I know I am a Licensed Florida Mortgage Broker located in Palm Beach Gardens, Florida (Northern Palm Beach County). This is what I do for a living and I take pride in what I do. Below is a list of careers that I am either not licensed for or not trained for:
The reason for this post is lately I have been approached by many individuals pushing the rapid mortgage pay down (Mortgage Accelerator programs). While I have seen different programs and some are better than others it is just a tool to have and not for every individual in every situation.
What amazes me is while some of these programs are good in theory and might benefit the consumer the people that are pushing me into these programs all claim to know the Laws, Taxes, Financial Planning and how the property will appraise out.
I have a very good client who contacted me last week to ask me to review these emails from another Mortgage person telling them about this program. I will not repost them because I am sure some people in South Florida might even know this person.
After what sounded like the greatest invention in the world I explained to my client while they purchased their home 8 months ago and did a 80/20 (first loan at 80% and the second for 20%) stated and they are in a great programs the fact is most likely they at best he might owe what the house is worth or probably they are upside down on the home. Plus the way these programs work is you need a HELOC(Home Equity Lines of Credit) to make the program work and the truth is in the current market HELOC's are getting quite hard to come by and plus he could not prove his income and would need to go stated. Also, I did not know if he could even get a HELOC at 100% but I would look into if he wanted me to do that.
Well, my client sent his concerns to this Mortgage Person (my comments to his emails) and this is what he got back.
Of course my client forwarded me the emails. Now I know why Mortgage people have such bad reputations. I asked him if he spoke to his CPA for the business and personal before doing anything. Then I asked him if he heard the news that Stevie Wonder was now doing appraisals? Because that will never fly!
Remember the program is not a bad program and can help people who can qualify for that second mortgage and also have the goal of paying down their mortgage rapidly. Also, I have found people that push you so hard into believing this is the only thing available and the best thing have alterer motives. Oops by they way did I forget to tell my readers that in many of these programs they get a very nice commission for doing this? Oh but I am sure in this case the person was really looking out for the clients best interest...(NOT)
People, in closing stick with what you know! Don't start quoting tax laws, Real Estate, Mortgage's or apprisals when this is not your profession.
For More Mortgage Advice: Mortgage Advice in South Florida
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Full-Time Mortgage Broker in South FL. Palm Beach County. Specializing in Hard Money / Private Money, Foreign Nationals, Jumbo and Super Jumbo Loans. In addition I work with Today's Premiere Lenders.
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Matt,
Figures, there's another Idiot in the Business. Sadly your client was being approached by a Desperate Crook, and he luckily had you to watch out for him.
Good Job!
Tom, What are you going to do. Luckily this person was educated enough to know to call me and also more importantly his CPA. Once this person started talking about tax's
Matt,,,,,, LOL I am actually going to write about this type of mortgage tomorrow. We had the major player in this type of mortgage sit down with us last week. I was not impressed. And what's sad is that I have seen a few loan officers even on AR push this loan. In my opinion, there are way too many wholes in it that aren't explained or made you aware of. You should have seen the two that spoke to us and how they were trying to sell everyone.
Their main selling pitch was.... " you can get others under you to sell this.... even CPAs...." lol It reminded me of the pyramid schemes... I will go into great details on why this loan is not as good as so many think. thanks for the post.... it does prove why we have such a bad name and this will add to it. I got spammed by someone through AR about this product... it was pathetic when I asked certain questions... and everyone fails to tell you about the $3,500 fee that it costs to do this loan. Not you have me on a roll...
Jeff, Thank you Thank you Thank you. That is exactly how I feel about that. In this post I was just pointing out more about people claiming things that they are not licensed or educated on. They think they take one course (From the saleman pushing the program) and now they are educated enough to tell them everything. Ok now you got me going.....
Matt... yea, I got away from your post a little... lol But you make a great point here. I think Tom W. wrote about this about a week ago also...
Jeff, I did not see that post. Thank you though.
Matt - Can't believe the advice this other mortgage person gave? What was he thinking? Oh, I guess he was thinking about his commission....
Sandra, I agree. Just like Jeff said they get 3,500
The Pay Option ARM was good in theory too.... this is just the next bottle of snake oil....
Tom, Thanks for commenting..Officially no comment..:-)
Matt, I bet your client was glad for your advise. I was only a kid but I remmember a story about a boy sticking his finger in a dike to stop the flood..... ;)
Hey now..... we ALL sold it when the customer wanted it....
But, in the end, we all denied it when it wasn't cool....
Matthew- Oh, my, how they like to just make a buck and to heck with how it may hurt or ruin the person! Katerina
Keith & Robin, LOL.. He is a good friend of mine also and he knows I would never stear him wrong.
Tom, I still think the Option Arm is a good loan for some people. I do think the changes to the rate locking now for 3,5 and 30 years is a great option now. The guidelines also got much tougher which I think they needed to be. That loan should never of been offered as a 90/10 stated. That was just crazy. I never closed any of those loans with a high LTV.
Katerina, True. But they speak with such authority.:-)
Hi Matt,
At least this client has you to watch his back! :)
Suzanne, Thank you..:-)
Matt,
Seems the MMA is the new hot thing these days. Another commission driven program that will spur people to pitch it without regard to it's relevance for the consumer. I did a little research a while back, and it seems similar programs can be had for much,much less than $3500. This is situation where the consumer really needs to do their research and seek advice from the appropriate professional, ie CPA, financial planner.
I do know they have been using it in Europe for many years, so it may have merit, but it's complicated and isn't for everyone. It's not something you can become an expert on by attending a 2 hour seminar.
Cheryl, I know about the 3,500 I guess I should of said up to..sorry. You mean you can't become an export in just 2 hours? lol...just kidding thanks for your comment
Bad advice is cheap to get, but expense to follow.
I hear these all the time
one person that I spoke to has never even been in the real estate industry or finance industry
I understand WHY it is popular
Susie, To funny.. Thank you
Dan, Now that is one of the best statements I have heard in a long time. Thank you
David, I understand it as well.. I think most people that are pushing it only see the commission though
I am a huge fan of the MMA programs. In the right hands the Money Merge Account and other debt elimination programs such as UFLO's are the most powerful business building and equity management tool on the market today. It's unfortunate that jerks such as the LO that sent your client this e-mail don't have a clue.
It is absolutely true that many people will not qualify for the HELOC either credit or home equity reasons. (That's where the UFLO DE Program comes in). For those that do it works. For LO's who are smart, you can build long term relationships and generate repeat business by showing your clients how to pay down their mortgage quickly and and then show them how to harvest the equity once it's paid down. The harvested equity can then be used to buy investment real estate or be put into other investments with the help of a Financial Planner. The client then repeats the process with the harvested equity, pays it down and re-harvests it for other investments. Depending on the age of the client the cycle can be continued multiple times and by the time they are ready to retire their home will be paid off and they will have a healthy nest egg of investments.
Think outside the box guys. The potential for wealth creation is monumental. Give me a Call Matthew. I'll be happy to explain how I'm using these programs to truly make a difference in the lives of my clients.
I'm tired of playing nice on this topic. I sat idly by and watched countless people do the neg-am dance, and I'm not shutting up for this go-round of fraud and misrepresentation.
Why would a bank issue a product that will cost them millions of dollars in lost interest? They are "banking" on the reality that people won't follow the program. This product benefits 2 entities...
...the Bank, and...
...the broker.
End of story.
Matt,
You can blame Jeff B. for dragging me back over to AR, lol. I did a comment over there providing links to my explanations on my other blog, which I think would behoove your readers to visit as I am doing a series comparing "apples" to "apples" across the realm of strategies using UFF's own presentation numbers (they come in 4th place believe it or not - I was surprised myself as I thought they would be at least #3).
Nevertheless, since I have heard about every argument for and against these types of programs, I thought it wise to throw an input here...
DO NOT RUSH INTO THESE PROGRAMS!!!!!!!!!!!!!!!!!!
They work, but usually not as presented, and I have seen several presentations at this point. The vast majority of the savings is derived from "discretionary income", not from the software. It does require about the same amount of discipline as almost every other strategy, except CMG does a one time shot and that is about as lazy as it gets. (I do not like it that way, but if someone has no discipline then it is probably the best solution).
I could go on and on about how these are not the best thing for virtually everyone, but your readers need to decide for themselves. Bottom line...don't rush into them, do not get caught up in the "presentation", and do your research. Of course it helps if you can find someone who is an expert in all strategies, which you are not likely to find in the people selling them (I have found one or two that show all options and educate the client). Keep an open mind to ALL strategies from mortgage acceleration to equity harvesting and you will likely find the true best solution for you.
See you next month...
Kate, This is not meant as an attack so please do not take it that way. I just find it amazing that everyone who sells these programs is an export. What makes you an export? Also by joining a group and making a donation this does not make you an export. I have found it is just a product and nothing in this world is absolute.
Rich, Love the pic.. Not crazy about the neg am product quote. In some cases it was a great product but just like these programs they are good for some people but not for everyone.
Robert, Glad your back!. You are one of the few that I will listen to when it comes to these products. Because you have not just taken a 2 hour sale course and sell it. You actually looked into each product and are very well educated on each one. ok ok enough brown nosing..lol I really agree with you on "DO NOT RUSH INTO THESE PROGRAMS!!!!!!!!!!!!!!!!!!"
Matthew,
I like Robert, am very educated on each product. I have spent the time to fully research not only the UFirst program but almost every alternative out there. I've spent I don't know how many months, at least six, researching , talking to, interviewing and getting trained on debt elimination. I don't jump into anything without doing my homework.
I researched Sydney Financial, CMG, UFirst, Debt Consolidation, Debt Elimination, Bi-weekly, 15 year products and the do it yourself stuff out there. Currently I spend at least 3 hours a week in training and making sure that the recommendations I present to my clients are best for the client. I personally input, on average 2 debt elimination analysis per day, about 10 a week. When I work with a client I run the numbers through 2 different programs and discuss the pros and cons of each plan.
You have not heard me say, nor will you ever hear me say that the MMA is the right thing for every client. It's not. Spend some time researching my blog comments on the topic. I did my homework and I made my decision based on hard work, and due diligence.
When you see the real hard numbers from the various analyses and you talk with the clients, get into their heads and really care about finding solutions that are right for them you become an expert.
Once you've worked with the different products, and you work with the numbers and create differing scenarios for each client, you become an expert. Ok Client; "This is what will happen if you do this, you can't roll that debt in, but you can do this." You know what client; "It looks like you have a hard time managing your credit cards so a Heloc may not be a good choice for you...But, this third party administrator program could a great solution. It will lower your monthly expenses, make sure all your bills are paid on time and over time improve your credit scores, all while eliminating your current debt.
Just because I joined a program doesn't make me an expert. Doing my homework, doing my due diligence and working with real clients, with the real product does!
Kate, It is true I have never heard you say "You have not heard me say, nor will you ever hear me say that the MMA is the right thing for every client"
The problem that I have is that it does work for some people I think we both agree on that. The problem that I see is you are having many many people who are not really educated and go to one seminar and all of a sudden they become an export on the subject.
Who said I only went to one seminar? As I mentioned above, I've spent hours and months getting educated on various aspects of Debt Elimination and U1st is only one strategy of several that work for me.
I can only speak for myself that I've taken the time to become an expert on the products that I utilize I'm not an expert on products I don't use, but I am educated on them. It's the niche that I've chosen, people need it and I'm passionate about it. I am also very outspoken about not liking the fact the the U1st product is marketed by non financial professionals. I think that's a mistake and it hurts me because of comments made by people like who discredit everyone who sells it responsibly.
It's ok for you to say, I looked at the product it's not a fit for me, I prefer this method. It's not ok to discredit something that you have not used and have not seen in action because you don't like some of the people who sell it.
The responsible thing to say, is I've reviewed this product and it doesn't work for me. It has merits and if you are going to research it, make sure that the person you talk to has taken the time to understand what they are talking about.
A statement like that I'd be fine with, but your discrediting the entire product without even having taken a two hour training is makes me pause!
Kate,
Just out of curiousity, have you ever run the numbers using other equity management strategies?
I can see you choose the best mortgage acceleration program, but other strategies may be even better as I have proved several times when running the "hard numbers". Just take a look at this 30-year outlook post I did at my primary blog. The strategies are found in part 1, but there is a quick reveiw before the analysis is run and this is using UFF's presentation example and numbers/assumptions to make the comparison as "apples to apples" as it can be.
Hello Matt,
Great post, can you say if its too good to be true...it is! the UFirst will work for a handfull of people, but the majority of the public does not have enough discipline to benifit from the program. Not to mention the requirment of equity; equity loans are getting harder to come by as well. Have a good one.
Robert, I've run the numbers only through the following of your blog. What I see that's missing in your assumptions is that you assume that when someone uses the MMA, that they will only start to invest after the 10.4 years. You are also assuming that the client has no debt. The average American has $50,000 worth of credit card debt!!
My argument is to combine your strategy with mortgage accelleration and harvest more of the new equity before the 10.4 years. Harvest the equity more than once and invest it to increase returns. I'm saying don't just sell them the MMA and walk away. Stay in their lives, build a relationship with the client.
Reality is that the average consumer will choose Option 1 or Option 2 in your primary blog. Most will abuse the IO options that you discuss and a whole bunch won't qualify for an IO product.
I'm simply arguing that the MMA provides a viable solution for the average consumer. No it will not provide the returns of Options 5 & 6, but it's certainly better than Option 1 or 2.It can also be used as a vehicle to get someone educated and ready to take advantage of the IO options you discuss.
Also, what if somebody doesn't have the 30 years that you assume. There are so many variables.
Kate, I did not say You.. I did say the vast majority of the poeple that are selling it don't have aclue and all the really care about is the commission. I also believe after looking at the products that it does benifit some people but not all. The point that I am making is that many people who are pushing these products all are quoting tax laws, finacial planning and everything else. Not bad for a one hour course. The worst thing I have ever heard from these people is taking a line of credit on your business. That has just in my opinion a RED Flag for the IRS.
Ronald, You are right the majority of the people will not.
Matthew, a bad apple is a bad apple. My point is that your dissing the product when you yourself say that it fulfills a niche. Your statement casts a pretty big net and it's harmful to those people who are responsible and who understand that there is no magic bullet! You don't want to market the product, not problem. Just don't say the product is bad for everyone when you yourself say that it fulfills a niche. That's a double standard and I hate double standards!
You don't want to market it no problem. At least align yourself with someone who will give an honest assessment and say ohh, this isn't the right product for you!
Kate, The problem is it is not just one person. The way these are marketed is what is wrong. The vast majority of people that are pushing these products are not educated enough to fully understand them. So in this case the products are bad. If they where to change how they where marketed then maybe I would see it in a different light. I can count on one hand how many people who I know that actually know the in's and outs of this. (by the way that would include you as one of the people that know and understand)
Matt, kudos to you for being polite for soooooo long. Seriously, you seem to have tremendous patience as I have read you going "around and around the mulberry bush" on this topic. It is becoming a little comical, and this post should be listed in the AR Comedy club section as well...I'm serious. The power of "belief" is hard to overcome, in fact, belief and denial go hand in hand.
In Easop's fable, the blind men holding on to different parts of the elephant are each convinced that their particular reality "defines and describes" the whole elephant. The same goes for these niche programs and products. It has to work, not because it is sound and is a good program; but it has to work because they are desperate. They only way they can actually make it work is to find other desperate people to sell it and buy it.
When you contradict them or point out the lunacy of the program, they take it personally because they are so invested in the scheme that there is no separation between the scheme and their identity. An attack on the scheme is received as an attack on the person.
Yes, my assumptions are that the consumer starts investing after 10.4 years, but that is also the same assumption that UFF uses in their presentation. The fact is that in order to pay off the loan in 10.4 years, that is what has to happen, use all discretionary income to pay off your mortgage. Investing will prolong the payoff and a combination effort is likely to do more harm than good (no focus can create confusion among other issues).
Yes, the average consumer cannot comprehend what options I present. But that is why I blog like I do, to educate and change their mindset to one that can, and will, make it happen. I know some cannot make the change and I opt to place them in a program such as CMG's or just get a HELOC that works correctly and use it as a checking account shifting money as necessary, no need for expensive software to do that.
Any client who comes to me lacking discipline (proven throughout my unique process) ends up with one of two options...1) CMG refi the whole thing to set it and forget it, or 2) don't do anything with me as your financial life is too far gone to be saved (if you were undisciplined, you need to change or suffer the consequences).
Now, my main point is that there are numerous options, including the MMA or other mortgage acceleration programs, but a side by side comparison of more than one strategy and an education on the rules of money, etc. is needed for the client to make an educated decision and I have yet to see anyone present that and know only a few that even have the knowledge to do so.
PS - For those with less time, here is a link to part 2 which shows fastest payoff. (MMA is still #4)
Robert,
You and Brian and I think it's Bill Roberts really like the CMG program. While I have access to it, I've stayed away from it as the concept of a HELOC as a 1st makes me uncomfortable. Clearly I need to go back to school on this one.
As someone who is actively looking for a mentor in my area regarding the concepts that you discuss, I wholeheartedly agree with you. Too many professionals look at me glassy eyed when I ask them questions about mortgage planning strategies. In addition many have an agenda that is not necessarily in the clients best interest.
As I stated on Jeff's blog, my argument is, the MMA tool can be a valuable arrow in your quiver. At least have it available. If nothing else the dynamics around it can start a conversation and get you in front of the client to start the education process.
Rich, I agree 1000% "When you contradict them or point out the lunacy of the program, they take it personally because they are so invested in the scheme that there is no separation between the scheme and their identity. An attack on the scheme is received as an attack on the person." They really do...
Robert, Thank you for the info
It never seems to end. What amazes me is these people can sleep at night. Just take out a loan on your bussiness. Yeah Right!? It is obvious that the Mortgage person hasn't had an appraisal cut.
Shaun, I know.. exactly. Thank god my client had common sense.