RIVERSIDE, Calif.--At nearly 80-years-old, “Ann Wright,” has seen and experienced a lot in her lifetime. However, she said, nothing compares to her frustration since trying to figure out how her signature showed up on a contractor’s agreement she’s certain she never signed.
That agreement, a legal and binding document, indicates that she now owes more than $10,000 for the purchase and installation of a new air conditioning unit in her Riverside home. Wright, who
Caught in the Wake
Of the Housing Crisis
Driving North on Arrow Route through the city of Rancho Cucamonga new home construction signs can be seen just over a mile past the main post office. In this city area of Southern California’s Inland Empire, covering Riverside and San Bernardino Counties, new home construction banners flanking the skyline are indicators economists call evidence of a comeback.
At the height of the national recession, the Inland Empire was considered ground zero for home foreclosures and double-digit unemployment. Even after the recession was officially declared over in June 2009, unemployment in the region soared to 15.1 percent in July 2010.
Many families could no longer afford to stay in their home. Hundreds lost precious memories and most or all of their wealth to foreclosure. Nationally, African Americans lost a whopping 53 percent of their household wealth. Black and Latino families bore the lion’s share of home foreclosures in California.
Linda J. Jackson, a senior certified housing counselor and regional branch manager of the National Investment Division of the Housing Counseling Agency (NID HCA), remembers the desperate faces hoping for relief in the form of reduced or modified mortgage payments.
The NID branch, based in San Bernardino, is a nonprofit agency approved by the U.S. Department of Housing and Urban Development (HUD). The branch is part of a diverse network of advocates, housing counselors, real estate professionals, faith-based organizations and others committed to ensuring fair housing opportunities for all in urban or minority communities, here. The agency has helped scores of families appeal to their lender for assistance.
“The ironic thing about all this was that I was shown that I didn’t know how they truly felt until it happened to me,” said Jackson referring to the African American homeowners she’d met. “I went into foreclosure. Only then did I really connect with the people to understand exactly what they were going through, especially the African American people in my community.”
Jackson, who is African American, said, “This knew no color line. It affected us all. It let me know how many of us were living paycheck to paycheck. The thing that got me the most was that I had people come in that had PhDs and masters degrees. It was shocking because it didn’t know any color. The really sad point about this is that they really believed they had done everything right. They had gone to college; they had saved their money.”
She and her office team helped some families stay in their home., but not others. Some have since restored their credit and gone on to purchase homes again. For African Americans, the path to wealth and financial stability has been through homeownership. African American seniors however may not have the luxury of time on their side to fully restore the financial nest egg.
“They came to our office because we cared, she said, adding, “Our goal was to talk to the banks to work it out.”
“I remember I was rushing and a little preoccupied that day when he asked if I had ever heard of the HERO program,” Wright recalled.
She hadn’t. The young man went on to explain he was in the community trying to get residents like her to get involved and to take advantage of a program that would virtually cover the entire purchase and installation of a new air conditioning unit. He assured her that her expenses would be nominal.
Energy-Efficient Improvements Pushed
HERO was developed as a public-private partnership to help home and business owners finance energy-efficient, water-efficient and renewable energy products more easily. Despite praise for the program, though, some business practices have become controversial and led to financial abuses in certain cases.
The program, now in more than 300 California communities, was developed in 2010 by the Renovate America company with the Western Riverside Council of Governments, representing 18 communities. Part of the Property Assessed Clean Energy (PACE) [http://tinyurl.com/jrygtlz] program, HERO has helped to create more than 6,500 jobs in California, funded more than 38,000 residential projects, and provided more than $760 million in financing to homeowners, according to advocates.
Through HERO, local contractors are paid to conduct needed improvements, such as better air conditioning or solar panels, and property owners who signed on then repay the loan through additions to their property taxes. Community government may do this by placing a lien on the property and adding the amount to the owner’s tax bill.
But the Federal Housing Finance Agency, Fannie Mae and Freddie Mac have objected to use of liens, for instance, when priority lienholders are not notified nor given an opportunity to object to this financing.
Wright said, “I have friends on the eastside of Riverside that had renovations done to their home and they didn’t pay much for the work. I thought this was the same program offered by the county. The most I expected to pay was about three or four thousand dollars.”
Believing the HERO Program would cover most of the expenses to upgrade her home cooling unit, Wright said, “I signed an electronic clip board thinking that I was giving my permission for him to check my eligibility, that’s all. I was surprised when he said the contractor would be out the next day to start the installation. When I got the bill I was furious. I went and got one of my neighbors to review the bill too. I couldn’t believe what I was seeing.”
Wright believes there were important details of the program that were not properly explained, such as the lien that’s now placed on her home. She also felt poorly informed by the statement on the company website: “Making energy efficient upgrades to your home is affordable with HERO Financing. We offer a low-interest financing option that is repaid through your property taxes, which may provide tax benefits. Approvals are not based on credit scores and applying is simple.”
‘If It Sounds Too Good to Be True …’
Rose Mayes, executive director of the Fair Housing Council of Riverside County, has met with Wright and many other seniors, who have lost their footing since the nation’s housing crisis.
“I tell people, if it sounds too good to be true, most times it is,” she stated.
Mayes said what is happening now is yet another layer of the housing crisis. She explained, “Many seniors have already lost homes because of predatory loan products. Now, programs such as the reverse mortgage, which uses the home’s equity as collateral, and even the HERO program, don’t always offer the best solution for seniors trying to recover or protect their remaining assets.”
Mayes’ and her staff have seen many clients who went into foreclosure during the housing crisis. “We had seniors that had to move in with their adult children and that strained relationships. It’s very sad because I know that some will never recover,” she said.
As for the HERO program, it continues to receive mixed reviews as a useful tool to finance home renovations and offer savings to consumers. Some proponents have named the HERO program the No. 1 energy-efficiency financing program in the United States, while others, such as Mayes, question whether a program that primarily bases eligibility on home equity without considering one’s credit score is good for seniors.
Chris Orlando, a spokesperson for the HERO program, said in a written statement, “For homeowners age 65 and up, we do a separate call to help ensure they are happy with the job, understood the financing terms, and are setting aside funds for their first payment. We ask that another family member or advocate be on the call. We have an elder advocate on our team listen to all senior calls. And we offer eldercare training at a contractor’s request to their full sales and installation teams to learn how to communicate effectively and ethically with older homeowners.”
As for Wright’s case, Orlando stated that several weeks after the installation was completed, she contacted HERO and said that she been charged for an upgrade that she didn’t want. HERO subsequently worked with the contractor to obtain a refund for that portion of the work.
According to Orlando, Wright again contacted HERO about her ability to pay off the remaining assessment. He has confirmed that HERO has been working with her to find options to help her manage the unexpected tax burden.
That help, though, may not be enough for seniors who could find themselves in murky financial waters. Since there is no guarantee that the HERO program is a good fit for every homeowner, especially seniors, it’s a good idea to seek independent council and proceed with caution.
“We encourage seniors to contact our office and request to have documents reviewed before signing them,” said Darrell Moore, deputy director of Inland Counties Legal Services (ICLS), which covers Riverside and San Bernardino Counties. “This way they’ll know what they’re signing and what they’re actually on the hook for.”
ICLS provides legal aid free to low-income individuals, families and seniors like Wright, who is now banking on a reverse mortgage to finance a little relief. Financial advisors, though, caution that a reverse mortgage may jeopardize one’s ability to obtain financing at a later date.
“I feel a little better now that I have a reverse mortgage, but I’m concerned about the principle. There’s been some talk of a class action lawsuit. I don’t just want to give in to something that I don’t feel is right. Something needs to be done. I told them, ‘You’re going to make people homeless.’”
This article is adapted from a two-part series that Sheri Stuart wrote for Inland Valley News with support from the Journalists in Aging Fellowships, a program of New America Media and the Gerontological Society of America, sponsored by the Archstone Foundation. To read the original, see Part 1 and Part 2.