Bill, I was always uncomfortable about this "money merge" scheme, but more for the reason that it would take a lot of discipline not to abuse the easy line of credit.  Your post points out a much more insidious aspect!

Bill

I never knew Indymac did the Money merge, did this cause the problem?

Brian,

Thank you.

bill

Jeff,

"Money Merge" is not a bank program! Even the worst never give such bad advice. But, the key to a "money merge" account is a HELOC! The idea is only pay intrest on what you have to and only when you have too. It all makes sense if you abandon all realty.

Bill

Bill

Thanks, I should have worded the response better, were people working for Indy doing the HELOCS with clients to get them ready to do a money merge program and was this what caused the FDIC to shut them down?

Jeff,

Maybe. What people forget is that when some one request a loan, the LO and lender must make the loan if the applicant is qualified. Weather or not the applicant declares his intentions is not relevant at the time of application for a HELOC.

HELOC's are a great and even wonderful tool, when used pro pertly! No one should ever put themselves in a position where they are dependent upon a bank loan. These lines of credit can and do get canceled all the time, much of the time for no fault of the borrower.

As I understand it IndyMac had a cash cricis, exasaterbated by a Congressional fool late last week.

Bill

Bill, AWESOME!!! So many people where pushing hard for those programs or should I say brainwashed into believing this was the best thing.  What a crock!  Of course the commission I am sure had nothing to do with it..lol  great post

Holy crap Bill!! I just "got" this whole money merge stuff..I think. Am I understanding that fols were being told to take their money out of other accounts and pay down their mortgage, then, take out a HELOC to use only as needed. Now with values down and the helocs being frooze they are screwed and have lost all of their savings. Is this right?

Matthew,

People believed in these programs, everyone wants to beat the system. The only people that win are the people selling the "computer program" for $3,500.oo and LO's originating the HELOC's and sometimes rewriting the first mortgage.

"crock" seems very polite!

Bill

Bryant,

People didn't loose their savings! They lost their liquidity! They lost the ability to easily spend their money.

There is nothing new about HELOC's being frozen, not allowing further advances, it happens all the time when clients have new credit trouble, it happens when the market depreciates, and it happens when the bank fails.

People in these programs are going to have a bad month or two. The prolbem is that a bad month or two can take 2 to 7 years to correct on their credit report!

"Is this right?"  Well it depends on your point of view. People who get burrned trying to get some thing for nothing, took the risk. On the other hand most of these people made their payments, they lived up to their responsibilities!

Bill

Bill:  This is only the beginning of the nightmare.  Wait until about 2:00 a.m.--- should be full-blown.

Jan,

Care to let us know what you anticipate?

Bill

Bill:  I anticipate you will see more of the same.  Financial Accounting Standards Board in FAS 140 is going to require that banks become more transparent and this off-balance-sheet crap of lying to shareholders and the public in general is going to go away.

This guy says it about as well as anyone I have read.  Read his latest posts and let me know what you think...

http://market-ticker.denninger.net/authors/2-Karl-Denninger/P2.html

Jan,

Mr. Denninger leaves a lot to be desired.

I do appreciate your link, even if I only partially agree.

Thank you.

Bill

Readers:

Please read: INDYMAC and SCHUMER. A BANK WITH QUESTIONABLE LINEAGE AND A SENATOR with QUESTIONABLE JUDGMENT

It's an absolutely exclent presentation on IndyMac by one of our own!

This is a post not to Be missed!

Bill

Thank you, Bill..... For this wonderful insight into the MMA. A scheme that takes no training to sell. Well, except for that cult video they make you watch. LOL

Hi Tom,

We had a local TV news anchor fall, hook line and sinker! That is until the station legal department got hold of him.

Everyone want to beat the system. Everyone thinks there is a secret!

Thank God for optimist, and pray for a return of their sanity.

Bill

Bill... Tom pointed me over to this.... because I am being bad mouthed by one of our own, because I disagree with her selling these programs.  What's funny, yet sad,... is that she says you don't need a heloc anymore to make this program work.  Which tells me that she still fails to see what our points have been about this program. They also fail to realize that even if you do pay down your home quiclly, that in order to tap into it, you need to refinance.  The other issue that I have is that you aren't writing off as much or no interest anymore...  which when you did, offset a few other things when it came to your overall savings. My whole issue with what they sell is that you have financial freedom and financial wealth when you have a free and clear mortgage.  And this is false in many cases... in order to do this, you have to abanden your 401-k plans and other retirement plans. Many financial planners would disagree with these money mergae accounts, not matter what you have to use. Lastly... it ticks me off because most advertise these programs as a program that you don't have to change your monthly life style, which is the biggest bunch of bull crap out there. If that was a case, I could pay off many of mortgages without spending more money. Their whole concept is just misleading....  and it's just a program on your computer. You still need discipline... which many don't have.  And the program doesn't make you disciplined. The average person can't save that much money and not spend it...  Not in this economy. 

Bill,

Thank you for writing this piece, It helps to expose the MMA crowd with hard facts and you presented one.  Thanks again.

Bill,

You know I have talked about how the numbers just don't add up regarding these programs for a very long time.  I have even talked about the issue of HELOCs being frozen in a post or two.  The responses I get from the "cult" are amazing.

I have had them suggest using personal lines of credit if the homeowner cannot get a HELOC or their HELOC was frozen.  I have even seen suggestions that this program will work using a credit card. 

I have even been told by many that they comingle business funds to take advantage of the idle cash from their business to pay off their "personal" home.  Don't they know anything about "imputed income"?  I am sure the IRS would love to talk to them!!!  Then again these guys don't give any "advice" (their disclaimers cover their butts, convenient, huh?)

Thanks for posting this because the word about this, and other, issues regarding this program need to get to the homeowners before they get duped.

Jeff,

I'm hurt that Tom had to point you to my blog! :-(

I'm mad that someone else is attacking you, I look forward to harassing you myself.

No matter what they say you're a good man Belonger!

I now know what you're talking about, consider the source, she's not in your league!

Bill

Gary,

Thanks!

Facts don't matter to these people or their victims. They all believe there is a secret other than hard work! They all want something for nothing.

Bill

Bill,   LOL... well, considerung that I haven't been on much in the last 2 weeks.  Not only have I not made many comments, but I think I have written like 5 blogs in the last 14 days?  if that????    and thanks for the compliment...

Robert,

You know what they say about great minds.

I hadn't heard of doing this with credit cards, but I like the idea of moving secured debt to unsecured. Especially in homestead states. Maybe that's the secret, move the debt off, homestead, and go bankrupt!

These MMA prevayors and their clients are not the kind of people I want to deal with.

Bill

PS: How's the new plane and what is it?

Wiliiam,

I have a HELOC with another bank but they have yet to freeze it. They told they weren't planning n it and I owe nothing at this time but you never know if one day I'll wake up and find out there is now a block of ice in my account. I wonder what banks are basing their decisions on. I even herd that they were freezing Realtors(R) accounts because they are frequently using them for operating expenses.