Anyone here do PACE or HERO financing- renovate america

[Sierrasparky]

Hi all,

Does anyone here do hero financing. Just got a email today for this. What is it?

 

[Sierrasparky]

What I meant is who are they?
They appear to want me to sign up!

 

[jaggedben]

PACE financing is a loan from a county government that funds the construction of certain home improvements, mainly solar, and is paid back through property taxes. It stands for Property Assessed Clean Energy. HERO is one organization that administrates this for you and deals with the setup and bureaucracy so that you don't have to waste your time dealing directly with the county governments as a contractor. There are quite a number of PACE counties in California so working through HERO can streamline and standardize the process for you.

The big difference between PACE and other types of financing is that the responsibility to make payments stays with the property, not the individual. This can be an advantage if the homeowner has bad credit scores, because those are ignored (because the property will retain its value regardless of whether the homeowner keeps it). It also takes the burden off the homeowner having to feel committed to an investment whose ultimately payback may outlast their stay in the house.

With that said, for homeowners who don't have those concerns, a conventional home improvement loan from a bank is probably going to be cheaper money.

 

[ggunn]

What PACE is depends on where you are. Here in Texas it's for commercial and multifamily residential buildings only and it does not involve public money.

 

[kwired]

PACE financing is a loan from a county government that funds the construction of certain home improvements, mainly solar, and is paid back through property taxes. It stands for Property Assessed Clean Energy. HERO is one organization that administrates this for you and deals with the setup and bureaucracy so that you don't have to waste your time dealing directly with the county governments as a contractor. There are quite a number of PACE counties in California so working through HERO can streamline and standardize the process for you.

The big difference between PACE and other types of financing is that the responsibility to make payments stays with the property, not the individual. This can be an advantage if the homeowner has bad credit scores, because those are ignored (because the property will retain its value regardless of whether the homeowner keeps it). It also takes the burden off the homeowner having to feel committed to an investment whose ultimately payback may outlast their stay in the house.

With that said, for homeowners who don't have those concerns, a conventional home improvement loan from a bank is probably going to be cheaper money.

We have TIF (Tax increment financing) programs around here. I don't know all the beef on them, but sounds similar in many ways. Your loan is paid through your taxes, this PACE sounds like it is more dedicated to funding for specific types of projects, but with a lot of same procedures on the financing side.
The loan payments essentially become part of the property taxes, if owner doesn't pay taxes the lender don't have to try to collect or repossess property, those payments just get passed on to another owner should ownership transfer take place. City/county may be stuck with some payments during the process if there is a reposession, but in most of these cases they sell the property, and any taxes past due usually must be paid upon purchase in such sales. I would guess if there is any such loans outstanding they may even want the total balance of those to be paid on such a sale and then the whole TIF deal is closed out.

Most cities/counties certainly don't have funds in their budget to provide financing for such projects and I would assume that is done through third parties, they just collect payments from the owners at same time they collect property taxes.

 

[Sierrasparky]

The more I look into this stuff I see red flags.

 

[kwired]

The more I look into this stuff I see red flags.

I am not a bank, so I am not interested in getting involved in financing, though occasionally a customer thinks I am a bank.

If I were to be the middle man on financing on projects I do, I am not doing it free. Look at the charges you do have to pay banks for things that probably do not really cost them much if anything. If I am going to be a banker I want banker's proceeds from doing so.

 

[Sierrasparky]

What I have been reading is that as a Renovate America authorized contractor you do not make the loan. Those folks have the loan officers. The contractor does not make the financing. The contractor is supposed to be involved just to perform the work. The financing is to take place when the job is signed off and money paid to the contractor directly.

However reading through the documents online it is not that simple.
Very weird terms and conditions.

I'm not getting involved.

 

[kwired]

What I have been reading is that as a Renovate America authorized contractor you do not make the loan. Those folks have the loan officers. The contractor does not make the financing. The contractor is supposed to be involved just to perform the work. The financing is to take place when the job is signed off and money paid to the contractor directly.

However reading through the documents online it is not that simple.
Very weird terms and conditions.

I'm not getting involved.

I understand I am not doing the lending, but I don't intend to process information for lenders either. Though auto dealers, furniture stores and a few other places do this. I don't know if they get any reimbursement for it or if they consider it an overhead cost, yet somewhat necessary.

 

[Sierrasparky]

Well last time I purchased a car the dealer wanted to do the financing they wanted me to sign all their stuff. I refused to and would only pick up the car after I had paid the dealer.

This PACE stuff does not appear to be the same.
The contractor does not file or handle the customers loan papers from what I understand.
But I don't know for sure.

 

[kwired]

Well last time I purchased a car the dealer wanted to do the financing they wanted me to sign all their stuff. I refused to and would only pick up the car after I had paid the dealer.

This PACE stuff does not appear to be the same.
The contractor does not file or handle the customers loan papers from what I understand.
But I don't know for sure.

If they are pushing you (the car dealer) to use their financing - they probably are getting some profit from it somehow. If you offer cash or write a check and they still want to push their financing - they definitely are getting some profit from it. Otherwise the dealer is not likely putting up the financing themselves but rather working with one or even several lenders to set up this financing. Those radio ads that state "bad credit or no credit - no problem" you can bet they shop for a lender that will bite on that consumer, and probably at a high interest rate, but they also have the vehicle as collateral so the risk for them still isn't something too extreme.

The PACE thing is possibly either the actual organization that manages that program or even a second party that works with them, and they are just reaching out to contractors or anyone else that typically provides goods or services that those funds can be used for so they can at least mention it to customers that may qualify to use the funds.