2 hero energy retrofit program
Download as DOCX, PDF0 likes314 views
The HERO program (Home Energy Renovation Opportunity) provides California homeowners a financing option for energy-efficient home improvements, but comes with potential refinancing complications due to its super-priority lien status. This status may hinder homeowners from refinancing or selling their homes, as major mortgage lenders like Fannie Mae and Freddie Mac do not support properties with HERO loans. While the program aims to promote energy efficiency and has generated jobs, prospective buyers should be aware of its implications on mortgage marketability and financing options.
2 hero energy retrofit program
- 1. HERO Energy Retrofit Program? Buyer Be Aware. Gene Wunderlich for: The ValleyBusinessJournal It's hard to opena newspaperoryourmail these dayswithoutseeingsome promotionof the HERO Program (Home EnergyRenovationOpportunity).LaunchedinDecemberof 2011, the HERO Program is offeredbythe WesternRiversideCouncil of Governments(WRCOG) andadministeredbyRenovateAmerica.Itbeganas a local implementationof the more widespreadPACEProgram, or PropertyAssessedCleanEnergyProgram, first introduced in2008, but the CaliforniaHEROProgramhas recentlybeenexpandedtocoveranyjurisdictionin the state. As presented,the HEROProgramprovidespropertyownersinCaliforniaanew wayto finance home improvementstoconserve waterandsave energy withminimal upfrontfinancialoradministrative burdens. While mostof the focus appearstobe on solarenergyapplications,the programalsocoversthe installationof energyefficient airconditioningsystems,windows, 'cool'roofing,watercapture anddripirrigationsystemsand artificial turf. There are currentlysome 50 categoriesof productsavailable underthe HEROProgram. In additiontoofferingresidentsaneasywayto upgrade theirhome andreduce costs,the program hasalso producedjobsforthe region.RenovateAmericaclaimstohave completedsome 23,000 projectsthroughoutthe regionutilizingover400 certifiedcontractors. Homeownerssimplyhave toapply, (aprocessthatcan be completedonline),have theirproject approved,selectacontractor to performthe workand sitback and reap the rewards. So if it's thatgreat and that easy,whythe 'BuyerBe Aware'warning?Well,there are few caveatsyoushouldbe aware of like lifetime costof the programand evolving technology, butbyfar the biggest question Realtorshave withthe HERO Program today is: Can I refinance or sell my home with a HERO loan in place? Depends.Yousee,aHERO loan isstructured so thatit appearsas an assessmentonyourtax bill - it ispaid throughyour monthlyimpoundaccountoryoursemi-annual tax bill,whicheverwayyoupayit. The trickypart is that itappearsthere as a superpriority,orfirstlienstatusloan.Thatmeans inthe eventof a defaultthatloan getspaidoff before anyotherloansdo. What's wrongwiththat? Nothing,exceptthatFannie Mae and Freddie Macdon't like thatand theycurrently underwrite about90%of mortgage loansinthiscountry.But letme quote themdirectlyfroma white paper issuedonDecember22, 2014: Today, the Federal Housing Finance Agency (FHFA) is alerting homeowners, financial institutions, and state authorities of the agency’s concerns with state-level actions that threaten the first-lien status of single-family loansowned orguaranteed by FannieMaeand FreddieMac. The existenceof these super-priority liens increases the risk of losses to taxpayers. One such program is known as the Property Assessed Clean Energy (PACE) program, which often provides loans as first-liens and is offered in California and in some other states. While FHFA fully supportsenergy retrofitfinancing programsto allow homeownersto improve energy efficiency, these programs must be structured to ensure protection of the core financing for the home and, therefore, cannot undermine the first-lien status of Fannie Mae and Freddie Mac mortgages. In issuing this statement, FHFA wants to make clear to homeowners, lenders, other financial institutions, state officials, and the public that Fannie Mae and Freddie Mac’s policies prohibit the purchase of a mortgage where the property has a first-lien PACE loan attached to it. This restriction has two potential implications for
- 2. borrowers. First,a homeownerwitha first-lien PACEloan cannotrefinancetheir existing mortgagewitha Fannie Mae or Freddie Mac mortgage. Second, anyone wanting to buy a home that already has a first-lien PACE loan cannotusea FannieMaeor Freddie Mac loan for the purchase. These restrictions may reduce the marketability of the house or require the homeowner to pay off the PACE loan before selling the house. (Full text available at www.fhfa.gov) A commentlettertothe FHFA from the Mortgage BankersAssociation,AmericanBankersAssociation,Housing PolicyCouncil andothers,made theirposition equally clear:"Whileenergy efficiency is a worthy goal,PACE super-liensthreaten thelien position on which mortgagelenders,servicers,and investorsrely, and are disruptive to mortgagemarkets.PACEfinancing isnotan appropriatemethod forfinancing energy efficiency improvements forhomes." So be an informedconsumer.Understandthatthe energyretrofityouare soenamoredwithmaynotincrease the salabilityof yourhome and insome cases may reduce it.It will make itmore difficultfora buyertoobtaina loanor to qualifyfora loanif theycan finda willinglender.Afterall,theywill have toqualifyforthatextra$200 or $300 /monthjustas if theywere buyinga bigger,more expensive home.If theycouldaffordabigger,more expensive home,that'sprobablywhattheywouldhave beenlookingattobeginwith. Itmay alsomake it more difficulttorefi yourhome intoalowerinterestrate.FHFA streamline loansare not availabletoyouat thistime unlessyoupayoff that firstlien. If you decide thatnowisthe time foryouto take advantage of energyretrofitsforyourhome orproperty,get all the facts. The HERO Program has beena boonto manyhomeowners andinstallersthroughoutthe regionbut onlyyoucan determine if it'srightforyou. For more information. visit:https://www.heroprogram.com/RiversideCounty/