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  1. #1

    Mortgage Reduction Scam via MCA

    Smoke and mirrors

    To read the entire article on the scam that is over taking USA with claims that Australians are using this Mortgage Reduction miracle via a Mortgage Checking account with claims of paying off primary mortgage in less than 10 years with a HELOC loan......SCAM for your $3500.00

    Australian Government officials are condemning the practice even there!
    to read the entire arcticle go to the link below and save yourself $3500.00, headaches, possibly being worse off than before.

    http://www.theage.com.au/news/proper...137225560.html

    They're pushed as a way to pay off mortgages faster, but a line-of-credit loan should be treated with caution, reports Michelle Innis.

    Thousands of Australians have been sucked into buying expensive and complex line-of-credit home loans that provide little in the way of savings, despite claims they will cut years off the average mortgage.

    Line-of-credit loans may offer more features and flexibility than other loans, but they offer no significant advantage when it comes to paying the loan down faster.

    That's because line-of-credit loans usually carry higher interest rates than standard or basic home loans, as well as higher ongoing fees.

    For borrowers who are anxious to save money and pay off their debt quickly, a basic home loan is a far better bet.

    According to the Reserve Bank of Australia, however, borrowers have about $100 billion in outstanding debt in line-of-credit loans. This compares with a total home loan market worth $590 billion.

    It is a staggering figure that shows just how quickly line-of-credit loans have gained acceptance amongst everyday borrowers. Or, if you're cynical, how heavily the loans have been marketed - some would argue on a misleading basis.
    Advertisement Advertisement

    The irony is that these loans were not designed for "everyday consumers". In fact, they were engineered for high-income earners with a very large cash flow. Even then, credit experts say, they don't provide much in the way of savings.

    However, many mortgage brokers have been hard-selling the products and adding their own fees and margins on top.

    Money revealed in June that one brokerage firm, Sample and Partners, which has offices in Sydney, Melbourne and Brisbane, was charging borrowers a fee of $2995 for line-of-credit loans they could get from a bank for a few hundred dollars.

    Once refinancing costs, stamp duty and brokerage fees were included, borrowers could be up for as much as $8000.

    Brokers selling line-of-credit loans sometimes promise that 10 years or more can be cut from the average home loan if the borrowers deposit their income into an account that offsets their mortgage and uses a nil-interest credit card for their expenses, which is paid off once a month.

    This is sleight of hand. Any loan that has extra repayments made into it will reduce faster.

    Unlike a traditional, amortising home loan, which requires a borrower to pay principal and interest so the loan is eventually repaid, a line-of-credit loan merely requires that the borrower cover the interest (although he or she can pay more).

    The danger with paying interest only is the debt may never be paid down, let alone cleared in record time.

    Going back to basics
    Common sense dictates that a lower interest rate will save you money and reduce your debt faster. Take Members Equity's home loan, for instance, with a variable rate of 6.49 per cent and lots of flexibility. It has no annual fee.

    There is no application fee, the loan comes with a redraw facility, free phone and internet banking, ATM, Eftpos and giroPost access, and repayments can be made weekly, fortnightly or monthly. There is no charge for making extra repayments on the variable rate loan.

    Borrowers can also lock in a fixed interest rate on a portion of their loan without incurring extra fees.

    The loan has a comparison rate of 6.49 per cent. Compare it to a typical line-of-credit loan, with a comparison interest rate of 7.27 per cent (which includes a rate of 7.15 per cent, annual fees of $180 and an application fee of $499).

    Research house InfoChoice crunched some numbers to see how the two loans compared (see graph at right).

    Assuming a $300,000 loan paid back over 25 years at a rate of $2150 a month, the Members Equity's loan saved $46,660 and was paid off 3.25 years earlier.

    The calculation does not take into account any extra fees or trailing commissions that may be charged by a mortgage broker on top of the line-of-credit loan.

    Nor is the Members Equity loan the cheapest basic loan around. As the accompanying table shows, there are other lenders offering even lower rates - such as Wizard's Rate Breaker Loan, carrying a comparison rate of 5.93 per cent.

    Sold on spin
    "These [line-of-credit] loans are all smoke and mirrors" says Jan Pentland, a financial counsellor. "It's not a magical solution. They don't work."
    Pentland is the chairwoman of the national association for financial counsellors, the Australian Financial Counselling and Credit Reform Association, Chair of the Consumer Credit Legal Service Board and the consumer representative on the ASIC Consumer Advisory Panel.

    The line-of-credit loans are frequently sold as "mortgage reduction" schemes by brokers to people concerned about their level of debt and anxious for solutions.

    Penelope Hill, a lawyer at Victoria's Credit Helpline, agrees: "The way these loans are marketed is deceptive and misleading. It is a total scam.
    "If brokers and lenders were honest about what these products do, no one would buy them. There would be no reason for anyone to be in one of these loans."

    Carolyn Bond, manager of the Consumer Credit Legal Service Victoria, says: "These loans are an urban legend fanned by misleading marketing and to some extent by unthinking support from generally reputable sources. They really are a hoax."

    Bond, with colleague Roslyn Hunter, has prepared a 50-page report on "mortgage reduction schemes" and line-of-credit loans for the Australian Securities and Investments Commission (ASIC).

    ASIC has recently taken action against mortgage brokers that it found had failed to act independently or impartially. "You cannot be totally impartial if you only deal with a limited panel of lenders who are paying you commission," says Greg Tanzer, ASIC's executive director of consumer protection and international. It is continuing an investigation into Sample and Partners, which offered borrowers line-of-credit loans with thousands of dollars in refinancing fees and charges that left borrowers worse off.
    Bond and Hunter's report, Mortgage Reduction - Misleading Marketing, found in cases examined by the Consumer Credit Legal Service Victoria that borrowers could have achieved the "same savings simply by increasing their existing regular mortgage payments".

    Bond found that many mortgage reduction services rely on false marketing, including making bigger repayments to line-of-credit loans than the standard variable loans in the calculations so that the savings look significant.

    Using an online calculator offered by one mortgage reduction scheme, Bond entered the same monthly repayment amounts for both the line-of-credit and standard home loans to compare the savings that could be achieved.

    "It resulted in savings of just 78 cents a month," the report says. "Some marketers mention the need for disciplined budgeting. Few mention that you need to increase mortgage repayments [to pay down your loan faster]."

    Mortgage brokers' role
    Jan Pentland points out that line-of-credit loans have boomed in line with the growth in the mortgage broking industry.

    "There are a huge number of brokers out there and you have to think that the only way they can make a living is to churn people into new loans," she says.

    She adds that lending to first-home buyers is softer than it has been and the threat is that interest rates will rise rather than fall, putting more pressure on the broking industry to generate an income by refinancing existing clients.

    There were 7296 first-home buyers in June nationally, compared with a peak of 7684 a year ago, according to data from the Australian Bureau of Statistics. The trend is up, but off its peak, says a CommSec economist, Craig James.

    Add to that mix a largely unregulated credit industry and "you've got real problems", Pentland says.

    "People think they are missing out on something if they are not in these loans," she says. "The marketing is very clever. Everyone thinks 'well, if so-and-so is in it, it must work'. These loans are that widespread. But my experience is that the broker comes to your house late at night, charges high fees and leaves you feeling bamboozled. That's because the loans are not what they seem."

    Bond goes further, saying: "I've seen a number of debt reduction plans presented to borrowers and I have not yet seen one where the consumer would be better off refinancing into a line-of-credit loan.

    "Even if these loans didn't come with thousands of dollars of fees, the borrowers would still be better off staying with a traditional home loan. I have complained to ASIC, Consumer Affairs Victoria and the Mortgage Industry Association of Australia about this scam but so far nothing has been done to stop consumers from being fleeced out of thousands of dollars."

    Bond's report says the idea that a line-of-credit loan can substantially reduce a mortgage comes from the fact that interest on home loans is calculated daily on the outstanding balance.

  2. #2
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    Jul 2007
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    558

    Re: Mortgage Reduction Scam via MCA

    No kidding! Most of the agents pushing these DUMB mortgage acceleration products are lying thru their teeth, the HELOC is smoke they blow up people's asses. The math doesn't work.

    The people promoting these schemes runaway when faced with the facts/numbers.

  3. #3
    Join Date
    Jul 2007
    Posts
    558

    Re: Mortgage Reduction Scam via MCA

    No kidding! Most of the agents pushing these DUMB mortgage acceleration products are lying thru their teeth, the HELOC is smoke they blow up people's asses. The math doesn't work.

    The people promoting these schemes runaway when faced with the facts/numbers.

  4. #4

    Re: Mortgage Reduction Scam via MCA

    Every one here seems to be missing the point!!!

    A hammer is a useful tool, in fact its hard to buld a house without one. But if you give it to an idiot, he may just smack himself in the head with it.

    Same thing with MMA, I read the article about LOC schemes in Australia, but all I see is that banks are pushing the line of credit on consumers saying they can pay there mortgages down with it. All I'm see is the HELOC and nothing about what they are supposed to do with it. Now take the MMA you go out and get a HELOC 2nd (not the first like CMG and Maquarie are requireing which I think may be risky).

    We can all agree that a HELOC is a glorified checking account/credit card except that its all secured on your equity. If I get a $100,000 line of credit tomorrow and not use a single cent what is my payment...... $0.00 and after that maybe a small yearly maintence fee (around $75).

    I can borrow money from my HELOC and use it to pay a lump sum to my mortgage then pay my expenses, bills what ever and deposite my pay checks into the HELOC to cover everything.

    Hypothetically lets say I just kept borrowing money from my HELOC to pay down my mortgage what did I do? Just traded a fixed rate mortgage for a LOC on a variable rate set at X above prime. Well of course that does not make sense. So money does need to go in.

    (I'm going to go in first person mode here and become the Average Joe's)
    So I send my paychecks in. Lets say I get paid bi weekly net $1500 every paycheck. My spouse gets paid weekly nets $500 every paycheck. We have known mortgage payment of $1200 known bills of $2000 and an "unknown" expenses (grocieries, eating out, entertainment, partying, just money spent) ranging from $1000 to $1500. So what does this tell me I have a husband and wife who nets $65,000 a year or $5416.67 a month. (But this is average because paychecks come in for me on the 1st and the 5th (or the proceeding Friday if it falls on weekends or holidays) and my spouse gets paychecks every Friday. *and I'll get to this later*)

    So on average we have a monthly descretionary income ranging from $716.67 to $1216.67 or average of $966.67. We are planning for retirement so we do invest in a Roth IRA putting in $6000 a year so that leaves an avarage of $466.67. So one would think that if you checked our saving we would have an extra $5600.04 piling in every year... RIGHT!!!!

    WRONG!!!!
    I saw that $5600 piling up one year and decided daddy needed a new BIG SCREEN TV.
    Wife saw that money in the account and she said you know what its time to deck the hole house in BED BATH AND BEYOND!!!
    So where did our discretionary income go too........ USELESS CRAP THAT BECOMES OUTDATED ANYWAY!!

    So what happened, are we saving for retirment.... yes. Are we able to pay all our bills. yes. Will our mortgage be paid down in 30 years.... yes and maybe sooner because my wife and I through an extra payment in about six months ago and we sure patted ourselfs on the back for it.
    But did any of the guys on this Scam forum ribbing the Money Merge Account software call em up to remind me to be financialy prudent and keep throwing money into the account....... NO THEY DID NOT.

    So back to the HELOC..... so someone called me up and pitched the idea of the MMA account and I swore it was too good to be true, but gave it a try anyway. Went down to the bank got a HELOC for $100,000. They said it would work on $15,000 but I thought why not creat a buffer since I'm going to be throwing all my discretionary income into my mortgage. "What if I get fired from my job and have to find a new one". So my HELOC is at 8% start rate will varry according to the prime. First of all I paid for my software with my HELOC so no money effectively out of pocket and I set it up and get trained by the support staff. I give them the above budget scenerio and its set up with what the man who sold it to me told me on my annalysis. I'll pay off in under 12 years, saving $150,000 on interest.(I did not crunch the numbers but there ball parked to just show a point) So immeadiatly the software has me paying my bills, mortgages and expenses paychecks are coming in every friday for my wife and 1st and 5th for me. I have a detailed plan on paying my mortgage down based on the budget I gave it.

    Ok so the beginning of the first month the software tells me to take out $5316.27 (its to the penny and I'll explain why later *once again numbers are not crunched its just for explanation*) from my HELOC on an advance and apply it to my principle. I just paid down my mortgage by XX amount of months saving XX,XXX.xx in back end interest. Ok so know everyones thinking what I just added $5316.27 to my HELOC balance added to the $3500.00 software and $2000.00 in bills, my regular mortgage payment of $1200 plus my wife spent $200.00 from the HELOC for groceries. Now I owe $12216.27 on a HELOC at 8%. Right?.....

    WRONG

    Your forgetting that your interest only payment on your HELOC is based on a caluculated daily interest. Have I made that payment?.. well of course I did when my paycheck's were deposited. Now when did my paychecks get deposited.. if I had no auto deposit set up I may have deposited them the same day I got them. (every friday for my spouse and every 1st and 5th for me) When were my bills paid? Were they all due on the first?... No I took advice from the program and paid them as late as possible. "mortgage on the 10th. (keep in mind you don't want any kind of transfer or mailing delay resulting in your payment to go in after the 15th so I would not choose the 14th.) I had some payments due on the 1st. some on the 10th. some on the 28th. So my avarage daily balance was changing depending on when my money was going in and when it was going out. And who was telling me to do this?.... the guys bad mouthing it above?..... NOOO the software was.

    Now keep in mind the software only tells me what and when I should do it. It does not have access or control over my money, nor do I give it any account information.

    Now what if I screw up and make a payment too early or deposit money in too late. Well I will just update the system showing when the HELOC was deposited or withdran and the software will then update and tell me how that affected my interest saved and months paid down.

    Ok so taking the above HELOC info we have already paid down the mortgage balance by $5316.27 plus our regular payment of $1200, paid all our bills and deposited our paychecks. We have cancelled xx months from our amortization on the first mortagage and assuming we havn't spent any more money we should have a balance by the end of the month of $7716.27 plus a finance charge for the HELOC of $X amount. (sorry I'm a bit too lazy to crunch the true number, but the point is the software will help you keep that average daily balance for the month as low as possible to keep the monthly finance charge as low as possible) So... does it tell me to take out another extra $5316.27 next month and apply it to my mortgage?....

    HELL NO!!! That would be stupid, your just trading your primary mortgage for a HELOC then. What the program would advise you to do then is pay all your bills and deposit your checks at the optimum time to save as much interest to pay the HELOC down to a point when the finance charge is just right to take another deposit to apply towards your mortgage.... Will it be exactly $5316.27?....

    NO! The number will be another amount maybe $4327.16 or $5012.17. Keep in mind the goal is to float the money from the HELOC to create and optimal savings from both the interest saved on the Primary mortgage and finance interest charges from the HELOC. That is why the draw amount is listed to the cent. The true goal is to have both accounts to 0.00 at the designated payoff time.

    Ok what if my spouse and I deviate from the budget plan.... Hands up for anyone who's ever done that!!! :) Ok so instead of depositing the full paycheck like I told my wife I would I took the $1500 the bank cashed in for cash and went drinking with my buddys. By the time my wife found me on Sunday morning I have already spent $750.00, which she promptly deposited in the account on Monday and made a note on the program... well immeadiatly the next draw amount from the HELOC is going to change to a smaller figure since the discretionary income went down... that way I cannot max out my HELOC.

  5. #5

    Re: Mortgage Reduction Scam via MCA

    Continued:

    OK now what happens during and emergency. Remember I took the HELOC out for $100,000 when I only need a $15,000 LOC. Ok so we find out one month our boy is diagnosed with a form of cancer... our insurance (if we have some) is able to pay for most but we need to come up with $25,000 quick... to pay for transportation costs and other not insured expenses. Instead of empting a savings account which at the time would of had about $3500 judging I didn't need the BIG SCREEN TV at the time, cash in the Roth, go 2 months down on mortgages and try to apply for the HELOC when out credit was shot... (Trust me working in the lending industry I've seen more than one case exactly like this) I have easy access to my already open HELOC. That is reflected in the software and the software immediately adjusts the time and payment of the withdrawals to pay down the mortgage and yes it does affect the time to pay off the primary mortgage by extending it and yes we will lose out in potential interest savings but I don't have to be an expert in anything to know what’s important. Judging that things work out that you wouldn't have to pay more than what the HELOC is the program will allow you to get back on track to an interest savings and timely pay down which would save you more money in the long run then just making the regular payments, and you get the benefit of having access to money to keep house payments and expenses going thus not affecting your credit. Would the guys above saying that the program is a SCAM call you up or do your spreadsheet budgets for you on QuickBooks for something like that??????

    Ok so disaster situations aside lets get back to that average discretionary income......
    mmmmmmm what should we do with this... this is our money left over after bills are paid... do we invest it?... well Wall Street wants you too and don't get me wrong I'm not a financial planner but ever hear of ENRON?... you could lose out or you could have bought DELL when it was starting up and not have to worry about a mortgage or any other bill but remember we're talking about the "Average Joe's" here. I'm not saying you shouldn't invest... you can take certain amount of money and do something with it that’s why I added the $6000 a year in the Roth. Now the big thing about discretionary income is what a lot of economist like to quote and that’s opportunity costs. If I put my money here I won't be able to put my money there. Now most American's don't save and lots of their investments are based on the idea of the Get Rich Quick..... "lets find something like DELL dude" and a lot of brokers and people selling investments make a lot of money preying on people with that mentality. Now investments on average over the long term will pay off and pay off huge!! Benjamin Franklin quoted something about the "power of compounded interest” (anyone who looks at their amortization schedule on there mortgage can see the banks no about that) But an economist Alan Keynes also said something to the order of "In the long term your dead" so what’s that money going to do for you, you can't take it with you. The other thing to think of is there is risk involved in investing... It's kind of like having an open bar where the only condition is that the last people to arrive pay's the tab. If you invested prudently and soundly and the whole economic situation took a dive at your retirement age you just lost out, you just "paid the tab". Well add a house with a mortgage on it and it looks like retiring in your 60's is out of the question.

    Don't get me wrong I'm not saying investing is bad just that its risky. I would advise a lot of people to save some money in a mutual fund or a few stocks and bonds for retirement. I bet the "Average Joe" could read, study and take notes on Benjamin Grahams "Security Analysis" and comb through the Wall Street Journal every day and keep up to date on their investments but they probably paid someone with experience or paid to use an E-trade account so the info is easy to understand to help them make there investment choices. :) hmmmmmmmm Do it yourself????

    Ok so what’s wrong with paying off your home early..... you save a bunch of money on interest... hell some of the savings is hundreds of thousands of dollars.. plus you have more time where you don't have a payment. My Grandfather did it... Hell it makes so much sense why doesn't the "Average Joe" do it...
    Brings us back to the discretionary income "Why does the Average American have so little discretionary income?" The answer is plainly AMERICANS DO NOT SAVE out saving has never been this low since the beginning of the Great Depression. The truth is the "Average Joe" lives in a consumer society where bigger is better is more is best. That thirty year mortgage is stretched out for so long (and even longer if its the new 40 or 50 year) that he just pays attention to payment. Paying it every month and knowing in the back of his mind that if he saved a bit more and applied it to his mortgage he will pay off early and save tons of money.... why doesn't he/she do this?... Because the instant gratification of stuff is better than the later satisfaction of being debt free. That’s what people are finding out about Money Merge Account... take our "Average Joe's" they get on the program the first month do what it says and see positive results showing that their paying there mortgage off in XX amount of years... Month two they screw up spend all there money and get a negative response showing how it affects there mortgage pay off and potential interest lost. What I'm finding out is that people like the instant positive pat on the back when they save and avoid the negative guilt when they don't. WHEN THE RESULTS OF THIER ACTIONS ARE SHOWED TO THEM IN REAL TIME ie the savings and months, years saved on the mortgage they tend to participate in it more often. Not only that but most users of the Money Merge Account end up taking it up a level and making a game of saving.... How much money can I save and throw into the mortgage and pay down even faster. I'm hearing from personal useres of the software that they are paying down even faster than first quoted because of the exact same thing. Bottom line they Get excited about saving money..... Now tell me is saving money so wrong.

    Ok I'm getting a bit wordy but my last scenerio is giving the program to an idiot.. (remember the idiot with a hammer) I'm not saying someone mentally retarded, I'm saying someone financially stupid.... Will they save money if they follow the software?.... Yes!!!

    Will they follow the software...... Most likely NO!!!! These people whether they just are completely stupid about money are not going to save on anything they spend more than they make... always in debt... sometimes it may involve addictions like drugs or gambeling but if I was selling it and knew they had a problem would I advise them to get on it as an end all to thier problems..... Definitly not!!! The last thing these people need is an extension LOC secured by there home... But if this problem has been ongoing then they probably would not qualify for the LOC from thier bank thus couldn't get the software anyway.


    OHHH P.S for everyone throwing out the what if I move in 3 years... Well the software is transferable to as many properties which you own for LIFE!!!


    KEVMOMONEY

  6. #6
    Join Date
    Jul 2007
    Posts
    558

    Re: Mortgage Reduction Scam via MCA

    Quote Originally Posted by KevMoMoney
    But did any of the guys on this Scam forum ribbing the Money Merge Account software call em up to remind me to be financialy prudent and keep throwing money into the account....... NO THEY DID NOT.
    People don't become financially prudent by blowing $3500 on a software package that falsely claims that HELOC money shuffling knocks years off your mortgage. People don't become financially prudent by buying Microsoft Money or Quicken. People don't become financially prudent by getting a HELOC.

    Quote Originally Posted by KevMoMoney
    So back to the HELOC..... so someone called me up and pitched the idea of the MMA account and I swore it was too good to be true, but gave it a try anyway. Went down to the bank got a HELOC for $100,000. They said it would work on $15,000 but I thought why not creat a buffer since I'm going to be throwing all my discretionary income into my mortgage. "What if I get fired from my job and have to find a new one". So my HELOC is at 8% start rate will varry according to the prime. First of all I paid for my software with my HELOC so no money effectively out of pocket
    Step #1 in becoming financially prudent is never using the phrase "no money out of pocket". That is the exact same trap morons who buy big screen TV's use. They buy it on credit so "no money out of pocket". It costs $3500 and you financed the cost.

    Quote Originally Posted by KevMoMoney
    and I set it up and get trained by the support staff. I give them the above budget scenerio and its set up with what the man who sold it to me told me on my annalysis. I'll pay off in under 12 years, saving $150,000 on interest.(I did not crunch the numbers but there ball parked to just show a point) So immeadiatly the software has me paying my bills, mortgages and expenses paychecks are coming in every friday for my wife and 1st and 5th for me. I have a detailed plan on paying my mortgage down based on the budget I gave it.
    Since you appear to be dedicated to paying off your mortgage faster you can take the $3500 you blew on the HELOC money shuffling scheme, stick with exactly the same spending plan, deposit your paycheck to your savings account and once a month write a check to your mortgage company for your regular payment plus you discretionary income.

    Quote Originally Posted by KevMoMoney
    Ok so the beginning of the first month the software tells me to take out $5316.27 (its to the penny and I'll explain why later *once again numbers are not crunched its just for explanation*) from my HELOC on an advance and apply it to my principle. I just paid down my mortgage by XX amount of months saving XX,XXX.xx in back end interest.
    You didn't save anything yet. You are financially $3500 worse off then when you started on your escapade.

    Quote Originally Posted by KevMoMoney
    And who was telling me to do this?.... the guys bad mouthing it above?..... NOOO the software was.
    Really? I'm pretty sure most people already know how to pay their bills as late as possible, no HELOC required for that, no $3500 software required for that.

    Quote Originally Posted by KevMoMoney
    Ok so taking the above HELOC info we have already paid down the mortgage balance by $5316.27 plus our regular payment of $1200, paid all our bills and deposited our paychecks. We have cancelled xx months from our amortization on the first mortagage and assuming we havn't spent any more money we should have a balance by the end of the month of $7716.27 plus a finance charge for the HELOC of $X amount.
    It must really suck to know that despite having all that discretionary income you now owe more than you started out owing. You would have been better off skipping all that work involved in your lengthy commentary and simply not spent that $3500 and written a check for your monthly mortgage payment plus your discretionary income. Since you are so gung-ho and motivated that shouldn't be a problem.

    Quote Originally Posted by KevMoMoney
    (sorry I'm a bit too lazy to crunch the true number, but the point is the software will help you keep that average daily balance for the month as low as possible to keep the monthly finance charge as low as possible) So... does it tell me to take out another extra $5316.27 next month and apply it to my mortgage?....

    HELL NO!!! That would be stupid, your just trading your primary mortgage for a HELOC then.
    Well too late, you've already been stupid. Borrowing more against your HELOC than you can pay back from cash flow that same month is a guaranteed money losing proposition.

    Quote Originally Posted by KevMoMoney
    What the program would advise you to do then is pay all your bills and deposit your checks at the optimum time to save as much interest to pay the HELOC down to a point when the finance charge is just right to take another deposit to apply towards your mortgage.... Will it be exactly $5316.27?....

    NO! The number will be another amount maybe $4327.16 or $5012.17. Keep in mind the goal is to float the money from the HELOC to create and optimal savings from both the interest saved on the Primary mortgage and finance interest charges from the HELOC. That is why the draw amount is listed to the cent. The true goal is to have both accounts to 0.00 at the designated payoff time.
    Actually there is absolutely no reason for those numbers to be exact, but seeing as how you haven't actually done the math you don't realize that. You've been bamboozled by the guy who sold that scheme to you into believing that those numbers must be just right.

    Quote Originally Posted by KevMoMoney
    Ok what if my spouse and I deviate from the budget plan.... Hands up for anyone who's ever done that!!! :) Ok so instead of depositing the full paycheck like I told my wife I would I took the $1500 the bank cashed in for cash and went drinking with my buddys. By the time my wife found me on Sunday morning I have already spent $750.00, which she promptly deposited in the account on Monday and made a note on the program... well immeadiatly the next draw amount from the HELOC is going to change to a smaller figure since the discretionary income went down... that way I cannot max out my HELOC.
    Sure you can max out your HELOC, just keep spending more that you make.

  7. #7
    Join Date
    Jul 2007
    Posts
    558

    Re: Mortgage Reduction Scam via MCA

    Quote Originally Posted by KevMoMoney
    OK now what happens during and emergency. Remember I took the HELOC out for $100,000 when I only need a $15,000 LOC. Ok so we find out one month our boy is diagnosed with a form of cancer... our insurance (if we have some) is able to pay for most but we need to come up with $25,000 quick... to pay for transportation costs and other not insured expenses. Instead of empting a savings account which at the time would of had about $3500 judging I didn't need the BIG SCREEN TV at the time, cash in the Roth, go 2 months down on mortgages and try to apply for the HELOC when out credit was shot...
    Or you could just take the financially prudent step of applying for a HELOC and NOT USING IT. Gee, why do the simpliest things seem to escape the minds of those promoting worthless schemes?

    Besides, why would your credit be shot? Apply for the HELOC when you need it, not after you started missing payments.

    Quote Originally Posted by KevMoMoney
    Would the guys above saying that the program is a SCAM call you up or do your spreadsheet budgets for you on QuickBooks for something like that??????
    Quickbooks is accounting software, not appropriate for generating a budget.

    If you want to track your spending for budgeting purposes Microsoft Money or Quicken do an excellent job and for under $40. Highly recommended.

    Seems simple enough to apply your discretionary income to your debts, that is, after all, all that your $3500 scheme does.

    Quote Originally Posted by KevMoMoney
    Ok so disaster situations aside lets get back to that average discretionary income......
    mmmmmmm what should we do with this... this is our money left over after bills are paid... do we invest it?... well Wall Street wants you too and don't get me wrong I'm not a financial planner but ever hear of ENRON?... you could lose out or you could have bought DELL when it was starting up and not have to worry about a mortgage or any other bill but remember we're talking about the "Average Joe's" here. I'm not saying you shouldn't invest... you can take certain amount of money and do something with it that’s why I added the $6000 a year in the Roth. Now the big thing about discretionary income is what a lot of economist like to quote and that’s opportunity costs. If I put my money here I won't be able to put my money there.
    Don't invest in individual stocks and yes if you apply your discretionary income to your mortgage it won't be available for savings or investments. Naturally that makes your claimed "savings" shrink away to nothing so you must do something. I know, claim that if people don't apply their DISCRETIONARY income to their mortgage they'll spend it on a big screen TV.

    Quote Originally Posted by KevMoMoney
    Now most American's don't save and lots of their investments are based on the idea of the Get Rich Quick..... "lets find something like DELL dude" and a lot of brokers and people selling investments make a lot of money preying on people with that mentality. Now investments on average over the long term will pay off and pay off huge!! Benjamin Franklin quoted something about the "power of compounded interest” (anyone who looks at their amortization schedule on there mortgage can see the banks no about that) But an economist Alan Keynes also said something to the order of "In the long term your dead" so what’s that money going to do for you, you can't take it with you.
    In the long term you're dead so what good is a paid off mortgage?

    Most people don't pay off their mortgage early either, is that a reason to suggest that people shouldn't?

    Quote Originally Posted by KevMoMoney
    The other thing to think of is there is risk involved in investing... It's kind of like having an open bar where the only condition is that the last people to arrive pay's the tab. If you invested prudently and soundly and the whole economic situation took a dive at your retirement age you just lost out, you just "paid the tab". Well add a house with a mortgage on it and it looks like retiring in your 60's is out of the question.
    LOL, no, investing is not like having an open bar where the last people to arrive pay the tab.

    On the other hand a lot of people in hurricane Katrina learned how much a house is worth after a natural disaster. Some learned that having all your net worth tied up in a house is a bad idea as they got used to the idea of living in a homeless shelter.

    My parents took an entire 30 years to pay off their home. By the time they got around to making that last $145/mo payment the house payment was less than their gas+water+electricity payment. Inflation works to the debtors advantage. Paying off low interest rate fixed rate mortgages is foolish.


    Quote Originally Posted by KevMoMoney
    Don't get me wrong I'm not saying investing is bad just that its risky. I would advise a lot of people to save some money in a mutual fund or a few stocks and bonds for retirement. I bet the "Average Joe" could read, study and take notes on Benjamin Grahams "Security Analysis" and comb through the Wall Street Journal every day and keep up to date on their investments but they probably paid someone with experience or paid to use an E-trade account so the info is easy to understand to help them make there investment choices. :) hmmmmmmmm Do it yourself????
    Again, you make things wildly more complicated than need be. The average person need only find a low cost index mutual fund. No need to read the Wall Street Journal or read Ben Grahams' books. Most funds will be happy to set up a direct debit automatic investment plan for you. No work at all.

    Quote Originally Posted by KevMoMoney
    Ok so what’s wrong with paying off your home early..... you save a bunch of money on interest... hell some of the savings is hundreds of thousands of dollars.. plus you have more time where you don't have a payment. My Grandfather did it... Hell it makes so much sense why doesn't the "Average Joe" do it...
    Nothing wrong with it at all, as long as you have a balanced financial plan that doesn't force you to borrow money at high interest rates when the inevitable roof repair, educational expenses or medical bills crop up.

    Nothing wrong with it at all.

    There is something wrong with spending $3500 in the mistaken belief that shuffling your money thru a HELOC will allow you to pay your mortgage off years faster than just taking the same amount of discretionary income and paying your mortgage with it.


    Quote Originally Posted by KevMoMoney
    Brings us back to the discretionary income "Why does the Average American have so little discretionary income?" The answer is plainly AMERICANS DO NOT SAVE out saving has never been this low since the beginning of the Great Depression.
    You are clearly confused about what discretionary income is. People don't save because they spend their discretionary income or they don't have any discretionary income.

    Quote Originally Posted by KevMoMoney
    The truth is the "Average Joe" lives in a consumer society where bigger is better is more is best. That thirty year mortgage is stretched out for so long (and even longer if its the new 40 or 50 year) that he just pays attention to payment.
    You fell victim to that very thing in your first comment, remember? "No money out of pocket"? You financed something you couldn't afford to pay. Why couldn't you pay for it despite your claim you had over $1000/mo in discretionary income? Because you spent your discretionary income.

    I do agree that we are a payment society and people lose sight of the real cost of their borrowing. Borrowing an additional $3500 isn't the fix. The fix is reducing your spending, increasing your income and being prudent with your discretionary income.

    Quote Originally Posted by KevMoMoney
    Now tell me is saving money so wrong.
    Nobody said saving money is wrong. I just saved $3500 by not buying a worthless mortgage acceleration scheme.

    Get a copy of Microsoft Money, it costs under $30 and it will track your net worth to a penny. Feel free to make a game out of making it grow as quickly as possible. It will track your debts to the penny. Feel free to make a game out of making your debts shrink as quickly as possible.

    No need to use a HELOC, it will just waste your time and money. Not a good way to start out in your quest to become more financially responsible.

    Quote Originally Posted by KevMoMoney
    Ok I'm getting a bit wordy but my last scenerio is giving the program to an idiot.. (remember the idiot with a hammer) I'm not saying someone mentally retarded, I'm saying someone financially stupid.... Will they save money if they follow the software?.... Yes!!!
    They will pay off their mortgage faster using money out of their pocket. They can do that for free. People love getting on the new diet, they lose weight quickly, they are excited. A year later they are fatter than ever. No difference here, after a year of having to scrape and scrimp they'll tire and go back to their spending ways. Slowly at first and then they start packing on the debt again.

    Then they'll regret having blown all that money. You see, the problem with all your rosy scenarios is you are pushing a product that has been out only a short time. You have no scientific evidence to back your claims, you only have your hopes and dreams of bamboozling a few more people out of their money so you can pocket a nice commission.

    Quote Originally Posted by KevMoMoney
    OHHH P.S for everyone throwing out the what if I move in 3 years... Well the software is transferable to as many properties which you own for LIFE!!!
    For your life or the life of the company you bought it from? Care to wager which is going to be longer?

  8. #8
    Join Date
    Jul 2007
    Posts
    558

    Re: Mortgage Reduction Scam via MCA

    It is nice to see that the people promoting this worthless scheme have given up trying to claim it makes FINANCIAL sense (they used to say "the math doesn't lie" until I pointed out that THEIR math did lie) but instead it is $3500 worth of motivational software.

    I particularly loved Kevin's part about it not costing you anything "out of pocket". There he is promoting the idea of paying off debt, that debt is bad but in order to sell you the product he points out that you can FINANCE IT.

    ROTFLMAO

  9. #9
    Join Date
    Jun 2005
    Location
    Chicagoland
    Posts
    25

    Re: Mortgage Reduction Scam via MCA

    I researched the software and was not a big fan. It could work with the right people, but who would spend $3500 to find out. I am a mortgage professional and I do have the CMG Home Ownership Accelerator as one of my products. If a client has cash flow and their desire was to payoff their mortgage as soon as they could then it makes sense. However, I would stress that it is not for everyone.

    The CMG HOA makes it easy to throw excess money into the loan as you can pull it out any time. Knowing this you don’t need to park excess money in an account if it can be used to lower your principle and is available to withdraw when needed. Since the payment of this product is based of simple interest as opposed to amortizing every dollar put against principle lowers your payment. This compounds over time as your direct deposit should not shrink, but your payment does. The lower the payment the more your income drives down the principle thus the lower your payment…etc.

    Now financially it may not be the best use of your money. The best plans I have seen use interest only loans and place excess funds into conservative investments. The investments have a growth rate higher then the payoff of your traditional 30 year mortgage. I would not suggest anyone use this unless a financial advisor is helping them with their investments.

    Again, for the right people, the HOA can be substituted for the I/O program.

    Some people do not want to go that far and just want to focus on the payoff of their largest debt. That is when the CMG HOA makes more sense for them.

    Any of these scenarios are for the financially savvy and not the average Joe. Discipline is the largest factor in financial matters. Without it all plans will fail.

  10. #10
    Join Date
    Aug 2007
    Location
    St. Louis, MO
    Posts
    34

    Re: Mortgage Reduction Scam via MCA

    Wow! Much confusion about CMA and MMA. Having worked with both for over a year now, let me clear this up. Please understand the distinction between this controversial mortgage repayment method, the need to refinance your current loan and a financial management software tool.

    The acronym MMA (Money Merge Account) however, is NOT the same thing. It is NOT a loan at all. You do NOT need to refinance or change lending institutions. There are NO closing costs or refi fees what so ever. MMA is the name given to a financial management software program developed by United First Financial headquartered in Salt Lake City, UT. Check them out...extremely reputable, long-standing and BBB complaint free.

    With a CMG Loan, the customer will typically pay several thousand dollars in associated refinancing and/or closing costs. Your entire mortgage balance, whatever it may be, is transferred into a credit line, which now becomes your only loan.

    The concept being, you now have the capability of repaying the loan in “simple” interest terms as opposed to “compound” interest, which is typical on most primary mortgage loans. You also have added control over those payments should you need to use those funds at any given time for other urgent or important situations. The main concern with CMG is that in most cases you now have a huge balance at a higher interest rate that adjusts with Prime or Libor.

    The concept itself is valid and extremely successful under the right circumstances as a way to repay your mortgage loan sooner, eliminate thousands in interest and build equity faster.

    The right circumstances are this:
    One, you need a home equity line of credit
    Two, you cannot be in a negative monthly cash flow situation (your monthly income must be greater, or at least equal to, ALL your monthly expenses combined.)


    I paid $3500 for the software in October 2006 and my July 2007 mortgage statement reflects a savings of $18,587 in interest that I would have paid had I not been using the program. If my income and debt remain the same moving forward, I will have my house paid off in 5 years and 3 months. As opposed to about 18 years. I also paid off a $12000 car loan and 2 credit cards for $8000 with my credit line and added that into the equation for the software to manage. I will be completely debt free in 5 years. When I began the program I was 7 years into my mortgage repayment term and would occasionally find a way to send in extra money toward the principal, but not frequent enough or in large enough amounts to make the impact that the software enables me to make.

    Some are concerned that the rate on the equity line is adjustable and typically higher than their fixed rate on their primary mortgage. Even if it were to go as high as 20%, it will have little or no effect on the final result, which is ZERO debt in less time. The interest I paid on my HELOC in the last nine months was $2,228. Had I not paid off my auto loan and credit cards it would have been much less, but I would have paid more interest to the auto and credit card financers. My interest saved on my primary mortgage was $18,587. You do the math.

    The reasons…one, you are NOT borrowing more money, you are transferring debt from a “compound” interest account (your primary mortgage) to a “simple” interest account (your HELOC)…two, the software prompts you the same day you transfer debt from your mortgage principal to your HELOC to move money from your checking or savings (depending on where your monthly income normally resides, usually just waiting unproductively to pay upcoming expenses) to your HELOC, which pays down that balance immediately. You are only charged interest on the daily average balance of your HELOC. The balance of your HELOC will continually rise and fall as you transfer “compound” interest debt to “simple” interest debt. This is why the software has true value. It keeps the reigns on how much and how often this transfer should occur so that the amount of your income is always enough to significantly reduce the HELOC balance and still pay all your expenses without additional discretionary funds required to make it happen. Once again, the interest I paid on my HELOC in the last nine months was $2,228. My interest saved on my primary mortgage was $18,587. You do the math.

    Eliminating thousands of dollars of interest that your mortgage lender is currently scheduled to collect from you and building equity in your home faster is a good idea, I think we would all agree, yes? Investing prudently in mutual funds or other proven stocks is also a good idea, agreed? For both, the question is when and how much. A good financial planner can help with the stock investment. The financial management software can help you know when to transfer and how much to transfer to optimize your interest savings and equity building potential.

    Do you “need” the software to do this? Short answer, NO…but at one point in time we didn’t depend on computers or any of Bill Gates software either. Do you REALLY need MS Word to write a letter or Excel to create a spreadsheet? Their cost is not cheap either. What kind of guaranteed ROI comes with MS? How much are you willing to pay each and every month for your Internet service, your cable TV or your cell phone? I bet it cost more than $3500, EACH YEAR? Do any of these seemingly necessary products come with a mathematical guaranteed ROI? MMA does! What do you have to lose? With mathematical certainty, based on your income and debt, you will know exactly how much interest you are eliminating and how fast your equity is growing. By the way, to get that info costs you nothing! A no cost, no obligation analysis is available. And the program, if purchased all comes with a100% money back guarantee…all $3500.

    Yes, you can use any online calculator to input loan amounts, rates, income, debt, etc. and it will figure interest reduction, extra principal payments, payoff periods, etc. BUT…there is no other product on the market that links your checking and/or savings through an equity line to your mortgage principal enabling every dime you have to work 24/7 in paying that principal down faster, reducing your monthly mortgage payments, eliminating thousands in interest and building your equity faster. NO OTHER PRODUCT! Total convenience, complete control over your finances, easy to use, mathematical guarantee, no risk!

    If your lost in the woods (financial woods) you can look for moss at the base of a tree that will guide you North…or maybe you whip out a compass that you brought, which would help you find your way…or just perhaps, before you went into the deep woods, you made an investment in a GPS device, despite skepticism in its value. Which would you rather have?

    Skepticism and concern is always present as products and the way we do things evolve. Some people are handwriting a response to this posting right now and will then mail it to Scam.com via US Postal Service…because they still think email is a scam.

    MMA is not a panacea for all your financial woes, but it is far from a scam!

    Learn more: www.u1stfinancial.net/KevinFlatley

  11. #11
    Join Date
    Aug 2007
    Posts
    104

    Re: Mortgage Reduction Scam via MCA

    It's a scam.

    Customers have to pay $3500 to manage money that can easily be managed themselves for the same effect.

    Lets see how quickly UFF can pay this off (as posted in another thread):

    Quote Originally Posted by thetruthbetold
    Monthly income of $5000 net ($60K/yr)
    $250K mortgage at 6.5%, principle and interest no escrow account
    Savings account earns 5%
    HELOC at 8.5%
    Monthly expenses other than mortgage total $3019.83

    No cheating and claiming you make $1250/wk either.

    ...

    If, instead of prudently saving money, I decide to throw all my discretionary income into my mortgage (the UFF way except no HELOC) I pay off the mortgage in month 214.

    Your turn...
    I added to the numbers. If you apply $3500 up front as an extra principal payment, the mortgage can be paid off in month 208.

    Using the above numbers, can UFF pay off this mortgage in less than 208 months? If so, please show us the numbers how it did so.
    Last edited by helix; 08-14-2007 at 03:10 AM.

  12. #12
    Join Date
    Aug 2007
    Location
    St. Louis, MO
    Posts
    34

    Re: Mortgage Reduction Scam via MCA

    What most skeptics keep missing is how "compound" interest and "simple" interest truly effect the equation. Using TheOpinionbeTold's scenario the MMA program will have the loan paid off in 147 months. If you want that in writing and guaranteed, just go to this link and fill out the worksheet and I will send it to you. https://analysisrequest.u1stfinancia...Correctly=True
    No cost. No obligation.

  13. #13
    Join Date
    Jul 2007
    Posts
    558

    Re: Mortgage Reduction Scam via MCA

    Quote Originally Posted by AD Expeditor
    What most skeptics keep missing is how "compound" interest and "simple" interest truly effect the equation. Using TheOpinionbeTold's scenario the MMA program will have the loan paid off in 147 months. If you want that in writing and guaranteed, just go to this link and fill out the worksheet and I will send it to you. https://analysisrequest.u1stfinancia...Correctly=True
    No cost. No obligation.

    What "equation" would that be? Oh, you just made it up. Thought so.

    And no, you will not pay off the mortgage using the parameters I specified in 147 months. Prove it:

    Tell me what the 1st page of your UFF analysis says for:
    Total monthly fixed expenses
    Total monthly income
    Interval for Net Income and amount
    Current monthly discretionary income

    I'll bet anyone $5000 that Ad Exp either is flat out lying or did what most UFF agents do, entered bogus numbers into the analysis.

  14. #14
    Join Date
    Jul 2007
    Posts
    558

    Re: Mortgage Reduction Scam via MCA

    Oh, BTW, Ad Exp happened to include the EXACT SAME flawed link as another poster on another thread (who claimed to NOT be an agent) posted.

    Funny how these guys just can't seem to tell the truth.

  15. #15
    Join Date
    Aug 2007
    Location
    St. Louis, MO
    Posts
    34

    Re: Mortgage Reduction Scam via MCA

    Fill out the worksheet...I will pay the $3500 to put you on the program and bet you that $5000 your still using the software in Aug. 2008.

  16. #16
    Join Date
    Aug 2007
    Location
    St. Louis, MO
    Posts
    34

    Re: Mortgage Reduction Scam via MCA

    Request Free Money Merge Account Analysis Try this link. I'm a satisfied customer, but I also already mentioned I was an agent...6 months and many satisfied customers. Not one BBB complaint since the program has been launched. Maybe we'll get one in the next 3 years.

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