[Update: This article has been updated to clarify the nature of the FBI and SEC investigations in question.]
The Federal Bureau of Investigation and the Securities and Exchange Commission are reportedly looking into the business of the nation’s largest green lenders.
On Tuesday, the Wall Street Journal reported that the FBI and SEC are looking into the business of Renovate America, which provides loans as part of the Property Assessed Clean Energy program.
The loans, also called PACE loans, allow homeowners to obtain financing to make improvements to their homes to increase the home’s energy efficiency. PACE loans are often used to add solar panels to a home.
But the program is shrouded in controversy because in some states, PACE liens are given super priority status above the home’s mortgage, which many in the mortgage business take serious issue with.
According to the WSJ article, the FBI wants to review how Renovate America marketed its services.
From the WSJ article:
FBI agents are seeking documents that show how Renovate America marketed its financing to homeowners, trained its sales force and outside contractors, and communicated with investors, according to a document reviewed by the Journal. The FBI also is conducting interviews of people familiar with the company, according to the people who have been interviewed.
The article also states that the SEC is looking into how the company handled its loan payments for certain borrowers.
In a lengthy release published in response to the WSJ article, Renovate America confirmed that the company has spoken to both the FBI and SEC about the the company’s business, but the company said that it had been repeatedly assured by federal law enforcement authorities that the company is not the subject or target of any investigation.
“Renovate America seeks to lead the home-improvement industry in protecting consumers and in tightening standards for contractors with whom we do business,” the company said in a statement.
“We are fully cooperating with an FBI investigation into a contractor and its affiliated entities who offered their home-improvement customers financing from several Property Assessed Clean Energy administrators, including Renovate America,” the company continued.
“This contractor and its entities were never employed by Renovate America, and our company no longer does business with them,” the company added. “In conversations with federal law-enforcement authorities and prosecutors as recently as this past week, we have been repeatedly assured that Renovate America is not a subject or target of that or any federal investigation.”
According to the company, the SEC investigation relates to an issue with less than 100 homeowners.
“Renovate America has received a request for information from the Securities and Exchange Commission in relation to a prior Wall Street Journal story about assistance provided to 86 homeowners — something that we disclosed to investors and which was included in presale reports by rating agencies Kroll and DBRS in April and July,” the company said. “We are cooperating with the information request and believe it is unlikely to have a material effect on the business.”
