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Money Merge Accounts aka Mortgage Accelerator programs...... beware!!!

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Disclosure : This might be slightly longer than usual. But in order to get this posts full potential, you need to read it all.

In a down market, you will see more lenders come out with gimmicks telling you that they can pay your house down in half the time. They will use such terms as wealth builder, mortgage accelerator, debt elimination, and money merge account programs. People advertising these types of programs tell you, "don't let lenders steal your money". That you will be saving thousands of dollars in interest. But is there a catch? Let's investigate this some more.

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The number one component that drives the money merge account is discretionary income. This is not the only component, but the most important. As long as the client has enough discretionary income, they can then make this program work for them. Discretionary income can be also known as disposable income.

There are two types of these so-called money merge accounts out on today's market.

The Australian Mortgage in which Kate Bourland wrote about. This program is sold by CMG mortgage services and is a first lien HELOC. I still don't know what the costs are associated to this, but I would assume it will still come with some of the traditional closing costs because mortgage brokers will be selling this and that would be their only form of income from this program.
The money merge account by United First Financial. I had the pleasure of sitting with 2 representatives from this company. This program is a HELOC in the 2nd lien position. What's nice about this program is that it will not affect your current mortgage. Especially if you have a lower rate. But this program would cost you $3,500 in order to obtain the software.

The major positive is that this works very well if you have a lot of outstanding debt when it comes to high interest credit cards. Sure, if could work with other things such as car loans and student loans. The bottom line is reducing your debt load and your monthly payments. What I truly dislike about this program is that so many lenders are advertising it as a program that reduces your compound interest. And such advertisements as this : "The average MMA customer will pay their 30-year mortgage off 100% within 8 to 11 years—with little change to their day-to-day spending habits and without increasing their monthly mortgage payments." Sorry, but this statement is extremely misleading and I will explain why.

How these programs work : First off, why are these statements misleading? UFirst uses an example of discretionary income of $1,000 per month. Sure, that sounds like a lot and it will work with any number above zero. But what they are saying is if you keep $1,000 a month extra in your account, that it will pay your mortgage of $200,000 with a 6% rate off in 10.4 years. Wow, that sounds awesome. You can save $161,236 in interest. But didn't they say, "without increasing your monthly payments?" The average American doesn't have more than $1,200 in the checking or savings account.

So, let me play devils advocate, the true money geek that I am. We all know that a 30 yr mortgage takes about 17 to 19 years before you start paying 50% interest and 50% principle. That is such a long time. But you can do the same thing yourself that these programs offer with no added costs. NOTHING... ZERO. The only problem is that it would take discipline. But wait, you would need discipline with the programs mentioned above. Because you are using discretionary income and if you used part of that $1,000 that was left over, it won't work as quickly as promised. If you used that full amount up before the end of the month, you did nothing to your interest savings. You are then back to zero, with a HELOC loan that is an adjustable at worst.

On another note, if you took that $1,000 yourself and applied it monthly to your principal, your mortgage would be paid off in 10.1 years. Wow, that's 3 months sooner and it didn't cost you a thing. But wait, it cost you $3,500 when you did the UFirst program. If you divided this fee by 240 months which is 20 years, that is an extra savings of $14.58 a month that you could apply towards your mortgage. And after doing this, now your mortgage is paid off 1 month sooner now, 10 years even. So if you held onto your mortgage for this length of time and if you used the program mentioned by UFirst, you would still have 4 months to go. That is an additional $8,852 dollars that you would be spending.

Overall, you would be better off taking the extra payments and dumping them into a stock portfolio which would give you a better rate of return. Robert Ashby put together a few great posts in comparing these types of programs with what I just mentioned, which is called Equity Harvesting. Money Merge Accounts Vs Equity Harvesting: Harvesting Wins by Over $1.5M A must read!!!

Conclusion : Money Merge Accounts can be a great tool, don't get me wrong. But in my honest opinion, they will only work for the few out there. And in most cases, it's just great advertising to get you in the door. If you don't qualify for this loan, they might try to get you into another type of loan. As in the case of the UFirst money merge account, keep in mind, it's a HELOC loan. That means that you need to be qualified for this type of loan. And with the mortgage meltdown, these are very hard to be approved for. Secondly, as mentioned above, it would work a lot better if you had other debt than just your mortgage.

Overall, everything that is mentioned here is solely based on my opinion and 15 years of service in the mortgage industry. But a FYI, I also did a lot of research on this, explored different scenarios, and examined different numbers when playing with this program. Hey, I am a money geek, what can I say. I basically want to give sincere and genuine advice and not what makes me money.

Lastly, can anyone else say pay option arms? Again, a good program that was not explained correctly, but could work for you if used properly. Here is a thought to sleep on for now. Aren't many of the foreclosures attached to the pay option arm and that these consumers are now up-side down on their mortgage. Meaning that they owe more than it's worth, especially if you make the least amount of payments, which would be less than the interest only payments. Just words to the wise, speak to a mortgage professional that will give you many options and not just what you want or what they try to get you to buy into.

My inspiration for writing this post was because of the post by Matthew Blum : Are You Really That Desperate?

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Posted by Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans on 11/27/2007 02:32 PM

Comments (64)

money merge accounts, mortgage accelerator program, mma, equity harvesting, equity management

This post has been included in New Jersey Information Camden County, NJ Information Cherry Hill, NJ Information

64 Comments on Money Merge Accounts aka Mortgage Accelerator programs...... beware!!!

NOV

2007

Excellent work Jeff, this post is vital for consumers to read and make their own educated decision.

Jeff,

I like the format in this presentation...with giving your conclusions and honest assessment at the end...after thoroughly explaining how tha programs operate!!! Thanks, Fran

OK Jeff, you got me to sign into AR again. I was happy being a hermit, lol.

I am glad to see others starting to continue what I did a long time ago (already been over 8 months) and that is showing that the program can work, but it doesn't work as presented, and it clearly is not the fastest way to pay off your mortgage as I have shown using other startegies. You can expect your email box to get filled with "hate" mail now as mine did.

I am doing a series of posts on various strategies, UFF and CMG side by side as well as other options. That series can be found at my newer blog home, the Florida Mortgage Report (mirror site). To get a great side by side comparison, using UFF's own presentation numbers, visit part 2 for payoff timeframes and part 3 for 30-year outlook. Both UFF and CMG fall behind simply taking the $1,000 discretionary income and placing it into a conservative account yielding 6%!!!

Why trap your money in your home when you can remain liquid and obtain financial freedom faster by doing something else?

PS - Thanks for the compliment and link to that one post and sorry for linking alot in this one, but I think it will help your readers.

Jeff - This is a nice summary post about these types of programs. I had recently heard more about the money merge accounts, but I wasn't sure what to make of them. Thanks!

As usual you present a fair and balanced assessement. Before commenting here I jummped over to Matthew's blog and posted there. I hadn't seen his post yet. I have done a great amount of research on the whole concept of the Money Merge Accounts and Debt Elimination and have become so empassioned by it that it's become my niche. In the right hands and in conjunction with referral relationships with Insurance, Financial Planners and Accountants this is a very powerful tool.

For the right client the MMA can be used create wealth by paying down a mortgage quickly, harvesting the new equity for investment purposes, then repeating the cycle.

You are absolutely right. My stats tell me that the U1st product can only be used by about about 25% of homeowners. It should be noted that the u1st program also works with a personal line of credit but that's a different topic.

There is another debt elimination program that I use for clients who have no home, bad credit or or are completely over extended. It uses a 3rd party administrator and still has the average client out of debt in 1/2 to 1/3 the normal time, while decreasing the monthly outgo.

I believe that every reputable mortgage guy, like yourself Jeff, should have these tools available to them even if they are not a major part of your business.

I've not been posting a lot lately as I've been laying the groundwork for a major education series on debt elimination. Many of my future blog content will provide education regarding the pros and cons of debt elimination in general. Watch for it. Give me a call if you'd like. I'd be happy to share some of the ways I'm using this product to help my clients.

JASON S. .... I turly think so. I never felt so pressured by the two reps. that stopped in my office. And I am getting more and more spam mail telling me about this awesome program. But nobody is breaking it down. They are relying on the so-called program that is suppose to be flawless. But everyone forgets about the amortization program that works the same, especially as you add your own extra payments into this. Overall, consumers won't see the writing on the wall, but be in awe after seeing the program. I have talked to 2 people personally that were amazed at this program, but apparently to me, they don't understand how mortgages work.Thanks for the compliment.

FRAN..... my pleasure. I am glad it was somewhat easy to follow and possibly to understand. Thanks for the comments.

ROBERT.... thanks for the support on this one. I was just getting tired of everyone that I run into, trying to sell me on this idea. Yet, when I break it down or ask questions, they all run for the hills. So many I think are just so easily sold on something new and because the program looks awesome, that they miss the basic concept of mortgages and amortizations. In any case, my pleasure and thanks for your input and feedback.

JASON C. ..... in all honesty, I don't think too many actually know what money merge accounts are and the meaning behind them. But I am glad that this helped some. thanks

KATE..... I do appreciate your comments and feedback. First off, we just won't see eye to eye on this one. I am seeing to many getting all gaga over this program. I think some reasons are that it does look impressive, until you break it down behind the scenes. The program that they sell doesn't do this. It shows 'their' way. 2nd.... I think it makes so many loan officers in a down market think there is a new program that will save their business. Taking the Pay Option Arm as an example is a great example. Look at how many sold this program, thinking it was the next best thing to sliced bread.

On another note, you said 25% of your business? How can that be, when a HELOC needs very good to great credit scores with some equity. They aren't the same as they once were even a year ago.

Overall... I am not always set in my old ways. And I truly believe if you are going to sell debt management, that you go the route of equity harvesting that Robert Ashby has described. I am a firm believer in letting your house make you money on its own time... and taking that extra money that you were going to apply to these programs, but put them in other financing vehicles such as mid risk stocks. And because of this, you will also still enjoy better tax write-offs.

In any case, I am not trying to change your mind. I saw so many people run around believing the Pay Option Arm was just awesome. Thousands of dollars spent on marketing materials and discs educating the consumer that it was fail proof... or safe. It's to easy to plug numbers into a program to woo people. But if you don't understand how an amortization works, then I think too many will miss the whole point. My whole point, there are still better options than what is mentioned above. Going the route of taking your money and finding better investments. And I am seeing that this loan is being sold to the public and even to loan officers as myself, in the wrong manner... misleading.... trying to be flashy. But then again, this is just my opinion. But I did do the scenarios on everything mentioned and have found holes that aren't being mentioned. The traditional way is still cheaper in the long haul.

..... just one note.... I was against these programs when they first came out, even before I sat down with someone to explain them to me. They have been explained to me and I am even more against them. It's sales 101 on how these are being sold, to collect a $3,500 out of the deal.

Jeff, Great Post and thank you for the mention. You mean you did not go to one seminar and became an expert...lol..just kidding. THanks again

All it takes is discipline right ? either way ? Do most people have it ? NO.

Most people don't have it.

Very very goof Jeff! I actually read this all the way through and feel this is one of those posts that should be included in the new Mortgage Week In Review. Most of us Real Estate Broker types don't know enough about this to speak intelligently to our clients about the pros and cons. Well done!!

MATT..... In all honesty, I was hooked within the first 10 minutes. It was like being gassed, I didn't know what would take place later on if I didn't open my eyes and ask the right questions. You should have seen me, I have these 2 guys a little upset because I wouldn't see their way, a way that they were semi brainwashed. Sorry... but it's the truth because I think I uncovered a lot here.

Overall, yes, it can work.... but you need to be in some good debt. And aren't those the ones that aren't disciplined? These are just facts.... you 700 to 750 credit score people have little or no debt. Those under 650 to 550 have way too much debt. Rut row.... when doing a HELOC, you usually need a 680 or higher credit score, depending on the LTV> Thanks for the kind compliment.

MISSY..... lol wow, you actually read this word for word. Awesome. Yes, the average person doesn't have discipline. I have several problems and issues with this type of loan. If you are sold on the first one, you are taking out a first lien HELOC. If you aren't disciplined, this could hurt you just like the Pay Option Arm. The other is, if you want to go this route, tap cash out of your house and got the route that Robert Ashby talks about. This will be more profitable, even if the stop market was in it's worst case as it was several years ago.

JENNIFER..... thank you very much. I know this is about 300 words a little to long for many on here. But if you read the whole thing, the picture should be clearer.... I am hoping this. Thanks again.

Jeff, I did not say 25% of my business. I said that only 25% of homeowners even qualify for the HELOC type product based on debt, home equity availability and credit scores. That's a different read all together. Those numbers are a couple of months old, so given the declining market it may be less now.

I had a mortgage guy try to put me into a pay option arm and I thought it was the dumbest thing I ever heard. Way too risky.

I've follow Robert's Blog and I agree with what he says. I also think that it's above the mindset of the average consumer.

The power of the UFirst Software is that it gives the consumer the ability to visually see what happens with their money. They are empowered to take control, run various scenarios.

There are definite things that bother me about the UFirst. Specifically, it's often marketed by people with no financial backgroud. That bugs me, big time. I wouldn't buy from someone like that. My clients are given the given the facts and recommendations, as I know them and allowed to make a decision that is right for them.

I'm not here to change your mind either. That's fine. You did your due diligence and it doesn't work for you. The one thing that bothers me about your blog post others like them is that you are commenting on something that you have not used. It's fine to say, gee, I've looked at this and it's not right for my business. It's not ok to make comments, like Matthew in the comment above, that completely discredits the product and those of us who are responsible with the product.

The average person can get their arms around this software in a way that they could never get their arms around solutions as recommended by Robert. Just my observations.

Hi Jeff,

I hope you are feeling better. I'm glad you wrote about this because an agent in our area did approach me about that UFirst Program and my first question was, "o.k., what's the catch" then he went on to tell me about the software for $3500 and I said - thank you very much for the info - NEXT.......

I gotta agree with you on making your money work for you in better ways than that.

KATE ....... sorry about that. But even to say that only 25% of the people out there could qualify I think is an inaccurate number. Do you know the percentage of people in the US that have a credit score under 620? Take a look at one of the credit reporting agencies, they tell you on the reports. How many have little equity in their property... and those that do have good credit scores and equity, usually don't have much debt besides their mortgage and a car. These are stats that can be found in many different locations. Which is why 25% in my opinion is a high number.

So, you talk about a loan officer that tried putting you into a pay option arm. You thought it was " the dumbest thing I ever heard. Way too risky. " Why do you say this? I think if you took the fixed payment and the extra money that you are being told to put down on the money merge program, that it will pay off even sooner. It goes back to discipline.

You talk about Robert Ashby and that you agree with him, but that it's above the average consumer. Which is why you should learn more about it and feel comfortable explaining it. Here is the problem that I have now and you are answering my concerns on your own. It's in regards to your next sentence.... "The power of the UFirst Software is that it gives the consumer the ability to visually see what happens with their money. They are empowered to take control, run various scenarios. " Now, this tells me on why it's easier to sell this, because it's a program that anyone child could possibly utilize. But it goes back to discipline. We need to look at history. Those that are already in money trouble won't have the discipline. Anyone in finances for over 5 yrs and have seen most scenarios will agree with this.

Lastly... you said that it bothers me because I talk negatively about this type of program without ever trying it. I have used the program. I have run the scenarios... You don't need to physically use it to make an opinion. Aren't you calling the kettle black when you said... "I had a mortgage guy try to put me into a pay option arm and I thought it was the dumbest thing I ever heard. Way too risky." Question, did you ever physically use a pay option arm yourself? Have you sold other programs that you have never used yourself before? Do you dislike a few other programs as of now? But if so, have you used them yourself?

Yes, the average person can get their arms around this program, for $3,500..... and a program that even wooed me in the first 5 minutes.... until I took their example and ran it 5 different ways, realizing that this is not as good as advertised with so many holes... in an economy that is not as strong as some think. Come to me by February when they come out with the money reports on the x-mas holidays. I would put money on it that the numbers will be worse than last year.

LISA.... when you say agent, did you mean real estate or loan officer. That's the sad part... speak to most of these people selling this program and they tell you that you can get people under you, to work for you, to sell this program to anyone and that you can still make a commission. This is not good.... you have people that aren't mortgage savvy, just trying to sell it like a pyramid scheme.

Just like an option arm, every mortgage product is created with the intention to help a specific type of borrower. When it's marketed across the board as EVERYONE's mortgage solution, this is where mortgage professionals can go wrong. Use it as another piece of the puzzle, not the whole picture.

Hey Jeff,

Great Post!!! I too have had the pleasure of setting through a UFirst Presentation...and the first thing that came to mind is that this will only work for a handfull of people because the average american has no discipline & that my friend IS the key ingredient along with the $1,000. of disposalable income. Also I personaly have never been able to figure out what disposalable income is??? Is it the same as extra money because I have no idea what that is either...LOL. Being the father of three boys ages 7,12 & 14 I do believe I shall never know the word "Disposalbe Income" It goes back to the old saying "If it sounds too good to be true...It is" Keep up the good work.

Ron

Jeff,

You do know that they make it sound so Good!! I still get these guy's trying to get me into this Product. I saw a guy driving around, and he was marketing this product like it was the best thing in the world. Jeff I am very Surprised that other brokers haven't chimed in on how great this is, because there were some posts selling these here on the Rain.

Jeff - nice topic. I had a guy pitch me this program today. He opened the phone conversation by stating we were associates on Active rain, so he got my attention. It took him 5 minutes of BS..ing before I had a clue he was even trying to sell me something. Our buddy, Matt Blum had a nice post tonight regarding solicitation from other AR members.

http://activerain.com/blogsview/287263/STOP-USING-ACTIVE-RAIN

It is truly getting out of hand! Especially these mortgage accelerator people.

Why doesn't someone just post the damn calculator they use on the net as shareware.......

Jeff, It really amazes me how many ways people can figure out how to separate people from their hard earned money.

Now Have a Blessed Day,

John Occhi, Hemet REALTOR®
Mission Grove Realty

Oxycontin is good for a very few, select people in our society! Make it available to the masses, via non-MD's, you have a problem.

Same issue with MMA's...you should have to have a special license to sell them, AND be required to have the reserve capital to buy them back from the client when they don't work. That will keep the snake-oil salesmen from selling these varieties of loan products. Only the true, dedicated "equity accelerator professionals" will sell them.

Do you notice the Amway / Quixtar "You just don't see reality!" responses you get from the true believers? They all respond the same way! If you ever saw "A very Brady Movie" you'll remember the scenes where Jan talks to herself rather psychotically..."Marsha, Marsha Marsha!"

I had a conversation with a broker/calculator/UFF salesman from California who was literally frothing through the phone! He was practically stuttering because I could not/would not see the light!

Nutty! Nutty Loan! Nutty platform for distribution! It will make us all look nutty!

Jeff

If you were closer, I'd almost HUG you for running through the numbers. As a result of my mortgage banking background, and much of the research I've been working on (as I am also a money geek), I havent made the time to run through the numbers, especially the $3500 cost. I can't begin to tell you how some of these very people selling the program try to name drop the name of real estate brokerages that are signing up.....blah...blah...blah....

I know some people will genuinely find value in the programs, but like the option arm, it sounds like its targeted at someone that is sophisticated enough financially, but just doesn't have the time to look at the analytics behind their debt (which is usually low anyway)!.

Thanks for really taking the time.

MARK...... bingo.... very well stated. The one thing that I will disagree about is that I wouldn't call them mortgage professionals then. Just as they teach high tech / super ops military people, you need to distinguish between friend and foe. You need a keen eye for those that need our help and not just sell them what makes us the money. Sure, I think my services are worth the price, but they get an honest diagnosis and not just a loan program that they want because everyone else says that it's a great program. And as you mentioned, using it as a piece of the puzzle and not as the whole picture.

RONALD...... well, thanks to Missy and several others, we do agree about so many that don't have the discipline for a program like this. Sure, we can teach it, but after so many years, you just can't change over night. Disposable income is income that is left over after all expenses paid, ie: mortgage payment, car, credit cards,.... etc etc. Any type of monthly payment, ... your cash remaining. In regards to discretionary income,
this is money that is left over after paying all your bills to include electric, gas, car insurance, and money on the side for living expenses... and money to get by for the month. That would basically mean, any money that you would have put in your savings account and not touch for a whole month... and in regards to this type of mortgage, money that you would never touch again. This is the problem that I have with this program, because you have to be so disciplined to not spend it until your house is paid off.

In any case, thanks for your input, your question, and for the compliment.

THOMAS.... what's sad is that many don't even know what they are selling.... or, that they are brainwashed in selling it, that even to them, it sounds great. And if you can't dissect it as I did, then you are selling false hope. This is just my opinion, but some of the blogs that I have already seen written have proven this to me. Especially when I ask them the simple basic question.... At what RATE and LTV.... and I get 2 more e-mails, but not with the answers. Or... I get a blank stare and they take me down another path for a few minutes. And check this out... I guarantee if you sat through 50 of these, done by 50 different people, that you might get 10% of them to tell you that you actually have to get a HELOC loan and then everyone realizes that this is going to be tough to begin with. I waited to the end and nobody brought this up, until I asked the question. That is the SAD part.

LEWIS...... yes, it's bothering me that so many are contacting me through Active Rain. But I am just letting it go for now. What bothers me is that most that have called me or e-mailed me, have a script and sound like a true sales person.... which I can't stand. Yes, we are in sales, but I love getting feedback from a client that tells me that I didn't sound like a sales person. I have had many tell me that was one main reason why they decided to go with me.

In regards to your statement, why someone just doesn't post the damn calculator? Because that is what they are selling, the program. Without that, there is nothing to sell. That is what the $3,500 is for, is for the money merge account program. They don't even use their own money for this. You still have to find the lenders to help finance your client. Think about this.... the options are endless. Think about those that sell their secrets through videos and or books. They have commercials on tv., late night, telling you that they can make you a millionaire, but you have to buy their discs.... that is kind of what this is...

JOHN..... I agree. Hey, we all need to make a living. But it's like selling snow in the desert, it won't last long. Look what happened to the Pay Option Arm once it got out of the box. Every lender wanted to sell it because so many found the secret of selling it, until everything came crashing down. In one year, I received 7 phone calls from people asking me to refinance them out of that program. You take care too...

RICH..... that was hilarious... I loved your comment. Thanks for the laugh. But seriously, everything that you mentioned is so true.

My boss had his accountant in our office the day the two reps. came in from UFirst. They told the accountant that he refers all of his clients to my boss. He trusts that he will take care of them. Then the rep. goes on to tell him that he is missing out on an opportunity to make a lot more money. That he could get other people under him, so he could make more money. The accountant again said, no for the 3rd time. I am way too busy from here until the end of tax season. And that is why he refers people that need help to my boss. After I sat there for 5 minutes, I realized that they were trying to sell him the program also. Keep in mind, something that I didn't mention, in order for me to have that actual program in my hands to sell to prospective clients, I need to be an agent. In order to be a true agent to reap the most net income, I need to spend $3,500. Or... I could be under my boss just like the accountant. Instead of having one big mass of people to sell from one group, they were now getting greedy, trying to line up others to buy as an agent also.

And yes, I know all about Amway... same philosophy here. I had a friend that tried to get like 5 of us together and explained the pyramid side of things.... none of us signed up. But he did.... and yes, all the responses were the same from those that were already part of this set up. I felt like I was joining a cult. Everyone has a basic belief and follow one main person... preaching how great it is, showing you througha program, that in all honesty, is a spin off of the basic amortization.

Yes... this program can work, but for the few, not for the masses. Overall, you made some great points... thanks, that was funny.... yet so much truth to it.

BILL.... yes, that is the scary part. They will allow anyone to sell this. But they are focusing on the loan officers, because a good accountant will rip through this.... and so should a good financial planner. I would love to get a bunch of them in the door and get their opinions. I just see too many holes in this. You need discipline. And yes, it would work wonders if you carried a lot of credit card debt. But aren't those the same people that will usually go back to their cards, once you free them up???? We need some stats on that one.

In any case, just send me a hug with some money.... lol Seriously though, my pleasure and thanks for your input.

what's missing from this conversation is a discusson of what the ideal client is? Every product fits a buyer. The real problem is that people ignore the facts and try to fit round pegs into square holes. A true professional will understand the client and know their products well enough to understand that - you don't fit here, not here either....but aaahhhh - here and here - this might work for your unique situation.

There is no one size fits all!!

Dangerous loan that shouldn't be 'sold'.

A valid tool, yes. But not for mass marketing.

Jeff, can I copy this to my outside blog?

Full credit to you, o course.

Let me know, so I don't have to subscribe to this topic

KATE.... not trying to pick an argument here, but I think you hit the nail on the head. Isn't that what so many that are trying to sell this loan, trying to fit a round peg into a square hole? Many of us agree, that a true professional will understand the client and know their products well. I guess I have to question you now, are you reading the comments. One of the biggest complaints is allowing just anyone running around on the streets selling this. Just as they did when selling the Pay Option Arm.

On another note, I asked you several questions on here and you didn't answer them. But then get upset when I put something down. Also, I sent you an e-mail with a few questions also. When someone can't give me an answer, their opinion and back it up, then I have to truly wonder on how they sell. Do they sell with heart and the program? It's one thing to be passionate, but it's another to be blind about what you sell, even if you seem passionate. Now, this is not towards you... this is a general statement.

Overall, you are answering the main issue.... you said, "this might work for your unique situation." And blind faith is what got this mortgage industry in trouble to begin with. Think about it... this program doesn't need to fit any government standards, the 2nd lien one.... because it's a software program for financing. It's still up to us to supply the financing for them to be able to use this program. HELOCS are not the easiest to do now. And you stated that you can even do bad credit people. I sent you an e-mail in regards to this, but no answer. Me personally? When I ask questions to someone that is very 'pro' on a program and don't get a response, I have to wonder then. Just like when these reps. came to speak to me.... they skated a little around some of our questions. They were hoping to get followers, people that would jump on very easily, with glazed eyes. They hit a brick wall when they had two of us in that room with a combination of 36 yrs in the mortgage industry.

TOM......Not 100%, but it can be, in the wrong hands. So many people will sell the program, but won't point out or reiterate the negatives. Like... that you need to be disciplined... and understand that if you spend the bank before the month is up, nothing will happen to your principal. RUT ROW... and this is an adjustable... so, now, what happens to your payment and principal?

In regards to this post? I would be honored if you had it on your blog page. We'll talk more about it... because I need to find out what we need to add so google doesn't pick it up as possibly a duplicate that was plagiarized. I am not an expert on that one. thanks

NOV

2007

Jeff,

I'm not sure what questions I didn't answer but ask again. In response to your other comments it never fails to amaze me how communication these blogs get misconstrued.

1 Regarding bad credit clients: The UFLO product will not work for clients with bad credit, nor would I even suggest it for someone who cannot manage their credit. What I said was that in terms of debt elimination there is another debt elimination product on the market for clients. The product has been on the market for 10 years and it uses a 3rd party administrator to help clients get out of debt. The client has complete control over the process and can turn it on or off at will. In essence the 3rd party administrator takes over the management of paying the clients monthly bills, pays the bills on time and pays off debts using time tested strategies. Through this program, the clients credit is improved over time and the mortgage may or may not be included in the debt elimination process. It does not negotiate down interest or hurt credit in any way.

2. Regarding the UFLO Product:

a. It is not a loan, nor is it being marketed as a loan. A client cannot even purchase the software if they don't already have a HELOC in place.

b. If a client doesn't have enough equity in the home to obtain a line of credit, the analysis says --- oopps you don't qualify to purchase this product. It won't work for you.

c. Even if the client does have a HELOC, the client still has to meet certain qualifications to buy the software.

In essence corporate has put safeguards in place to prevent what you guys are arguing about, so in most cases the arguments against the software are moot!

As an FHA expert - I would not think these programs (and you are talking about 2 distinctly different products here) would work for your clients. So what? FHA doesn't work for the referrals I get from Financial Planners. That's why we have so many program options available. One size does not fit all!

I have sat down with a MMA "salesperson" and while I love the concept, the pricetag is awfully high.

Yes, Jeff - it was another agent who was trying to sell the program to me to sell to my customers - Yikes!!

KATE...... it was questions both here and in an e-mail. But we can just move on.

In regards to the bad credit issue that you mentioned. This is what you said.... "There is another debt elimination program that I use for clients who have no home, bad credit or or are completely over extended. It uses a 3rd party administrator and still has the average client out of debt in 1/2 to 1/3 the normal time, while decreasing the monthly outgo." Now, I am not trying to be a jerk or a stickler. But we are talking about mortgage programs here. When you made this statement, it is very easy to assume that you are talking about a similar product for people with bad credit. So, let me take a stab at this then. Are you talking about something like a credit repair company? Or a credit management team or like credit counselors? If so, in my honest opinion, that should have never been mentioned, because it doesn't relate to the topic at hand. Hence the reason why such communication on here or in e-mails can get botched. I am not trying to attack you. But these are some reasons why clients assume so many things. It sounds like one thing when it's something else.

In regards to the UFLO program? Yes it is being marketed as a loan. Read the comments... I get so many different types of solicitations from people mentioning.... great program, special loan, great financing, etc etc. Part of why so many of us are against this is because of the company that is allowing just anyone to sell this. Why? Because of PROFIT. I start to lose all respect for any company, no matter what the product is. You have to many people unlike yourself, that can determine wealth building and just selling this based on what the program can do for you. This spells trouble. Besides, in my years of experience, this is not the best program to be going after and marketing.

I understand that it's a HELOC. I understand about the analysis and the safeguards. But if you read what I wrote and how I broke it down, in my opinion, there are better ways to still achieve what they are telling everyone. In any case, I appreciate your feedback.

ELEANOR...... I am not fully understanding your comment here. You talk about as an FHA expert... you or me? And in any case, that doesn't matter. I am here to break down this program so more people understand and not get fooled by the program that they have instilled, making it sound flawless.

I know one size doesn't fit all. I have done almost every loan out there at least once in 15 years. Except this one, because it's new. Besides, are you saying if your savvy customer from your financial planner wanted a stated loan, but after you gathered all of his information, you knew that you could do it full doc... would you still do what your client wanted?

Overall... again, I understand one size does not fit all. I am here to give my opinion on a program that is being sold by everyone and their mother.... that so much of what they talk about is misleading. That if you break this down to the penny, I can think of other programs and other ways to achieve what they are trying to sell. And in my opinion, if you don't do this and understand how it truly works, then you aren't doing your clients justice.

WHY doesn't everyone read the blog that Robert Ashby did and his series....(I mentioned it above in my post) ... and then come back to me and give me your thoughts. You need something to compare the above product mentioned to and it sounds like nobody is doing this.

On top of this...... someone made a comment that it's harder for a client to understand the equity harvesting and how to utilize this to the clients fullest potential. OUCH... you know what that tells me? That you would rather give your client the next best thing because it's easier to explain and show, because of the program. Because there is not true program for equity harvesting to show the client to make it easy. You need to know how to plan. This is my opinion, but it certainly sounds like my assumption is right on, because of the few answers that I am getting on this.

ED.......... yes, the MMA can work... but if I take the cost and roll it into other programs and or different methods, I can get a better result in most cases. As I stated above, the MMA with it's program can be the best for someone that has a lot of credit card debt. If you only have a mtg payment and maybe a car payment.... I could do several other things that would be way better than the MMA program.

Secondly.... this program is only good for those with 20 or plus years. It hardly works for those with a 15 yr mortgage. And if you don't understand why it wouldn't work, then you don't know how an amortization works.

Lastly..... and many people with so much debt, tons of credit cards..... will have so so credit scores.... and go back to their credit cards. Now... I didn't say everyone..... sure, there are people with 680 and above credit scores with lots of debt.... but there are stats that show it is more so amongst those with scores of 550 to 620.... and if this is the case, then how can they get a HELOC? Which is part of my point also.

LISA.... that is part of my point here.... allowing anyone to sell this is extremely scary and not everyone is understanding this. You don't have to be a licensed mortgage solicitor or broker to sell this. What does that tell you also? Once someone has the program, they can woo so many, because they won't be able to explain both sides of this. THAT IS A MAJOR ISSUE and part of the reason why I wrote this, why this product will become very misleading.

Jeff,

Regarding your assumptions on the UFLO Debt elimination program, your branch just broke. Not even close. A mortgage is part of a consumers debt so it's very relevant to the topic. I'll send you info on the product so that you know what I'm talking about. I'll also be blogging on it in coming days.

Regarding UFF, you are making some very big blanket statements in your comments and your blog post that bother me. What you are saying in your comments is that is that the MMA concept has merit for the right client, but that you don't like the way it's being marketed, or the distribution model that the company has chosen.

I'd be a OK if you had been straight up and said that.

Every product has a cost associated with it. That's reality. Since when is profit bad? Isn't the goal of starting a company to make a profit? Do you work for free? Don't get that comment at all. The reality behind everyone who blogs against the MMA concept is that they have an issue with the Direct Sales Distribution method.

Have you taken a look at the compensation plan in most real estate and Mortgage companies? Hmm, it starts with a commission split and in most cases management receives a percentage based on the sales volume that the sales staff generate. The higher up in management you go, the more people you earn overrides from. It's the same system with a different label.

Yes I have read and I do read Robert Ashby's blog. While I agree with his concepts and I strive to learn from what he writes, I also find flaws in some of his assumptions. What if the stock portfolio that the client invests in doen't perform? What if the client picks a stock broker who believes in churn and who talks the client into buying stocks that aren't right for them? What if your goal is to be able generate large sums of capital in a shorter time to buy real estate? Mortgage Acceleration, combined with equity harvesting is an awesome combination to achieve that goal. In the wrong hands, Roberts strategies can also be abused. Can you accelerate your mortgage on your own, yeah, but it's more a shot in the dark and how much time would someone spend actually creating the tracking tools to manage it. That costs money!

We can dig a hole with our hands, but a wonderful little tool called a shovel makes it easier, and a backhoe, now that's expensive but it's much more efficient for big jobs.

Also, you are way off base in the comment that the MMA won't work for a 15 year mortgage? I just did an analysis this week and the MMA software, combined with a line of credit will have his mortgage payment, a business line of credit and one of his investment property's paid off in 4 years. He'll be able to harvest the equity and buy more real estate as he goes.

There are variables that no analysis for any product can predict. It doesn't make the product bad, it just means that we can't predict the future. At the time the analysis is done, these are the facts that are being worked with. Circumstances may change and it will need to be reviewed and adapted.

It for this reason that I like the UFF software. It empowers the consumer to take control, get educated and become involved in their own financial future. In a time where Americans have a debt epidemic any tool that can encourage them to take control of their own destiny is a good one. Making consumers understand the power of their disposable income is probably the greatest value to this software.

I encourage people to look past the smoke screen, get past the din and get educated, really educated on the options available

Kate,

You are probably following my comments under Matt's post, so I will only make two here...

1) I agree that every mortgage professional needs to understand these program and have them as an option, at least one of them anyway. Sometimes they will end up being the best option for the client, my calculations are less than 15% and my experience has drawn that number even lower based on my clientele.

2) You commented "I've follow Robert's Blog and I agree with what he says. I also think that it's above the mindset of the average consumer." First off, thank you for the compliment. However, whether or not the strategies are above the average consumers mindset doesn't change facts. Rather, it goes to show the need to educate and change the consumer mindset to help them achieve their financial goals and dreams.

Hey Robert,

I'm going back and forth between the two blog posts and yes I am following your comments. It is you and your blog content that pushed me to start working on my CMPS certification. It is such a refreshing, awesome way to look at this business and Mortgage Planning is the future of this industry. Anyone who is trying to build a business in the old model of rate and term, slam a client into a mortgage is in for a rude awakening in the years to come.

Thank you for making your comment in line item #1 above. In that one little paragraph you said exactly what I'm trying to get across. The MMA's are a valuable arrow to have in your quiver. They are one solution of many. Your comment on clientele is interesting too. We can only draw on the experiences of our clientele and that is going to be different for each professional.

The underlying principles are still the same. The client must get educated and in order for that to happen we as professionals must be educated. If nothing else the MMA is a way to get in front of the consumer to start the education process. That's a good thing!

I'm so passionate about this education piece that one of my goals for 2008 is to form a non-profit that will bring financial education into the schools here in Redding and the North State as an extra-curricular activity.

NOV

2007

Thank you for this post.

I recently was told about the Accelarator. I immediatly thought how much trouble I personally could get myself into.

You are the best Thanks for this post.

Kate,

Thanks for the compliment and I am glad I inspired you to take the CMPS course. The mortgage broker of the future is the one that encompasses all strategies across the board, works with and educates the client on which options will work and which is the best one, then helps the client maintain the plan. It is about providing solid, proven solutions that will be the trademark of the mortgage planning professional.

Yes, mortgage professionals should have this type of program in their arsenal, but I would not recommend the MMA to anyone. USe the strategy, but the client can do without the expensive software which is exactly what the Money Merge Account UFF is selling is. Can it help, probably, but the client who wants to do this strategy can spend about the same amount of time and accomplish basically the same thing (and I have run the calculations). The $3,500 goes a long way in extra principal payments.

Is CMG the best, depends. I don't like the way CMG wants the whole thing wrapped into one loan, but it is the simplest and requires the least discipline by far, that is as long as you don't spend more than you make.

Calculating, based on those who have asked me about what to do in their situation, and they are from all across the United States and even into Canada, less than 15% would be better off using a mortgage acceleration program. With the clientele that come to me, I can work with them more and for longer (primarily because they can pay me...lol), I have foudn that the percentage is lower. That is because after being educated on the rules of money, home equity, etc., they decide to implement another startegy. I will also point out that the new strategy may not even require a refinance or even taking out a HELOC.

Again, it is all about providing solutions. By the way, I am thinking of just doing mortgage consulting as opposed to actually doing mortgages. What do you guys think? Send me an email with your response if you would.

Robert,

Thanks for posting this. As a result of the blog series that we've been commenting on I've been doing some major research on the MMA. I'm going in looking for fault. The more I try to tear it apart, the more I like it.

I believe that you are dismissing a major benefit of the the MMA software. I still have to do a side by side numbers comparison similar to what you have done before I go out on a complete limb. I'll have that completed by next week and will post the findings in my blog. If I'm wrong I'll admit it.

There are two things that are bothering me:

1. You posted a blogon the exact concept that I'm talking about - which means that you agree with the concept: http://activerain.com/blogsview/132348/Equity-Harvesting-Money-Merge You are simply discounting the value of the software as a tool! That's where we differ I think the software is powerful tool. I think that there is value in being spoon fed. Perhaps your client base is more sophisticated, but the people I deal with aren't.

2. Why would you put your clients into the CMG account when ,by your own analysis it doesn't perform as well as the MMA with software? In fact, by your analysis the MMA outperforms the CMG product by $55,158. That more than pays for the cost of the software? Ok, you said that it's set and forget. This means that the client has no gage to go by if they overspend and I think that it's dangerous.

Finally, this comment that you made: -less than 15% would be better off using a mortgage acceleration program. With the clientele that come to me, I can work with them more and for longer (primarily because they can pay me...lol),

the question that comes to mind, what are your costs? Is it more or less than $3,500 and is that cost included in theyour analysis?

I'm trying to find fault with the MMA, I simply can't justify the venon that's being spewed at this product. It's just not computing. I'll post my numbers next, if I'm wrong I'll be the first to admit it!!

Kate,

I am not going to comment further than this (I don't have the time). However, let me clarify a few things because I think you are taking how what I agree on to a different level than intended.

1) MMA is software that runs numbers, nothing more, nothing less. It is not a HELOC nor does it perform any "magic". Anyone can accomplish the same thing, at least close to it, without software. The part I agree on is that of being able to show and help implement a mortgage acceleration type program. If someone has to be spoon fed, chances are they will not stick with the program anyway.

2) My blog shows I understand how to use the program and that those types of programs can provide a benefit. That blog is strictly as it relates to taking out "extra" equity (Equity harvesting), then paying that harvest off quickly. It is part of an overall investment strategy that, due to limitations on tax deductability of mortgages, can allow multiple "harvests" without exceeding IRS limits. I am against anyone "focusing" on paying off the mortgage as it is almost always more detrimental to that person's financial health. Key word is "focusing". You cannot have two focal points and see clearly.

3) I have yet to actually put someone in a CMG product, even though I have it in my arsenal. Why? I don't like it as they present it. Why? There is added risk, but it is also the simplest to use and if the client is dead set on a mortgage acceleration program and has no discipline, it is the best due to its simplicity. I prefer a HELOC that doesn't cost the client anything, is not too small nor too large to manage and the client has a good understanding of how they work. Then I can put them in that HELOC, not refi anything that requires any "big cost" and I can run monthly "checkups" to make sure they are doing as they are supposed to. After a few months, it becomes habit and I know they will stick with it. They know if they don't stick with it, they just wasted a lot of time and money. Cost to them sometimes is nothing!!!

4) Everyone always wonders how much I cost? The bottom line is it depends. For most that I am working with, absolutely nothing (I don't make a dime except I do get satisfaction in knowing I helped them). For those in Florida that I can work with, sometimes I spend over a month working with them through my unique process and we end up doing nothing..again I make nothing. I do make money on the ones that do refinance or get seconds with me (I do need to make some money to cover costs, etc.) but I don't make any more on a loan than any ethical mortgage broker out there, so I provide the best value by far. I know that all sounds egotistical, but you asked and that is the truth. (My wife can't stand the amount of work I do that doesn't "pay"). I never put money above my client's best interests!

I think those touch the major points. These are based on my own calculations, my own experiences, my level of knowledge of mortgages and financial concepts, etc. and are my opinion. If you don't agree, fine, that is part of what makes America a great place to live. The only thing I will always continue to say is this:

"Without running the numbers, side by side, across the spectrum of strategies, even if 'sophisticated' is the only way to know which is the best solution"

In over 95% of the cases I have done side by side comparisons, not using a mortgage cceleration program was the best solution and that is based on a number of factors, not the least of which is the time value of money.

Robert, I appreciate your candor regarding the regarding the CMG. Of course the MMA is not a magic bullet, it is a piece of software and not a loan as many imply. I do believe that it is a powerful tool education tool that will get people thinking and understanding the real cost of the cup of coffee!

NOV

2007

Jeff:

Somehow I think you misread my comment. I respect your opinions and your posts, but all I said was I like the idea and concept, but not that price. I never said anything about not undertanding amortizations, or anything about credit card debt or the like.

Personally I think the concepts shown in the MMA presentation are strong, but only for the disciplined. Even though they say the software was designed for the undisciplined, I know too many people that will take an equity line, buy a call and still live paycheck to paycheck.

I think that if someone is interested in this type of wealth creation and debt elimination, the concepts should be focused on consumer debts first, before the home.

Kate:

What is CMG and how is that different from the MMA that U1st is selling? I'd like more info myself.

Ok... it's time for me to chime in now. MMA vs. HOA.....

Robert is dead on with his comment! MMA-This is a piece of software, nothing more or less. This software requires you to move money manually from checking account to HELOC then to CLOSED ENDED first mortgage losing time and interest savings. You must do this consistently to in order for this concept to work. Let me ask you this...Other than Hygiene, What have you done everyday, every week and every month the exact same? I personally don't have time to stop what I am doing to shift money around. The HOA (Home Ownership Accelerator offered by CMG Mortgage) does this for you without having the hassle of figuring out when and where to shift money. The HOA allows you to leave money that you would normally have lying AROUND IN LOW INTEREST EARNING ACCOUNTS against your loan ballance saving you interst dollars while you are not using the money. The HOA account lets YOU earn on your liquid position dollars.The MMA is designed to specially pay off your mortgage. I would say that the HOA is not a static obligation like the fixed rate loan. It's a dynamic financial tool that helps the client maximize the return on their personal cash flow and be better prepared for current and future needs. The HOA can provide greater benefit for the consumer than the MMA. Any financial advisor is going to recommend that a portion of your portfolio be "a cash position." You need liquidity not only for special investment opportunities, but as a "rainy day fund" or in case of emergencies. With the MMA software you are putting "rainy day funds" into a closed ended mortgage and the only way to get that money back is to refinance. What happens is someone using the MMA software were to lose their job, then what? They sure won't be able to find NO DOC cash out anytime soon. The HOA becomes a safety net to the consumer in the same situation. They are able to live off their available equity while times are bad.

The MMA is a multi level marketing concept where the HOA is an actual Mortgage Loan in the Mortgage world. I have a very hard time wrapping my brain around the fact that you don't have to be a licensed loan officer to offer the MMA product. I do understand why (b/c it's not a mtg) but I would be a little hesitant to entertain the idea of paying off my house from someone who possibly works at Burger King (no offense to BK workers,) and has no idea what LTV or DTI mean all to make quick cash with no interest of what my future financial plans may be. I haven't met a financial planner yet that offers or will offer this product to their clientele.

Bottom line the MMA and HOA are both designed to accelerate the pay off of the consumer's mortgage. The HOA is far more superior than the MMA.

Laurie

Hello everyone...... I have been busy with answering a few other blogs that I have written, besides work. I will come back to answer each on of you over the weekend...

On another note... Laurie V. ..... in all honesty, wouldn't you be against the MMA when you are actually a wholesale account rep. for CMG.... ?????? Just curious...

In any case.... it's great that some of you believe in some of these programs. Do me one favor..... can everyone just try this for fun. Take a $200,000 mortgage and run the MMA program on this. Using a rate of 6% for 30 yrs on the current mortgage, starting out as a 30 yr fixed rate mtg. Then take an extra $1,000 of discretionary income and apply it to the MMA program. Then, take that same money and just apply it to the 6% fixed rate mortgage of 200k and do a normal amortization with that $1,000 being added once a month. Just do this and let me know what the end result was on both programs. Please come back and report your answers to me. I will then break everything down.

In all honesty, if you can't do this one simple thing for me, then we can't talk. Because you won't be able to follow along with my next step. thanks in advance.

jeff

Jeff,

Wasn't trying to hid the CMG acct ex thing. I am not against the MMA as I said they are both designed to accelerate the pay off of the mortgage which is a good thing b/c Americans have TOO much debt and will not be able to retire comfortably when the time comes. What I AM against is exactly what I said. Not having to be a licensed loan officer and the cost of the software.

Laurie

Laurie...I truly understand your point and opinion. Just understand mine also. If I worked for Exxon gas, would I promote or be extremely positive about another gas company and their product?

On another note... please do me a favor... please run the same scenario that I requested on the MMA, but do it on the 1st HELOC loan with your company. Please e-mail me the results.... jbelonger@ihmci.com thanks, jeff

Jeff,

I completely understand what you are getting at. I've run similar analysis and for the purpose of this discussion I'll run one using your numbers.

You are 100% correct, in the black and white world of the spreadsheet lab a consumer can put $1000 a month towards their mortgage in the scenario that you are discussing and achieve similar results to the MMA.

However, and it's a big HOWEVER, what you are missing is the real life, non-clinical impact that this product has on people's lives.

Real Life Story: a husband and wife drive to work together every day and stop and Starbucks for their favorite hot beverage to the tune of nearly $10.00 a day. ($10 * 22.5 work days in a month is $225 on coffee.) They get the software and start using it and for the first time their lives they start to pay attention to where their money is going. They have it visually in front of them. They look at the Starbucks expense and realize that they can go to 7-Eleven and buy their coffee for $3.00 a day. ($3.00 * 22.5 days in a work week = $67.50 per month on coffee) $225 - $67.50 = an additional $157.50 per month in disposable income that the clients created for themselves. For some $157.50 is not a huge number, but invested over 30 years it becomes huge.

Real Life Story: Husband was a heavy drinker, family had financial problems but they were able to pay bills on time and had good cashflow but were living pay check to pay check. He hated his job, felt trapped. They purchased the software started using it in conjunction with an MMA and for the first time the husband heard what the wife had been trying to tell him years. For the first time he saw it visually based on their real numbers that the software provided. They were spending $25 - $30 a day on wine. $25 - $30 a day - OMG! Using the $25.00 number that's $750 a month. Because of the visual aspect of the software, he suddenly got it. He's now in AA, the family is going to Ala-non and suddenly they have financial hope!! Don't tell me that this isn't worth every penny of $3,500.00.

Those are stories that cannot be reproduced in a clinical spreadsheet lab. The coffee story is certainly more typical for the average family, the wine story is very dramatic. They are both representations of the power of the Money Merge Account product and software.

What about the client who doesn't have a 30 year horizon? The time/money contingency doesn't work so well!

What you are overlooking is the opportunity costs that are lost by not using the software. Can the client achieve the same thing without the Money Merge Account Software, of course. As Robert puts it in his comment above, they can come pretty close. In the game of golf, pretty close to the hole is still an extra stroke. Over the course of the game it effects your score.

Real life situations don't fit into a clinical black and white spreadsheet. The MMA software empowers people to take control of their financial futures AND it gives them a vehicle to create equity quickly. For many people, it is the only way that they will ever be able to generate large capital for other investment opportunities.

I stress again, that the MMA is not a magic pill. You must be responsible enough or ready to be responsible enough to use the tool wisely! It is not for everyone.

This comment is way longer than I anticipated and I have more to say on the subject. I'll do it in my own blog. That said, let's follow this through to conclusion next week by having several of us create the amortization schedules using the numbers that your put on the table above!!

DEC

2007

Jeff,

I did just that today, with slightly less extra cash. I used UFirst's MMA, CMG's HOA and MacQuarie's Asset Manager, as well as Mortgage Coach to come up with the Equity Accumulation. The MMA paid off the loan in slightly less time then applying the same amount of cash towards the principle. However, the biggest problem is that the equity is now locked and can only be accessed by refinancing. With a CMG 1st position HELOC or a 1st/2nd combo using UFirst's MMA software, there is flexibility.

Frankly, what I like about the MMA is that I can help clients who have a low 1st rate mortgage and a current HELOC pay their home off much earlier without having to spend extra money. If they can afford to throw extra $$ at the principle then great. But many can't. This allows them the ability to gain ground on their debt. Worst case, they only have the HELOC to get in trouble with. THe majority of the equity ios protected.

What the current HELOC climate is doing is help regulate the ability of those who are less likely to be successful with a HOA/MMA. Also,If someone's upside down on their home/mortgage and has a current HELOC with some room left, a MMA could help them correct the situation and actually build equity.

I agree with Robert's assessment on Equity Skimming, however, it's also not for everyone. Not everyone has the risk threshold for always maintaing a high mortgage and refinancing every few years. With property values decreasing, sure it's nice to have pulled the equity out, but what happens if they were in an Option ARM or any ARM and it adjusts? Options can be limited if their credit has changed or as we have recently found, programs disappeared.

I find it interesting that CMPS recommends CMG, and Barry Habib/Mortgage Market Guide is being sponsored by UFirst. If these are such horrible products/systems, 2 of our industry leaders are in bed with them.

Rather then running from these products and allowing the ignorant to give them a bad reputation, why don't we learn their ins and outs, add them to our arsenal.

DEC

2007

Can I refernce your post in a position paper I am writing for our local BOD recommending that we not promote this product to our members?

DEC

2007

wow, great stuff and nice feedback...i enjoyed every word.thanks

kevin gapol

Regarding Matthew's post, "why run from these products," consider the lending environment we have just come from. Scammers, swindlers, people that put first time homebuyers in neg am loans, etc. etc. I don't agree with throwing out the baby with the bathwater, but come on! These products are good for SO few people it is ridiculous! I'm sorry, but the benefit does not come close to outweighing the risks of abuse by unscrupulous lenders and gullible borrowers.

Barry and the other boy's love "cross selling," and taking endorsement money. But did you see Barry on Fox Business Channel last week...he came close to throwing neg-am under the bus until he remembered how much money he made of of the equity repo folks! He back tracked quicker Bill Clinton!

OK... Rich, I see your point on the Neg Am for first time home-buyers but these types of people can not get into my loan product ( Home Ownership Accelerator ). You have to have positive cash flow or my company will not allow the loan to go through. As far as the "good for SO few people" comment.... sorry but your gonna have to change your clientele in order to find the 50-65% of the American population that WILL fit into my loan. It's not hard to find them considering Sub Prime is a small % of the business. The MMA does not qualify a person to determine if they can fit into this type of product IT'S NOT EVEN A MORTGAGE IT'S SOFTWARE but MY LOAN does so please do not include me on the " These products are good for SO few people it is ridiculous" comment as well. Barry should reconsider what he is promoting especially if he is back peddling.

This is directed towards Larry Morris... (by the way, I am done preaching to the non-choir that won't listen. You won't see the light at the end of the tunnel. Read this... http://www.huliq.com/18901/buyer-beware-claims-of-paying-off-your-mortgage-early-with-mma-accounts

But getting back to Larry... yes, the money is tied up if you dump your money into the 30 yr fixed loan. It can easily be accessible with the MMA or heloc programs... but rut row, if you take money out, you won't be paying the loan off as quickly. I don't care what you see or what you do, you don't take money away and your pot of gold still be exactly the same.

Lastly, read the article that I listed. The author brings up a great point. Remember watching the presentation or listening to the MMA reps.... they say... "you can use this program without really changing your spending habits." BS BS BS BS PEOPLE.... that is sales talk. Some of these people are good magicians.... plain and simple.

In any case, I am going to do a blog the first of the year. I am going to break this done to almost the penny. It will amaze you and I am doing this for free. It will be more like what Robert Ashby talks about.... equity harvesting.... more so... LEAVING your house alone and taking that money and over a 15 yr period, you will make more than paying down your mortgage. These will be facts and put your accelerator programs to shame. The rest of you can keep believing.... Laurie... I don't care if your company is different or don't approve everyone. Did it ever come to you that those that are highly qualified, great scores and great residual money or cash left over are disciplined to begin with. They have financial planners that do this for them, what I am about to show you the first of the year, 2008.

FYI for those that have confused yourself when you talk about saving all of this interest. You forget about tax write offs... AND... investment returns in regards to other investment vehicles. You'll see when I break all of this down as a true planner would break it down. Most of you with these accelerator programs are one-sided and are brain washed by a program. You need to think outside the box.

Jeff.... BRING IT ON!!!! Last time I checked Financial Planners LOVE MY PRODUCT!!!! They HATE the MMA because it cuts the FP out of the loop. With my product they can take the equity out and invest in something that brings them a higher return than their mortgage rate?? What do you mean about people that "are highly qualified, great scroes, and great residual money or cash left over are disciplined" ????? Makes no sense??? That means they can save and not spend every dime they have. They would fit perfectly in my product??? Question is... since you think FP can already do this for the customer why haven't they... they can recommend they Cash Out Refi every few years to get equity out... and then you as a LO make money But if they did my loan then YOU wouldn't make any money.... You see I am teaching the customer not to waste money Refi"ing ever time they need cash out. As far as the tax write off... for every $3 you spend you only get $1 back... WHY would you spend it in the first palce. Break it down anyway you like... If you shift the money you are not using into your mortgage you save interest, PERIOD!!! My loan is a Finacial Tool as well as paying your mortgage off. It's not for everyone but everyone should know about it!!! Get your fax straight before you bash me. I am waiting to see this briliant spreadsheet you are going to send us?!?!?!?

DEC

2007

Get my fax straight? What's funny is that you talk, but show nothing. Why don't you give examples? That is what I am going to do.... Don't be like everyone else and say, my program works, those are the fax... I mean, facts. Why don't you use a $100,000 loan and apply $244 a month to your system. Tell me exactly when it is paid off and how much you paid in interest.

Now, on another note. You seem to be missing half the point. If you read this post and most of the comments, we are talking about those people running around, telling everyone that they can pay off their mortgage in x,y,z time. You care contradicting yourself now. You now tell me that people love your product because you can pay down the mortgage and then invest the money. But think about your statement, you aren't paying down the mortgage if you have to take equity out to invest in some other vehicle that gives a higher return. Isn't that what I have been talking about? Leaving your mortgage alone and taking the extra money and applying it in other investment vehicles.

So, since you are so... "bring it on Jeff" mentality.... you are proving a little to me that you seem to be all over the board. My main theme is leave your mortgage alone and take the money to make money. The people that I am against are those that tell you to pay off your mortgage quickly with these programs and that's it. You can't do both at the same time. That would cost even more money. Makes sense? So.... which way are you going to explain your program?

Jeff, thanks for this post. I've used it as part of research material for our Associations discovery of this product. The main issue I have is that REALTORS who "sell" this product get $1,000 of the $3,500 cost as an administrative fee. I've sat with our state's legal counseler and this is going to be a RESPA issue for us. It's a financial product that the REALTOR is selling as a licensee and must disclosure their own financial gain. Therefore the Principal Broker needs to be on board witht he agent selling the product. I think the products lays the heavy need for discipline on the consumer and most simply aren't responsible enough to do that. Other than that - to each his own. I met with two reps from UFirst. I felt like it was a "as seen on TV" episode, but they weren't nearly as rude or defensive as Ms. Vann. Actually they gave me breathing room and showed me the product. I think for some this may work, but it's going to be a small niche. It's not something that I'll ever feel comfortable selling to my clients. Lastly, I will say that reps and sales people who get so defensive of their products or are too aggressive tend to make me leary that the product just may not work. So, if the sales rep is too push - push back!

Jeff, once again your patience astounds me! You are my role model for not "losing it" and venturing into total sarcasm! Thank you for continuing to entertain the "reluctant to grasp" on this thread. I remember a family friend that entered an Ashram in the 70's and was convinced that by turning over all their wealth to the Guru they would enter into Nirvana...well, the Guru was the only one that tasted Nirvana (at Club Med) on the dime of all the believers.

Keep it up!

MATTHEW...... we agree on the costs. And so many that try and sell this program tell you that you will make up the difference quickly, but they fail to realize that I could take that money and pay down my principal quicker or invest it and make more back.

RICH.... lol thanks. I have so many different ways that I could use to show that there are better ways to invest your money and make more money. And in regards to what Matthew says, I totally agree with this. " Lastly, I will say that reps and sales people who get so defensive of their products or are too aggressive tend to make me leary that the product just may not work."

And I will add to that.... if they only sell one product and can't really offer anything else, that is very bad. If you don't have options, if you aren't asked your goals in certain increments, then they can be helping you at all. Each client is different.

Lastly, I am still waiting to hear back from Laurie Vann. Is your program that hard to come up with the numbers that I had asked for? You certainly were quick to comment when I so-called attacked your program. But now I ask for proof and nothing.

PS... Laurie Vann.... if your program is a 1st lien... right? At what rate? It's adjustable, right? Monthly? Yearly? Please give us details. Just don't sell us because you said so.... my proof is in the numbers. I am a numbers and stats guy.

Sorry guys, this is long!

Jeff, first let me start by apologizing for not responding until now. I thought you were aware of the fact that I am an account executive for the Accelerator loan. I am out during the day making sales calls and attending closings. I happen to post last night b/c it wasn't during working hours. I won't ever be able to respond during the day b/c I am never at a computer. Also, Jeff, have you ever been on my site and input numbers in your self. It's free to the public?!?! Also, I am not and sales rep who is aggressive about her product, I just don't like someone bashing it when they don't understand how it works??? I apologize if I offended you or anyone else. Hey, Atleast I'm passionate about my product.

Ok, my loan was originally designed to PAY OFF your mortgage without changing spending habits. If the average customer for the HOA has a paycheck of $5000 after taxes ( Jeff, I am referring to the average customer for my product not a FHA customer, This loan is not for first time homebuyers...) and saves about 10% of his income ( $500 ) and leaves it against their accelerator account rather than putting it in a money market earning 4% or a savings account earning 1-2% each month, they will save over $125k in interest out of pocket on a 200k loan amount originally at 6.250% 30 yr fixed. My loan is off the 1 month LIBOR plus a margin so at this month LIBOR at 5.245 plus a 2.250% margin they still saved even with a higher rate (7.5%). This is why my loan was originally designed. They can pay off faster just by shifting where they put their money. Believe it or not there are a lot of people that just want to be debt free. That is why both my product and the MMA will work for those type of customers.

I said this before. My loan is a financial tool more than it is to pay off the mortgage. I have a loan that closed today with an investor who does nothing but buy and sell properties. He needs to have cash quick at hand. With my loan he can use his equity to purchase more property and once he sells that property he can throw the money back on his account lowering his balance reducing the amount of interest he pays while he is not using the money. If you have rental property this is a great tool as well. Let's say you have 5 rental properties at $1000 a piece for rent. Well, rent is do on the first of the month but we all know your mortgage payment isn't REALLY due until the 15^th. Why not stick that $5000 in rent against your balance for 14 days letting it work for you rather than the bank. You will save interest out of pocket simply by shifting where you put your money. Think about what's in your checking account or money market right now? How often do you use every penny? If often then this loan will not work for you but if you are like me and you usually leave it there as a nest egg or safety net why not place it against your mortgage reducing the balance to then pay less interest??? On that same 200K loan example if they had 30K sitting in a money market and shifted it on to their loan they would end up paying 73k in interest out of pocket rather than the 117k with the accelerator loan. With the Fixed loan he would have paid 243k in interest. Now remember, I am still assuming he's going to leave that 500k against his loan balance every month.

This loan works GREAT for business owners. I have a guy who had a line of credit for his business account and as long as he paid it back in full each month he wasn't charged interest (kinda like a credit card) he instructed his business bank to send 300k to his accelerator loan on the 1^st of the month, he let it sit there and on the 28^th day of the month he sent the 300k back to his business credit line. This guy is only paying 2 days worth of interest on his personal mortgage just by shifting money around to work in his favor. I tell a lot of people, if they already put bills on credit cards to earn the rewards then why not do that on this loan. Let your money go in on the first redirect all your bills on your card, stroke a check at the end of the month and pay your card off. That way you earn rewards and your paycheck sits flat lined letting you pay less interest. Just working the system J

Back to the business owners. Lots of people throw money in their accelerator account then transfer it to their business account before the end of the month. Might as well let it work for you against your loan rather than sitting in your business account while you aren't using it. People that have jobs that sometimes they have great months and sometimes not so hot months....LIKE US, if you have driven your equity down with your savings that you normally keep in low earning accounts if for a few months you don't have income coming in then you have access to pull the money out to live off of. It works as a safety net.

I just spoke to a customer today who is self employed. He pays himself 75k a year at the first of the year, sticks it in a money market and lives off it all year. His house is worth 425k and he owes 175k. Well, since it's the beginning of the year I convinced him to bring the 75k he normally would put in a mm to the closing table reducing his balance to 100k saving him money on the origination fee ( no YSP in this loan ) and once he's in the loan (here in NC you can't buy the margin down until after you close) he can buy the margin down much cheaper b/c his balance was lower when he closed. I actually saved him about $4,500 out of pocket in CC. He has a credit line of 300k as soon as he closes he can access the money. Back to letting his money work for him and not the bank

Lastly, the good old Reverse Mortgage.... You can extend your credit line up to 80% of the value of your home. If you don't need the money you don't have to access it but if you do it's there at your fingertips rather than getting a check every month that you may or may not need the full amount.

There are a TON of ways to work this loan to your advantage. This loan is designed to work for the consumer not the bank. Think about it, banks make soooo much money off the money we have lying around in their accounts while we are not using it. If you shift where your money goes you are simply letting it work for you.

SHEW, I'm tired of typing. If anyone else has any questions please email me privately and I can discuss them with you. Jeff, I hope this answers your questions.

Jeff, I have sat back and have been quiet for most of this post..... OK... I can't take it any more when here is a perfect example of people explain how everything works but is not licensed or went on to higher learning for this. I am sorry but I do not meet this as personal bash but you have to take it if you plan on dishing it out

."This loan works GREAT for business owners. I have a guy who had a line of credit for his business account" This is a great example of people who are not qualified to give advice. I believe once you start mixing business funds for personal use your CPA will like to chop you at your knees in addition the IRS would love to have a chat with you. I can go on and on and on.

I have when people only tell you this is the best and only way to do things well HELLO?? If you are an AE don't you feel you should actually fill out your profile so in case people would like to speak with you can contact you directly.

OK.. I said my piece. The problem with these products if you have people WHO ARE NOT QUALIFIED do give advice who claim they know the tax law but yet they are neither a Tax attorney or a CPA. They claim to give great financial planning but yet they lack the education or degree in being a certified Financial Planner.

Jeff. I am sorry for taking so much of this post and if you wish to delete it I fully understand.

LAURIE & MATT....I'll get back to you both later.

LAURIE.... question.... how come you couldn't do what I had asked of you? Not trying to sound rude, but I asked you to run your scenario on numbers that I gave you and not numbers of what you choose. In all honesty, you work for a company that only sells this one program. If I give you numbers to work with and you use your own, now what am I suppose to think.?????

And then you say this....Now remember, I am still assuming he's going to leave that 500k against his loan balance every month.

What 500k???? 500k is the same as $500,000 .. you have me totally loss now. All you are worried about is how much interest that you are paying.... I can still make more money by taking the same amount that you use, place it in another vehicle, and write my interest off. Hence why I asked you to give me an example based on $100,000 and applying $244 a month. Please don't add anything more to it. I am trying to make a simple point.

Jef... You are suppose to do what I told you to which was go on the simulator and run your own scenario. www.homeownershipaccelerator.net Jeff, this is one of MANY products I sell. I sell Fannie, Freddie, SISA, SIVA, My Community... etc... 500k??? I made a mistake. I meant $500 a month per my original scenario. No worries, this is my last post. I can't keep up nor do I have time to continue this. Per your request with a 100 ballance and saving $243.67 per month.... in order to pay off your house you would pay off in 11.4 years and saving over 70k in interest. I'm sure you'll have some comment about this but like I said, this is my last post. If you are interested in contacting me my number is 919-796-3255.

LOL... don't tell me how much interest that I am going to save. Tell me how much interest that I ended up paying on your loan. I asked simple questions for a reason. I even asked this question. I never asked you to tell me what was saved. Can you at least tell me what was paid in interest. thanks

I'm not sure what you think is so funny, but on a 30 year fixed rate at 6.250% you would have paid $121,658 and on my accelerator loan with a higher rate you would have paid $48,864. Saving interest is the name of the game???? Any more questions you have please direct them to me personally.

JAN

2008

Jeff, sorry about the delay in getting back to you on this. I was out with family. It's amazing how my life has changed with a wife and child.

I agree that there are other ways to pay your mortgage off quicker and possibly better. My brother listened to me explain the program and stated "So you're charging me money for something that my bank will let me do for free." In his case, he's right. He's extremely conservative. He has a 15 yr mortgage at 5.125% and pays an additional $200 per month on a $200,000 mortgage. He will pay his mortgage off much sooner. But, here's the catch. He is a National Sales manager with a large company and has a lot of discretionary income. He could pay his mortgage off tomorrow if he chose to. But he keeps his mortgage and investments separate. He is paying his home off around the time he chooses to retire. For him, this is the best solution. Would he make more money with equity repositioning? Without a doubt!! Does he have the risk threshold for it. No. Does he care that he's "losing" money? No.

Most people are not in his situation. They have to make choices on where to put their limited income.

I read the article you linked and the author really doesn't understand the concept and mathematics. You should read the comments as some of them are more informed and open minded. To quote you " You need to think outside the box."

Is this software (MMA) or program (CMG or Maquarie) the end all solution? No. Are there abuses in who is selling them or how they are being marketed? Certainly!! Just as in our industry with ARM's and Neg Am's. Can you obtain the same or better results using equity repositioning, or leaving your mortgage alone and investing the difference? Yes.

But, this is a viable product for many clients. It should be a tool within our arsenal. As we ask questions of our clients we should get a clear picture of what their goals and investing philosophy's are. Then, we have the ability to help them get from where they are to where they would like to be. With the help of a knowledgeable Financial Planner we can help them get there.

I've become UFF and CMG reps not because I'm abandoning the industry and looking for the next trick pony, but because I want to become more well rounded and have all the tools available to help my clients. It's also why I joined an FHA shop.

It's supposed to be what's best for the client. This doesn't always mean what's the cheapest rate or what makes them the most money. For many, it's nothing more then what let's them sleep at night...

I respect you and believe that most of what you write is correct, but here I chose to disagree.

JAN

But this program would cost you $3,500 in order to obtain the software.

Hi Jeff,

I was offered this program last year. The price was one immediate red flag for me.

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