Pros and Cons of the HERO program

By
Real Estate Agent with Real Estate Places CA BRE #01802964
https://activerain.com/droplet/4BmN

Welcome to March - 

We are almost to the time when it I get itchy to make soe improvements to my house - I'm thinking you might too. And I'm not just talking about some new seed on the lawn. 

Image result for hero program

UPDATED 9/3/2015 - Additional HERO program info and benefits added. 

So, over the past few years, sales people have likely been banging your door in trying to sell you anything from solar to windows to siding, on this magical new program called the HERO program. 

No down payment, no payments at all - it's all in your property taxes... 

Hmm, don't know about you, but my dad said something about things that sound too good to be true... 

Let's define what the HERO program is - how does it work?

What does “HERO” mean anyway?
HERO stands for: Home Energy Renovation Opportunity
It provides financing for any energy improvements made to your house, solar, windows, plumbing, etc. 
The HERO program is a financing plan, where repayments are paid through your property taxes, 100% financing is available. 

The mechanics are realtively simple - the cost of the renovation is under the HERO program atached to your property as a tax lien, the payments (5-20 years) are then added to your annual tax payment. If you have your taxes impounded, your mortage servicer will adjust your payment to match. 

The big benefit is that the lien is held against your equity (Alas, if you are upside down, you don't qualify). And no credit score is needed. 

This all sounds good and fine - right? 
But what happens if you decide to sell your house before the payments are up? 

This is where the rub is... So, you put up a solar panel installation and save on your power bill (although you are probably paying those saving out towards the payment through your taxes), 3 years later, your company relocates you and you need to sell your house!
When I look at your taxes (Any good Realtor should review this with you to see if there is anything going on), I will redline that HERO program as it is now a lien on your property. 

And it is not just ANY lien, it is in first position, so it takes priority over your mortgage - as you can imagine there are a couple of banks who don't think this is a great idea. To the tune of FANNIE and FREDDIE MAE will not purchase loans with a higher ranking lien - this effectively means that at the moment, FHA financing is not avialable on a home with HERO financing attached. 

So, the sales pitch goes like this: 
You can transfer the tax to the new owner! Great... But, did the sales guy ask the new owner if they want that extra tax? Ahem... 

Reality on the other hand is not quite what was sold. Now that HERO has been around for a few years, we are seeing some results of this. When a buyer learns of the HERO tax that is added on, they are not too happy. In many cases, they are demanding that the owner pay it off, or at least pay off a big part of it. And/Or - they are left with no choice as their FHA financing does not qualify the property. 

In the current market where homes are sitting 2-4 months waiting for a buyer, sellers are often forced to pay for some of this. Hero now becomes a negative line item on your net results after a sale. 

I'll leave it up to you to decide what is best for your specific situation, I am all for improving our homes efficiency, that said, maybe not through my taxes?!?!

 

Now - I added these edits as I received some very well pointed comments asking about the benefits of HERO, and there are many. I definitely looked at this from a seller spoint of view. 

To get into the benefits a little, let's look at why the HERO program is here - 
HERO is a means to make it easier for homeowners to upgrade to energy efficient features, this could be solar, windows, plumbing... There are over 900,000 upgrades that can be done under the program. 

The big benefit is - NO MONEY out of pocket, so if you want to get that solar going but can't quite afford it, this is a good deal. 
The debt is placed as a tax lien against your property, payments are made through your property taxes. It is spaced out over 5-20 years and there is interest on the debt. 

 

Considering this, my opinion is this: 

If you plan on staying in your home, and want to make improvements, HERO offers a low cost option to do so. IT is easy, there are no credit checks and there are lots of contractors who can do it. 
The buyer beware part - don't get over charged just becasue you don't get a bill today - you are still paying the bill. Also, keep an eye on what kind of interest they are charging you. 

Now, should you have in your mind that *maybe* you might want to move in the next decade... Then consider, it limits the types of loans available, this especially is true in the lower prices - up to $500000. 
If you are not selling, it is not that bad a deal.

I encourage your thoughts on this - I am interested in hearing if anyone have had good/bad experiences with the program.

 

This is a link to an article in the PE about a buyer who is suing for the HERO lien that wasn't disclosed at sale. http://www.pe.com/articles/hero-761687-realtors-property.html

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Topic:
Home Improvement
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California Riverside County Temecula
Tags:
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Anonymous
T

I feel I have been scammed. I've purchased solar panels through hero program. Only to reduce me electric bill. I wasn't aware my mortgage would go up $600. monthly or if I paid $4400 roughly my mortgage would increase $300. If the sales person would have said your mortgage will increase $300-$600 I would have said no thanks. I'm saving about $70 on electricity but will be paying an additional $300 beginning July. I'm pist off & really would like to expose these bastards. if I'm sellng a product & I tell you your bill is going down by $70, monthly but then tell you your mortgage will increase the following year by $300 monthly. Would you purchase this product?

May 25, 2017 02:34 PM #79
Anonymous
FYrene

My concern is the misleading information that is given regarding the tax benefits. I was lead to believe that since it is added to the exsisting property tax it would be some tax benefits. That was wrong. Also if you try to re-fi your loan the HERO program has specific rules on that process as well. This information was not disclosed in any of the paperwork that I have signed.

Jun 01, 2017 01:39 PM #80
Anonymous
Vashan Bobney

My elderly mother used this program to add new light fixtures and solar panels to her home. She was told that the roofing was bad and she needs a new roof which they replaced. After replacing the roof she was told that she did not qualify for the solar panels. The company who was with Hero told her they would make a few upgrades off the record to her home because she already signed a $30,000 contract. The replaced a few light fixtures and toilets and faucets and promised to make other upgrades to the property and have not returned since and this was in Oct of 2016
I called the roofer who was hired by the company with Hero program and was told there was no hole in her roof and that there were only a few shingles missing.He also only charge the company with Hero $5,000 to replace the roof shingles. I'm now using the roofer to try and go to court only to be told I have to go to an arbitrator. I tried to call the company with Hero but they will not return any of my calls. I had the work appraised and it was less than $10,000 I;m want to know is there a way to pay Hero program off for work they done at the price it was done for and not have a lien against my mothers home for the next 20 years.

Jun 08, 2017 08:54 AM #81
Anonymous
Tom

Hero contractor STOLE $150,000 from us. Hero does not pay for the work up front, so the Hero Contractor came to us asking for investment funds to complete Hero projects. He was indeed a Registered Hero Contractor and had done Hero work--he then stole over $150K. Beware

Jun 09, 2017 07:09 PM #82
Anonymous
Kristi Buck

BEWARE. They are scammers and be very very careful when you sign that line. Our loan was for 11K. Payoff ended up being 14K. No tax payments missed or anything like that. The loan is NOT transferable. We had to pay it off before anyone would consider buying our house. The gal from Riverside County HERO office was so nasty, it was unbelievable. We will be more than happy to get involved if there is ever a class action lawsuit.

Jun 24, 2017 03:16 PM #83
Anonymous
Ed

I looked into the HERO program and got approved for 50k. I called around for quotes and realized that all HERO contractors were over charging. I got a quote from a different contractor (not a hero contractor) and was much less than all the HERO contractors offered me. Once HERO contractors know you are going through the HERO program, you better buckle up because they are going to take you for a ride. Ridiculous!!! Don't use HERO at all. It's a bad program. Shut them down.

Jul 12, 2017 09:24 AM #84
Anonymous
Pam Cramer

Have not signed contract yet for Hero program through a plumbing company,I hear I will pay couple thousand on house taxes , my payments would be around $125 for 20 years to pay off around $15,000.To fix leaky pipe under house and basically remodel tiny bathroom do to shower pan leaking . My concern is my home taxes are under Jarvas act prop 13 transferred from parent to child to keep propert taxes low . Parents passed away .Don't want to loose prop 13

Jul 17, 2017 07:10 AM #85
Anonymous
craig Wilson

Good day everybody am Craig Wilson By name i want to give thanks and a great appreciation to Mr Ramse Dave Loan Company for offering me loan for purchasing my house with a low interest rate. I want to give thanks to him for giving me this loan. My friends out there who needs loan for different purposes i advice you contact Mr Ramse Dave Loan Company for loan instead of falling in to hands of Scammers online. Am happy today because of Mr Ramse Dave Loan Company. So if you want to contact them for a loan you contact them on: ramsedave121@gmail.com

Craig Wilson

Aug 24, 2017 06:43 AM #86
Anonymous
Sue James

Scam!!! Buyer beware. I was told 29% interest rate.

Aug 27, 2017 11:31 AM #87
Anonymous
SUSAN MORGAN

I usually pay cash for stuff I buy.however i have quite a bit of debt due to my low income , how is that viewed when applying for a credit card. My credit score is constantly on a roller coaster and now severely suffering because my cousin has not been paying her monthly note as expected and myself has been skipping few bills.I applied for an American Express card ,the application was denied.Though i had one many years ago,and i use it to pay my minor expenses on time. This is the second time that I got denied.i have been monitoring my score and now i have My credit score at about 610 but i needed it to be upgraded for a CAR loan,just last week i saw a review on Facebook about this hacker who helped a lady to boost her credit score.i took his contact and mailed him asking him if he can help me fix my credit,Expectantly it was fixed and raised to 795 and all my debts has been rolled out..HACKWIZ at PROTONMAILDOT COM,Thats his email,should in case you need your credit fixed just like mine.

Sep 05, 2017 01:20 AM #88
Anonymous
patricia christensen

what if you pay cash as the buyer?

Sep 28, 2017 07:54 AM #89
Anonymous
james J

I am currently refinancing my property thru USAA with fixed interest and found out the HERO program will not subordinate. So, I need to pay off the HERO program in full. Also, when I had the home project done financed with HERO they automatically added the first year interest and jacked up my loan by $2,000.00 more plus another annual fee of $36.00. My original loan was $ 11,636.00 after two years of paying thru impound escrow now the payoff amount is $11,654.00.

Jan 19, 2018 03:34 PM #91
Rainmaker
1,478,606
Inna Ivchenko
Barcode Properties - Encino, CA
Realtor® • Green • GRI • HAFA • PSC Calabasas CA

Those PACE or HERO loans are just trouble.....as you said, if someone needs to sell and has no equity, or needs a refi....just trouble. No proper disclosures, tax increases, no good... I'm all for any sustainable and green improvements, but I would not probably recommend to take this loan.

Jan 28, 2018 09:45 PM #92
Anonymous
Vashan Bobney

Well to give you guys an update on my court case on the hero program. I was told by my lawyers that I needed to sue the construction company. After filing a suit the company filed for bankruptcy and closed. But opened back up on the same street with the same people under a different business name which makes them not liable for a lawsuit.

Jan 29, 2018 09:03 AM #93
Anonymous
Lucas Ben

My experience with Currency Capital has been great. I’ve been in business for 20 years and I’ve always managed. I really didn’t need the money, but it has obviously made things a little bit easier having it available if needed. We do quite a few construction projects and a lot of times we’re out of funds on labor and materials while we wait to get paid. So the loan with Currency Capital has allowed me to fill that gap when needed until I collect on my end. Whereas in the past, I would either just get a cash loan somewhere at a high-interest rate and it was costing me quite a bit on the back end. This loan with Currency Capital is more ideal for those times. The young lady that was helping me out has been great, too. When we did a equipment loan, we were able to do the DocuSign and everything there on the same day and we were able to take care of that fairly quick, as well. She made the whole process very easy and I’ve been happy with the service, contact them via currencycapital@yahoo.com If you need to use them for capital, they would secure your needs.

May 31, 2018 04:53 PM #94
Anonymous
DanA

The HERO Program is unprofessional, inefficient and their fees are outrageous. Paid off my loans and had to wait 5 months for a refund to be processed. Do not use. Better to get a loan if you're able.

Jun 06, 2018 09:54 AM #95
Anonymous
glenda

Oh wow. If I can say BUYER BEWARE, BUYER BEWARE. Hero (purchased 2015) is the worse. You cannot call it a program. I was told if I bought through Hero Program I would get a tax break at the end of the year. It was never explained that is added on to your home as a lien. I first had my house payment and tax payment lumped in together. Surprise I go t take off my PMI and here is where I find out that my house has this lien, that I owe more money toward my yearly house tax on top of the hero tax monies due. Note: No tax benefit whatsoever, so if I did not separate the house tax and hero tax (I would paid them on my own), my house payment would have gone up like a $1000. In the process of doing this I called hero to pay off the ow I realize it is a loan at a rate of 6.25% interest rate, I was informed that I would have to pay the interest due from the beginning of the loan date. Forget the fact that they do not do back ground checks on there outside contractors, and if the contractors tell you everything is fine and have you signoff on the project. That is it. You are at the contractors mercy. You can read about my night mare with Rennovate (Hero Program) and Sears (outside contractors) on Yelp. The contractor comes in and brings his people and then tells you when the city inspector contacts your or me. I will call you or you call me. Contractor I will do the walk through. Well 2015 is when the ac unit was bought and completed (so I thought). April 2016 I get a letter from the city stating the permit was not completed. Now as of April 2016 (note the only thing that saved me was that I had bought in credit), I called Rennovate, sears, contractors and I was given the run around. No one cared ( you can read my horrible experience on yelp). Needless to say april 2017 I started my crusade to have the permit completed and the permit was completed October 2017 (I almost had a nervous break down, almost lost my marriage and life was horrible. Hear is the thing if you want to finance anything, air/heating, solar, house repairs etc, please go through a reputable financial service. Now mind you if I had to do things all over again. I would have reviewed that contract with a fine tooth comb, I would have research the program that was only a few years old when I got it If I would have know that an additional 5000 was added in interest, that you have no one to call in response to a problem, that a lien would be place on my house. Trust and believe I did not need a central air and heating system that bad. If it sounds to good to be true, it is to good to be true. There is no one out there trying to giving you money. The sellers: Hero, the contractor all they want is there money upfront. The two do not work together to confirm that the job is done right prior to payment for them. So if they can keep you in the dark about anything so they can get paid. Trust and believe it will be done.

Jun 16, 2018 02:00 PM #96
Anonymous
Tane Tanzo

DO NOT TAKE A HERO LOAN!!! IT WILL END UP COSTING ALMOST DOUBLE THAN THE AMOUNT YOU "THOUGHT" YOU WOULD PAY. STAY AWAY OR BORROW FROM A MORE REPUTABLE CO.

Sep 22, 2018 05:43 PM #98
Anonymous
John Rodriguez

Just sold my home and had 18000$ taken for Hero Loan I took out for 17000$ home paint job. The payoff is more than the original loan and when I called they just say that there is no prepayment penalty but not so, how it’s a government approved program is beyond me, three time wounded Vietnam infantry paratrooper got took big time and this program needs to stop ripping people off. Will seek legal counsel. Whatever you do run from any offer from Hero Progrsm.

Apr 10, 2019 04:01 PM #99
Anonymous
Jimmy Reynosa

we have Hero program,we got new ac/heating whole works. I would think the contractor would be the problem. Now in our case we were paying out alot of money for income taxes just down th drain..Our person from Champions went over everything. In our case its good we have no write offs and or mortgage is paid off so you wait for that day then get slammed taxes. for us yes our taxes did got up 5,000 more a year which i am not thrilled about at all but it has been a write off. If we paid for it or financed it would not have been a write off for us in our case. Guess we fortunate house is paid off or maybe not but it helped not 100%. cant avoid taxes. we both on social security, have to do mandatory take out since husband over 70 so we use that pay taxes or else goverment gets that. I think it is a individual situation. Reality your house is paid off you home free but NOT true so for us we understand .we paying on it 15 years aware if move it comes it comes out of the equity of the house its ok with us you cant take it with you. We have no plans to refi .It sounds like the above people agree did not explain in detail. Dont get me wrong i dont like our tax bill but rather have what we purchased and not pay the goverment now thats money down the drain....Once you retire and dealing with mandatory take out if you have pension, IRA,s.Most people dont understand dont think once mortgage paid off its all fantastic you gotta have write offs we put that monthly house payment away use toward taxes..Also perhaps talk to your tax man.. We could have done equity line i suppose since mortgage paid off but to late now maybe cheaper but our case its once retire and must take out that money to goes toward or added as income so you screwed there showing higher income in reality and pay out money so for us its ok had to do something and thrilled our contractors Champions....WE plan on staying here if sell aware it has to be paid off with sale of house. Yes i think it was explained well by our contractors i dont have to like it but we have little choices other than pay Goverment and nothing to show for it......Agree dont think above people were informed .We would not do refi aware if you do taxes go up when accessed for it which not good..Luckely we had equity and was informed well but for us only way to go we think. Discussed with tax man borrow money equity loan pay it off but he did not think good idea to do t hat so we will keep doing what we are doing see what future brings. I dont blame HERO programs sounds like you did not totally understand which agree i would be very angry. Talk to lenders, talk to tax man get options.

May 08, 2019 01:24 PM #100
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Rainmaker
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Terkel Sørensen

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