We signed up with the HERO program through a contractor called Elite Home Energy. My wife and I wanted to them to install insulation in our home and believe it would add value to our house. We asked the sale agent that what happen when we want to sell our home in the future and he said you can transfer it to another person. We signed up.
Presently, we want to sell our home and find out a lot about this program. The company would put lien on your home and it's going to be difficult to sell your home at a later date, slow down the escrow. I have my title agent look into it and found out that they are charging us more than it is supposed to be. the amount increases from 9000 to 13000. I gave them a review on yelp and one of the agents responded to the post. She said she will have somebody to contact us. Nothing, so I called in instead. Also, I found out that the loan amount is more than it is supposed to be. One of your representative was trying to be a smart *** on the phone asked if it was 9000 and other fees were involve. I told him "even if it was really 9000 and the number still doesn't make sense". How can 9000 become 13000. So I sign up a loan with your company and it charges me 4000 in interest every year? Also, when we signed up, the sale agent didn't give us a hard copy of the contract and didn't disclose all the fees that involve with city.
In addition, I also found out from my research and from my brother in law, who recently purchase a home, that the hero program is not what it seems. Your company told us and everybody else that the loan is transferable. It's a lie. Some home owners, in my research, were unable to transfer the loan. It is between buyers and sellers. The sellers are responsible for the loan amount 100%.
To the other home owners contemplate about going with the hero program, Don't go for them because you will be in the mess we are in when you sell your home. Also, their percent is crazy high. their APR is 9.66 percent and they didn't even tell us that. The homeowner, whom my brother in law purchase the house from, was losing his house and he owed 30,000 on it in Riverside. You either lose your home or have to pay for in full when you sell your home. If you have the money for it, go for it. However, you should think twice before signing up. Once you sign, it doesn't matter what the other sale person said or how mess up it is, you are on contract. They will hold you to it. They will say you didn't read the fine print even you tell them that you have no loan contract in your possession. This is California for you, cut throat.
Lastly, we have no copy of the loan contract and all we have is the paperwork from the Elite Home Energy ( work order and notice of cancellation). I know either way we are screwed. I hope some body read this and do your own due diligence. New Home owners beware!
@David Tran ....Sorry to hear.....I question the costs of the services these business charge that are affiliated with the program (approved contractors). From my online research the prices are too high and pretty much a not so ethical way off doing business. Basically this program helps people with Zero money get a ton of improvements on their homes. Sounds good right? Problem is the cost of these improvements is not justifiable if you were to get bids on the open market. So the homeowner gets the improvements but pay an outrageous price in my opinion for the improvements. If the program would allow open bids then I would feel much better about the program. Just my opinion.
I agree with you. This is the biggest mistake we have ever made. All we can do is to learn from it and let other people know not to get into it. I also found out that there is no tax break at all. We can't even claim it.
Sorry to hear that you got involved in the hero program. Any homeowner offered these types of programs associated with allowing homeowners to upgrade their homes with solar or any type of energy conversation improvements with no money down should proceed with caution.
I recently did a lot of research into these programs and found the following:
- The programs associate directly with contractors. The price for the upgrade is between the program and the contractor. Frequently the price is higher than a consumer would get if they contracted directly with a contractor. The contractor is paid directly by the program.
- The programs place a tax lien on your home. The program is in the first position as a lien holder on your home which means that no bank is going to finance or refinance a home where the bank is not the first lien holder. In order to sell or refinance the home, you will have to pay off the amount owed to the program.
- People are led to believe they can write off the cost of your payments [principal + interest] on your taxes because they attach the debt to the property tax collected on your home. However, you can only get a federal tax deduction for the state and local taxes you pay on real estate that you own, such as your main home, a vacation home or bare land. This real estate tax is paid directly to the tax assessor or through an escrow account set up by your mortgage company. The payments to these programs likely do not qualify. You may be able to deduct interest paid on the loan but to make this determination, please consult a qualified income tax specialist.
- The interest rates on these loans from the programs are usually at a much higher rate as they do not qualify people based upon a credit score. By the way, they do not set the interest rate on the loan until they fund it -- so it could be higher than what you are initially quoted when qualifying for the program. The programs also attach all sorts of fees in order to finance the loan.
-- This is one fee among many which I found in the Hero program loan documents which could add quite a bit to your principal --
Program Administration Fee. At the time of closing, the Authority will charge you a one-time administration fee of up to 4.99% of the principal amount of the assessment on the Property to cover the costs of administering the Program. This fee will be added to the assessment amounts
- Several of these programs do not allow transfers or early pay off without paying some sort of penalty.
Finally, there was an article in my local paper recently which discussed issues with the Hero programs when trying to sell your home:
** **Beth Mills, a spokeswoman for California Banking Association, said in a telephone interview that any program that makes homes more energy-efficient is valuable, but the financing structure is problematic.
“Essentially, they are cutting in line,” Mills said, referring to the super-lien priority status over a mortgage.
“Few, if any lenders are going to accept this secondary lien position,” real estate agent Then said, so the tax-lien associated with the HERO improvements will have to be paid off, in most cases, at the time a sale closes or the mortgage is refinanced.
The question becomes, who will pay it?
Jane Chaname, of Remax Results in Moreno Valley, said she lost a listing because of the tax-lien provision. Sellers of a $339,000 home learned they had to pay off $20,000 in energy upgrades because the buyer wanted to finance the sale with a government-backed loan.
“Because the $20,000 took so much away from their equity to put into another home, they decided not to sell,” she said.
Another client of Chaname had difficulty selling his home because would-be buyers balked at paying $16,000 more for a home with HERO-financed air conditioning, duct work, water heater and insulation when similar homes were selling for less.
The buyers argued they were paying for the improvements twice – through the higher valuation on the house and assumption of the loan. “We sold his home, but only on condition the HERO loan was paid off for the buyer with proceeds from the sale,” Chaname said. **
@Laura Ozols Im considering the Hero loan only because I intend to pay off the balance in full before the 18 month promotional period expires. If one goes about it this way, do you think it's worth it? Apparently no payments are due for 18 months. And if you pay off the entire loan at that time all the interest accrued will be waived. What do you think?
Hey All- I work for a company that provides PACE (property assessed clean energy ) loans similar to HERO. I can explain these programs in more detail so you have an understanding of what it is.
1. @Mario Furmanczyk - There is NO promotional period. What you are referring to is the fact that your property taxes are generally due in November. Since the fiscal year ended in June any HERO financing you do now will be accounted for on the tax roll next year. So you will see it on your property tax bill for 2018. Hence the 18 month 'no payment'.
2. @Laura Ozols - Your research isn't exactly correct. The interest rate does not change. What you may be referring to is the capitalized interest that happens over the course of the aforementioned 18 months. The price for the upgrade is NOT between the program and the contractor. The price for anything is between homeowner and contractor. These programs are simply providing financing. That's it, they don't set what price a product has to be sold at. In fact we actually give max prices that we will actually allow a contractor to sell at.
3. @David Tran - It sounds like your contractor didn't do a good job at disclosing all the details to you. That is unfortunate. You should 100% be able to get all the documents you need from HERO. In fact that should have been emailed to you asap after you signed your finance documents.
4. Transferability - While PACE loans are transferrable (unlike unsecured loans) the reality is it will be a sticky situation when you go to sell your home. PACE loans do take 1st position over the mortgage company so they aren't too fond of that. With that being said, there are a number of mortgage companies out there that understand this type of financing and are more than willing to refi, and give mortgages.
I hope that clears things up. Feel free to fire away with any more questions.
Thanks for the explanation @Dustin Cady, I went through the PACE program for both solar and landscaping. I dealt directly with contractors, finance company was not involved with any negotiations. I would have to say it was a pretty easy process. I also just refinanced my property w/ BOFA and financing for the upgrades were not even brought up.
The upgrade in solar and landscaping actually increased my value during the appraisal.
Hero is the worst! My boyfriend got a hero loan for 16,000 dollars 3 years ago. Now three years later we are refinancing the house just to pay off the hero loan because no principal was even paid. We now owe 18,000. We were paying 2,000 on the loan every tax cycle for 3 years. Insane! No principal was paid off. The worst financial mistake ever! They disclose some fees which are supposed to be 100 to 200 per year so it doesn’t even add up.
As a participating contractor of the Hero program I feel for your situation, there are unscrupulous people in every industry. I wanted to clear one area surrounding price setting and contractors. A homeowner can get as many bids as they like from participating HERO contractors and there are plenty contractors to choose from, just check the HERO directory. The approved contractors have to meet insurance guidelines (often not met by an average company), typically are certified by national and state agencies in home energy efficiency, and invest around $10k in energy testing equipment just to participate. I don’t know what the next guy charges but my pricing reflects my overhead and doesn’t change wether or not the project is HERO funded. There are other low interest financing options that are not HERO/ PACE. I suggest anyone considering any type of home improvement project explore all their financing options.