Bank to Review Cases in Solar-Heating Debts

Attorneys for Central Bank of Oakland said Wednesday that the bank will review each case before proceeding with foreclosures against homeowners who have refused to make loan payments, claiming that they were defrauded by solar-heating contractors.

An Orange County Superior Court judge refused Tuesday to block the threatened foreclosures against 109 homeowners in Orange, Los Angeles and Riverside counties.

One of those homeowners, Mike Kilgore, said Wednesday that the controversy has become so pervasive in his life that it has caused mental stress and nearly a divorce. “It’s like a cancerous tumor,” he said.

Kilgore and the other homeowners took out mortgages on their homes to finance purchases of solar-heating equipment that they now say often did not work.

The Public Interest Homeowners Assn. Inc. filed a lawsuit on their behalf, claiming that they were taken in by fraudulent sales practices and in many cases were unaware that liens could be placed against their homes. But Judge Everett W. Dickey ruled that the Walnut Creek-based bank could not be held responsible for the solar contractors’ sales tactics.

While some of the homeowners--those who deposited their loan payments in a trust fund while their claims were in litigation--may be able to bring their loans current and avoid foreclosure, others were left in limbo by Dickey’s decision.

“Those who have paid into the trust fund will get 100% of their money back, plus passbook interest,” said Joe B. Morgan, a spokesman for the homeowners association whose directors are trustees of the $51,000 fund.

Kilgore, who lives with his wife and three children in Lancaster, is among the homeowners who did not contribute to the fund. On medical leave from his job at Rockwell International, Kilgore said he did nothing “wrong except buy a product that does not work. And I have been trying to do everything possible to straighten this out.”

Kilgore said he should not have to pay $10,200 for a unit that has never worked and caused the ceiling to leak. He said the equipment eventually burst, damaging a neighbor’s boat. The neighbor sued the Kilgores and collected $1,500 in small claims court, he said.

Contractors sold the solar units with promises of an 80% reduction in gas bills and a write-off for federal taxes, Kilgore said.

The contractors who sold the Kilgores their solar equipment, Van’s Heating & Air Conditioning, could not be reached for comment.

Josefina Sanchez, another homeowner who did not contribute to the fund, insisted Wednesday that no one is going to put her out of her Anaheim home. “Why should the bank take the house? They didn’t pay for it,” she said adamantly.

Speaks Only Spanish

Sanchez, who speaks only Spanish, said she cannot understand why Central Bank has asked her to pay $10,700 in order to keep her home. Like other plaintiffs in the class-action lawsuit, she said she was never told that a lien was placed on her home when the solar equipment was financed.

“I never went to the bank or signed any papers, and the bank never talked to me,” she said.

Moreover, the loan contract Sanchez signed was described to her by a solar equipment salesman as merely an application for a loan--a loan that she never expected to be approved, she said.

“I don’t understand how I could qualify for this loan by myself when I had to have a co-signer to finance payments on the house itself. I don’t even make $1,000 a month” as a worker for a Garden Grove window blind manufacturer, she said.

Morgan said Sanchez’s predicament is common among non-English-speaking homeowners involved in the case. The solar company, in this instance Ideal Energy Co. in Studio City, presents papers for sale of equipment and financing of the loan in English only, he said.

The association’s records show that Sanchez was charged more than $14,000 for the solar heating equipment that, Morgan said, could have been purchased for about $1,500 from retail stores.

Called Separate Issue

Central Bank lawyer Stanley A. Doten said the loan transactions with Central Bank are a separate issue from the purchases of the solar units. “If homeowners have complaints against contractors, that doesn’t allow them to refuse to pay on the bank loans,” he said.

Another bank attorney, Robert Heggen, said Wednesday that bank officials will examine each lien on a case-by-case basis and will treat them as any other default on a loan. He said if the bank decides to proceed on an individual case, it will send out a notice of default, and if the owner fails to repay the remaining balance within 90 days of the default notice, the owner then will be sent a notice of intent to sell the home.

Doten said that bank officials are still reviewing the judge’s decision and that there had been some discussion about foregoing foreclosure proceedings against the debtors. But he said no decision has been made.

But Marcia Cream blames the bank as well. “It seems to me they’re hoping for all our homes,” said the Whittier homemaker, who immigrated here with her husband, Ronald, and their five children from Great Britain in 1981.

“Not once did a bank representative or (contractor) American Sun tell us there would be a lien on the house or we would not have done it. It would have been ludicrous,” Cream said, explaining that an American Sun representative told her that everyone would eventually be required by law to have solar heating for their homes.

The Creams did not discover the second mortgage placed on their home until they tried to refinance the original mortgage during the summer of 1986, she said.

Marcia Cream estimates that they owe Central Bank about $6,000. The couple had been paying the bank’s $128 monthly bills but stopped last May when they became dissatisfied with the solar equipment because gas bills were not decreasing, Cream said.

“If the bank goes ahead (with the foreclosure), our lives are ruined,” she said.