ counsel named Ygrene.  This case is about attorneys looking for clients and not vice versa.”

Regarding Contractor Oversight

“Ygrene does not select contractors; property owners select the contractor to do PACE-eligible improvements on their homes, which Ygrene finances.

PACE financing offers property owners some of the strongest consumer protections and contractor oversight in the home improvement finance industry.  Currently, in order for a contractor to enter into Ygrene’s program, Ygrene confirms that the contractor is licensed with the CSLB and has the required insurance and business license with the Secretary of State. Ygrene then further investigates the contractor’s experience, reputation, and financial strength.

Ygrene also conducts on-going contractor monitoring, project reviews, customer satisfaction surveys, and other consumer protection related measures.”

Regarding Permitting

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“Ygrene does not inspect completed projects except in certain situations in which it requires geolocated photographs or finaled permits.  Ygrene does not make payment to a contractor until the property owner, like Ms. Walker, signs the ESS (completion certificate), which states that the work is completed to the property owner’s satisfaction. “