I've been flamed by a number of well meaning United First Financial agents already, and I'm sure this post will generate another group of hate emails.  But let's be honest folks, the long term affects of this new program are still far from being complete.  The honest agent is going to point out that the program hasn't been in effect more then three years.  Sure they've had a number of fantastic success stories, but the story's they never tell anyone about are now coming out of the wood-work.

I've been in the industry for over 10 years. I remember not long ago watchdog's within my industry lamenting about the lax underwriting standards and the potential explosion that we'd eventually witness in our market.  Most of the professionals in my industry ignored these watchdogs and continued to press forward.  Now the bubble's burst and some of these fellow mortgage professionals are greeting people at Walmart or are fleeing the country. 

Lately I've noticed another storm brewing.  It's called the Mortgage Merge Account.  You pay off your home in 5 to 7 years and your not in debt anymore, sound admirable and financially sound.  But the reality is that you put equity at risk to achieve this potential bonanza.  It also takes a strong will, consistent economical growth, and a steady real estate market. (whoops)!!

Here's the problem folks, you take the average home owner right now.  They purchased their home in 2005 in California or Florida.  They bought the home for $250,000, it then shot up another $60k in value by 2006.  They then were approached by a well meaning friend who suggested they get involved in this Mortgage Merge Account.  So they took out an Equity line because they could, and now they have a 250k first and 50k equity line.  Sure they don't owe much on the equity line and hopefully they can pay down that first really quickly.  But then something happens to this family, their is a medical crisis that is not covered by their current health care plan.  The husband then loses 25k in an option's investment that went south.  They don't have the cash on hand so they use the equity line, figuring they can always up the equity line with the great real estate market.   What they didn't realize is the real estate market was already in decline.  So now there calling their trusted mortgage planner.  He thinks they still only have the first and is surprised to find out that they now also have a 50k equity line that is maxed!!   So they ask trusted mortgage planner to refinance but guess what....you guessed it...their house has now dropped drastically, it's now worth $225k and dropping!!!  

This is not some made up story people, it's happening as I write this blog.  Think HARD and LONG before you just put someone into one of these MMA's.  There are allot of other contributing factors you should look at before suggesting one of these time bombs.  The bigger problem is that many of these borrowers are not even consulting financial professionals, their getting these Mortgage Merge accounts through friends, families and other non-professionals.