Home Foreclosure Sales Blocked as Owners Sue Over Solar Equipment
More than 40 Southern California homeowners, threatened with foreclosure because they refused to pay for faulty solar-heating equipment, won a court order Wednesday temporarily blocking the sale of their homes.
The stipulated order, signed by Orange County Court Commissioner Jane D. Myers with the agreement of the Walnut Creek bank that is threatening foreclosure sales, gives homeowners a one-month reprieve from the efforts of the bank to collect on long-past-due loans for rooftop solar systems.
The affected homeowners are part of a coalition of 400 buyers of solar-heating equipment who have filed a $100-million class-action suit against dozens of solar contractors and lenders, claiming that they received faulty equipment at inflated prices.
Many homeowners, some of them elderly and unemployed, did not realize that they were signing second trust deeds on their homes when they took out loans to purchase solar equipment, said Joe Morgan, president of the Public Interest Homeowners Assn., the organization formed to represent the plaintiffs in the lawsuit.
In some cases, he said, buyers who questioned loan papers alluding to a trust deed were told: “That’s not a trust deed, that’s just to show that we trust you will pay.” Others, he said, were threatened by loan officers who said they had to sign loan papers because the solar equipment already had been installed.
‘Psychological Warfare’
With the impending foreclosures, Morgan said, “they’re conducting psychological warfare on these people. They’re ruining their lives.”
Since the class-action suit was filed in July, homeowners have halted payments on solar systems and deposited the money in a trust account instead. Where that money ultimately goes will depend on the outcome of the lawsuit.
Central Bank of Walnut Creek launched the first round of foreclosures in mid-September.
Stanley Doten, attorney for the Northern California bank, denied that homeowners had been pressured or misled into signing loan papers and compared the transactions to second trust deeds securing any home-improvement loan.
“Our position is the loans were lawful, direct loans that the homeowners entered into with the bank, and we believe that homeowners are obligated to pay on those loans and they should be making their payments,” Doten said.
Nonetheless, he said, the bank voluntarily agreed not to put any of the affected homes up for foreclosure sale pending a full hearing on the issue Feb. 2.
Under the stipulated order, the bank can begin foreclosure proceedings on other homeowners who are behind in their payments but cannot issue notices of foreclosure sales.
