Mission Viejo

                                         HERO Program - Buyer Beware
                                                                     By Kirk Kelley

The city of Mission Viejo is again considering the HERO program after turning it down in 2014. HERO stands for Home Energy Renovation Opportunity.

The HERO program allows homeowners to make solar and energy-efficient improvements they might not otherwise be able to afford. The improvements increase their property values. The HERO program also touts the jobs and economic development it will bring to cities.

 If a city council adopts the HERO concept by signing on to the Property Assessed Clean Energy Program (PACE), residents can access financing for purchases and installations. Homeowners repay through "voluntary annual assessments" on their property tax bills.

However, despite great reviews from HERO's own representatives, there are downsides. Because little or no cash is needed up front, some lenders say the program takes advantage of homeowners with poor credit ratings.
In addition, the program can reduce homeowners' equity and stop them from refinancing or selling their home until this lien is paid off. The program can also create escrow problems for buyers, sellers, lenders and agents.

The homeowner's cost for participating in the HERO program becomes an added assessment on property tax bills, which can take 20 years to pay off. The loans are tax liens against the property. If the homeowner defaults, the tax lien gets paid before any creditors. The Federal Housing Finance Agency has warned about the risks to taxpayers as well as the real estate and lending industries.

Taxpayers bear risk because municipal bonds finance the program. Gov. Brown put up a $10M trust (The $10-million Loss Reserve Fund) for homeowners who fall into default. Even $10 million becomes inconsequential when spread throughout the entire state. Taxpayers can end up on the hook for someone else's debt.

As another argument against the program, government-sponsored loans are competing with the private-sector loan industry. The means exist in the private sector, already available to consumers.

As with any financial decision, it’s always wise to research the pros and cons to insure that you as the buyer, are aware of all the consequences. 

Kirk Kelley is a longtime Mission Viejo resident who is a fiscal conservative and an advocate of open government.


Anonymous said...

I hear there is a sober living home sprouting up in the neighborhood on Ruisneor.
This is not a good thing and will bring our property values down. We need to fight against this. Residents of this area need to be made aware.

Anonymous said...

This is on the corner of Los Caballos and Ruisenor. Just bought a home in the neighborhood and this was not disclosed. We need to bring this up at the next city meeting. I hear 12 residents. Does that mean 12 more cars on the street? What is happening to this city?

Anonymous said...

What?! This concerns me greatly and I'm certain my neighbors who are raising their families will not be happy with this. Do we not as a community have a say in this?! If this is true and I will contact the city myself to verify this. Every single one of our neighbors should know this. The biggest concern is our homes and those of us raising young families. Not to mention the school which is literally 1 block away from the area! It just doesn't seem right or fair that we as the residents wouldn't have been notified of this. I agree we do need to bring this up in a city council meeting and soon!

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