I have been looking into financing energy improvements for homes and businesses and came face to face with a program called Ygrene. It seems to have been implemented throughout a large part of California (and probably other states). The idea behind it is pretty simple. You can get a "no-down payment" loan for energy upgrades, and it becomes part of your property tax bill. Because it becomes property tax, it is tax deductible, goes with the house if you sell, and does not impact your credit rating.
Sounds pretty good, right? Well, it could be good. However, there are VERY high "fees" associated with getting the loan (3% fee plus expenses that aren't called fees, but still cost money to the tune of an additional 7% or so). Not only is there a 10% upfront expense for these loans (sounds a whole lot worse than a down payment to me, at least a down payment goes toward the loan), but the interest rates are sky-high. Right now a "normal" second-mortgage seems to be around 4%. The Ygrene loans are around 9% - more than double.
The only reason that Ygrene loans are attractive is because if you are in a high income tax bracket (30% or higher) the tax savings ends up with an overall reduced cost for the loan. This means that taxes are once again being used to subsidize very high interest rates for some corporation that is masquerading as a part of the County or City. The Counties and Cities are advertising for them on their web sites, making it look like that are tax supported entities intended to make energy improvements more accessible and affordable to everyone. That is not true, they are private loans that the governments have agreed to guarantee, and in doing so they have agreed to cut taxes to high income folks.
I have been unable to find out who or what is actually behind Ygrene, other than to see that it is a corporation, not a government program. I also have not been able to find what the Counties and Cities are getting in return for their part in the scam. It don't know if they are getting kickbacks of some sort, or if they just get to advertise that they are doing something "green." If anyone knows how this all works I would sure be interested in learning more.
When I went to the Ygrene website it felt like a great thing. It looked like a way to get low income loans, with low fees, and no credit rating required. However, that is not the case - it is high interest rates, high fees, and attached to the property directly so they take first priority over any credit issues. If you don't pay your property taxes, the County just takes the property and sells it at auction, using the returns to pay off the loan - no questions asked and no way to protect yourself.
The unfortunate part of this is that it is already approved by most municipalities in the State (maybe in the Country). I wonder how these sorts of things happen. Is nobody paying attention? Or are they paying attention, and the point is to stick it to the citizens? Do the municipalities get an windfall profit from this arrangement? It appears to be the latter, but I suspect it is just laziness and ignorance.
I wonder who is putting up the capital, and I wonder what the municipalities are getting out of this arrangement. (My bet is that this is Chinese money, they are very actively attempting to put a lot of money into our energy business as a source of very high interest rate investments. They are behind many of the extremely expensive non-down payment lease deals on rooftop solar.)
I don't know that much can be done to fix this scam, but I think we should all at least be aware of it.
21 comments:
Thank you so much for your blog! You confirmed my suspicion---and the old expression "...if it's too good to be true..." definitley fits!
I used to work at Ygrene Charlie. You're right to be suspicious. I can't believe that counties all over America have approved these types of loans. Here are some of the problems in my opinion:
*No credit score required, general credit doesn't matter at all for approval.
*Relatively high interest rates on the loans
*Effectively subordinates any first or second mortgage on the property since it's collected with the property taxes!
*Upper management mostly came from sub-prime mortgage industry...they know how to sling this stuff
*High fees associated/built in to the loan
This will turn into another subprime-like bubble in my opinion. It's also going to make property harder to sell. Can you imagine finding out that the home you intend to buy has a 20 year loan for solar panels tied to the property. You would require it be paid in escrow no doubt...if the value is there to do so of course. Not a problem in many parts of the country (right now at least.)
I never did figure out what the counties gained for passing this stuff. Maybe just bragging rights (green energy, job creation, etc.) But I always suspected they were getting something more.
Ygrene's only makes sense if the interest AND PRINCIPAL for those solar panels becomes tax deductible, however, Ygrene is always careful to say you need to check with your tax advisor. All the posts from tax advisors online seem to say that the principal is NOT tax deductible. Here's what TurboTax is saying.
https://ttlc.intuit.com/questions/2904920-do-i-claim-the-full-amount-in-the-property-tax-bill-or-deduct-the-ygrene-portion
Thanks for comments. It does seem like a great program but I haven't got any feedback yet on cost. And what does the County get-it might help employment and maybe lower income people but seems a bit like the subprime bubble.
I'm so glad I found this information. We received a letter in the mail. I went to "qualify" online and it was asking for a $50 application fee, that's when I decided to exit the website and find more information. Thank You again for the Information. You just saved us $50 and years of interest.
I truly can't stand people that blog and have no idea what they are talking about. I use Ygrene financing everyday to HELP my clients. If you are smart enough to use a calculator you can pull up the Ygrene proposal tool and do the math. On a five year loan "which is the most cost effective" the interest rate is 6.74 and after you take into consideration possible rebates, atleast 3% inflation on electricity every year and the tax deductions "full payment depending on your tax bracket" it is less than cash every single time. Even the 10 year is a break even with a just negative effective interest rate. And of course there are fees, have you ever financed something without fees.
And on top of that this is not a subprime loan. Actually most of my clients that get really excited about this program are the wealthy, but this program is great for all. I failed to mention on the 5 year plan the effective interest rate is a -7%. Good luck getting that anywhere. This bill was passed by congress allowing third party programs to give funding. Do you really think congress is out to get you!! This bill was passed so everyone can fund energy efficient upgrades because the nation in a whole is in an energy crisis, along with global warming.
The last 2 posts are inaccurate. This is nothing but a money making scam designed to prey on the equity of your home while pretending to be environmentally beneficial. DO NOT BE FOOLED into one of these loans OR YOU WILL REGRET IT like I do now!!! I used one of these loans to help replace my HVAC and they lied to me every step of the way. I had saved all but about $5k of the cash required to replace my old HVAC and this program seemed like a great way to do that a few months earlier than it would take me to save the cash required to do the job. What a mistake I made by buying into this faux “green energy/clean energy” program.
I was told I could pay down the principle early by making larger payments than what was due. This was a total lie! You can only pay the balance in full early, with early payoff penalties and even a $100 fee just for having them tell you what the total payoff amount with early payoff penalties comes to.
They also told me it wasn’t a real lien against the property, rather it was just a utility tax that was added to my property taxes like a utility district tax. That wasn’t true either! I tried to take out a HELOC for a small amount of the 100% equity I have in my home so I could do some home improvements and was denied because of this “clean energy” loan. When I called Ygrene to ask why it was showing up as an actual lien against the property rather than a utility tax assessment and they told me it is both, even though they lied to me to get me to sign the contract and told me it wasn’t.
Steer clear of loans like this unless you can afford a lawyer to review the documents and tell you the truth!
Then if this program is so good for the general public then why are they having to defraud the Hispanic community by using fraudulent Ygrene loan docs that had been forged by the contractor. Ygrene then uses that VOID forged loan agreement and illegally liens the victim home but never inform the victim of the lien or the forged loan docs that were illegally used to lien the home.National Director of Sales David Kelly had been informed of the scams that Peak Power Solutions Tustin office had been committing on their Hispanic homeowners when they were secretly forging the Ygreen loan docs for the homeowners ,however, without the consent of the homeowners. Weeks later it is discovered that Ygrene is secretly condoning the illicit sales and forging of these their loan docs and then sticking to the unsuspecting onsumers
If you are having a problem with them you should contact a consumer rights attorney, but you should also contact the CFPB. The Consumer Financial Protection Bureau is slow but can resolve problems on occasion and keeps records on these people.
If you are handicapped, did not understand the contract ( non english speaker) over a certain age, have other disabilities, were lied to or misled an attorney might be able to help you
Read your blog its really informative and helpful keep updating with newer post on home loans india
Hi, I just got fool by these asshole, and I want to get out of these as soon as posible. Do you know by any chance if a can make payment to the principal, or as you said you can only payoff the whole balance
Hi, I just got fool by these asshole, and I want to get out of these as soon as posible. Do you know by any chance if a can make payment to the principal, or as you said you can only payoff the whole balance
From a "buyers" point of view this is a HUGE problem. Thank goodness we read small print before we sign anything. We are int the middle of buying a home. 30 pages into the contract is something about "mello Roos". This is an area that has no mello Roos and that is exactly what we were looking for. Of course we do our research and the county assessor disclosed more information than the seller, their agent and our agent. Come to find out the home that we were going to purchase has this type of PACE loan/lien attached to it and they are able to call it a tax. Red flags when nobody else in the neighborhood is paying this crazy high tax! So basically we are being scammed. Being told the solar panels etc are paid for was a selling point. In all actually we would be acquiring a loan/lien that the seller agreed to as a bad financial decision. In the big picture the price of the home, $355,000, is now $445,000! By the time we paid off this second loan/lien, we could be purchasing a home for much more than the listed price. We would definitely prefer to buy our own upgrades for a fraction of that $90,000 this homeowner decided to pay for it. My husband researched before we signed anything. Why would we buy a home with an extra $90,000 attached to it??? We are buying through VA so I'm assuming the finance company would figure it out as well and deny the loan. VA wouldn't risk a poor financial investment either. Absolutely ridiculous! I hope all home buyers would do their homework before signing anything!!!
You are a scumbag feeding off this scam. It is a bullshit scam
You're better off getting an equity line of credit at a low interest rate and paying it off early. If you go with this program, you can be approved for around $43K and once you're done paying it, you'd have paid well over $90K. It makes no sense whatsoever! No one will want to buy your home with this type of investment attached to it.
I know this is old but my story may help some:
12/2015 I was approached by solar panel installer, my neighbors had already installed with them and I had read their contract. I could handle similar payments (I'm permanently disabled on SSDI and own my home outright) so figured it was a good deal to reduce my electric bill. He submitted my info and as we sat talking I received an email saying I was approved for the district program.
I signed everything. Payments were supposed to be $482 per year tied to my property taxes.
Last week, 5/2017, I received a demand letter from ygrene stating I was not approved for the PACE program due to wrong info submitted on the application though everything was correct. They are now demanding I agree to payments of $1300 per year (more than my neighbor whose system is twice the size of mine), the balance can no longer be transfered to the new owner if I sell and if that's not bad enough they require me to sign a deed of trust for my house to secure the loan which clearly states I would have to have written consent for any changes to my home and give them the right to immediately take possession if any payment is not received by the due date.
So yes, ygrene in my opinion is a scam and I'm scrambling to find legal assistance in this matter. They insinuate that I gave them the wrong information which I did not and due to their "mistake" are now demanding I sign my house over to them to secure a loan they said I was approved for 17 months ago.
I hope this helps others stay far away from this.
Scam! Do yourself a favor and don't do it! Stay away from PACE loans or at least be better informed and fully understand the Financing aspect before you commit. A job that cost $15000 over the term of the loan I would have paid $48000. Interest at 53% plus annual admin fees is crazy! Just don't do it!
Wow, Thank You! Everybody.
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nonsense. get the facts before you blog. who else is gonna loan you money for impact glass or solar. do you enjoy paying gov monopolized power companies? our solar bill was $400-550 a month. Now its less than 20 bucks. ygrene financed us at 5.05%
Dave in Florida
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