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MACQUARIE MORTGAGES is no more, another reason to avoid MMA programs

Macquire Mortgages USA Inc has informed our company that they will discontinue accepting mortgage applications. This is the kiss of death to most company's. Not that this is much of a surprise, but this company is one of the pioneers of the mortgage merge craze. Macquire was the first US company to capitalize on using your mortgage and checking account as a lever to pay down your mortgage in a short period of time.

I'm not sure how many people actually believe me when I say this, but these programs are DANGEROUS in slow or declining markets!! I guess most people do not understand is that home equity is not an asset! Equity is perceived value and is not technically real. You can't touch equity, you can't predict where it's going to be in a given day, you can't offer it as value. Therefore these programs that "tap" your equity are based on "fake" money. Therefore when the home values drop, this "tapped" equity evaporates into NOTHING!!

So please for the love of PETE, do not buy into these mortgage merge, mortgage checking, or Australian scams.

Now compare this to someone who refinanced their mortgage before the market slide, took the dollars they pulled out of their equity, and invested them into a safe return vehicle. These home owners have their money still, and those whom invested $3500 into some mortgage merge scam are now stuck with the bills, and even if they had paid down equity in their homes, they may still be upside down depending on the severity of the market slide in their area.

Posted by Karl Christen Credit Restoration Specialist on 03/11/2008 01:11 PM

Comments (3)

mortgage scams, scams, australian, mortgage checking, mma

3 Comments on MACQUARIE MORTGAGES is no more, another reason to avoid MMA programs

MAR

2008

I argued with a guy a while back here on AR about these programs and ended up doing a little research on them. The programs, by themselves, aren't all bad. The biggest problems with them are the facts that you have to be extremely disciplined (which in my experience, most people aren't) and the interest rate exposure that home equity mortgages have because they are variable rate products.

The other thing that I wondered about them is why you would need to spend thousands of dollars on a computer program? Seemed to me that a person could do this by themselves, if they put in the effort.

Bob Mitchell

ValueList Real Estate Services, Inc.

Karl

It would seem thinhs are coming out of the woodwork.

Sincerely

Tom Braatz

No the programs are not bad in a great market...The problem is you need to hope that market conditions continue to do well, or that if any corrections that they are sllllooowww.. The problem is the bottom has fallen out of this market and it's still falling. Banks cannot sustain HELOC's which are the life blood of this program. Let's take this example,

Home owner A....buy's a home in 2004 for 350,000 with 50,000 equity built into the home. The home owner then get's one of these Mortgage Merge accounts and pay's down his first mortgage to about 270k. So now it's 2008, and his home value has dropped 40% because he's in over built county in California or Florida. The bank that holds the HELOC decides that the market has dropped to far and cut's him off and now he has no HELOC. Let's assume he at that point owes nothing on his HELOC. So everyone thinks...great, he's paid down 70k in principal in less then 3 years, WOW!! But what does he have in the bank?...probably not anymore then what he started with, because these programs are based on putting all your cash-flow in these accounts. So now there home is worth 240,000 and they owe 270k! Guess what, this home owner is not in any better shape then anyone else.

Home owner B....buy's the home in 2004 for 350,000 then pulls out 50,00 an invests the money into some safe liquid fund. Three years later the 50,000 compounded and additional principal added through savings is now around 60k, and yes they are upside down as well with their loans. However if home owner B was to lose their job, or their income was to decrease, they would have enough in reserve to weather the storm. Where in Homeowner A would be in trouble.

There are several other factors to consider. Home owner A could also be left out to dry with a balance on his HELOC. Another factor is that many who begin these programs don't account for disability, illness, loss of work, or other potential personal disasters. These unknown events could throw further financial curve balls and destroy the best laid plans. Sure the other home owner could face the same challenges, but with 60k in a reserve account, it gives them much better freedom to cope with these type of events.

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