Home foreclosures raise questions about SolarCity policies

SolarCity, the nation’s leading installer of rooftop solar panels and a renewable energy darling, has pitched its value to investors on a simple premise:

In at least 14 cases, the homeowners were already in default, or had other liens on the property, by the time the San Mateo company filed paperwork about the panels with the government.

In September, a lawyer for SolarCity, Mohammed Ahmed Gangat, filed a document in New York state court arguing that the company needed to file another document late because it had in recent months been “inundated with hundreds of lawsuits in New York, and thousands across the country, all of which have named SolarCity as a defendant in a residential foreclosure action.”

In either situation, details of the cases identified by the Times raise questions about how well the company, relying on one credit check, vets potential customers.

The company often pays most or all of the bill for the installation, worth $25,000 to $30,000 on average, and charges the customer an agreed-upon rate for the electricity the panels produce, typically 10 to 15 percent less than they would normally pay for power.

“For a consumer with a sub-700 score, it’s likely that there are already some indicators of risk there, but not a severe one to that particular lender, I guess, at that point,” said Rod Griffin, director of public education at Experian, a credit reporting agency.

When a customer loses a home to a bank in foreclosure, the company also risks losing income from its energy system unless it can reach a deal to take the system back or contract with the new homeowners.

Executives at the company have never expressed much worry about the risks of foreclosures, boasting that customers tend to pay their electricity bills even when they are not paying anything else.