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A Los Angeles contractor defrauded low-income homeowners to the tune of $1.4 million by convincing them to take out clean energy loans they could not afford and then abandoning their projects, the city of Los Angeles alleged in a lawsuit filed recently.

The suit alleges that Eco Solar Home Improvement and affiliated companies urged homeowners to take out loans through the Property Assessed Clean Energy program, which allows homeowners to obtain financing to make improvements to their homes to increase the home’s energy efficiency.

But Eco Solar and its owner, Jose Nelson Solis, allegedly mislead homeowners about the terms of the loan.

According to an article in the Los Angeles Times, Eco Solar concealed critical information about PACE loan applications and employed salespeople who used “high-pressure in-home sales tactics, misrepresentations and false promises” to sign homeowners up for PACE financing.

In some cases, the construction was for an accessory-dwelling unit, also known as a “granny flat,” which would not be eligible for PACE financing.

According to the LA Times, Eco Solar targeted Spanish-speaking homeowners, advertising their ability to help homeowners turn garages into rental properties.

In some cases, Eco Solar employees completed the application and signed for the homeowners without their knowledge, leaving some unaware that they had taken out the loan.

Eco Solar allegedly submitted false information to lenders on the PACE application, failing to mention the construction projects the homeowners had agreed to but rather describing only energy-efficient improvements.

They also urged homeowners to lie to lenders over the phone and claim the work was complete so that the financing would come through, according to the suit.

Eco Solar then abandoned the homeowners’ projects once financing was received, leaving them with incomplete construction and substantial loan payments. Some homeowners were left in severe financial distress and facing foreclosure, the suit alleges.

The charges have prompted Los Angeles City Attorney Mike Feuer to set up a hotline for Eco Solar complaints in the hopes of identifying others who have abused the PACE loan program.

PACE loans are funded through private lenders but are set up through local authorities because payments are often made through property taxes.

In 2016, the Federal Housing Administration announced that it would begin insuring mortgages with PACE liens. But in late 2017, the Trump administration reversed that decision – a move that was applauded by much of the mortgage industry, which had expressed concerns over the use of PACE loans to finance solar panels and other energy-efficient enhancements.

Just last month, the Consumer Financial Protection Bureau signaled that it plans to issue new rules to govern PACE, soliciting industry input to help shape its guidance.

PACE programs, which have become increasingly popular, are not regulated as heavily as other financial services, including mortgage lending.

Feuer said his office is currently investigating claims of other PACE-related violations and urged others who have been defrauded trough the PACE program to come forward.

“We are prepared to stand up for people if they have been victimized,” Feuer said at a press conference, according to the LA Times. “There could be hundreds or more … out in our community who right now are being victimized.”

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