Some interesting news  on the mortgage acceleration scam by UFirst Financial.

Tracy Coenen, author on fraud investigation and blogger at Fraud Files, broke the news that UFirst may be looking to cash out and are seeking a buyer.

Tracy published a note that recently went to upper management at U1st Financial:

I know you’ve already met with Sorensen Group, but we still need them to sign the attached NDA. In fact each private equity / venture capital buyer that you talk to needs to sign this NDA.
Any leak to the field that the company is going to be sold will be devastating. We do not want anyone, including potential buyers discussing this.
Thanks.

Rex H. Huang
General Counsel
United First Financial, LLC

Note: NDA means non-disclosure agreement. And I believe this means the beginning of the end. Of course, as Craig Hansen asks, “Where’s the value in UFirst? What would a buyer want? It’s not the technology they’ve developed – that’s crap. I supposed all they have going for them is some ongoing MMA payments, but whoever buys them out would presumably have to keep the MMA servers up and running in order to demand the payments keep coming in. And, they would be associating themselves with UFirst, whose name is now toxic. Who would touch that deal with a 10 foot pole?” Good questions my friend. I’ve been asking this myself.

Joe

• Money Merge Account Analysis Pt 15
• Money Merge Account Analysis Pt 22
• Money Merge Account Analysis Pt 17
• Money Merge Account Analysis Pt 13
• Money Merge Account Analysis Pt 3

• Mortgage Home Possessions Continue to Rise
• How to Evaluate the Rent vs Buy Decision
• First Time Home Buyer's Guide To Fixed Rate Mortgages
• Competitive new construction and schadenfreude
• Homeowner Bailouts Destined to Fail

written by JOE \\ tags: money merge account, Mortgage, UFirst

A small bit of news to share today for those who have been visiting here to get more information on the Money Merge Account, a so-called mortgage accelerator which does little but line the pockets of those at the top of the pyramid MLM (multilevel marketing) company that sells it.

From a fellow nay-sayer (read that – someone else who is able to see the obvious, that one can pay their mortgage off on their own) comes these details. From a total 30,500 systems sold, these are the data regarding customers who have logged in each month:

v3:
Jan 953
Feb 896
Mar 891
Apr 787

v4:
Jan 7534
Feb 7328
Mar 7401
Apr 6968

What is the point? Very simple. Fewer than 25% of those who bought into this program are actually using it. This is the system that requires a log in to their system for any income or expense, at a minimum, once per pay period to properly use its features. For all of the claims of satisfaction by the agents, it appears that most customers are abandoning the system soon after purchasing it. If this system were any good, would you expect 95%+ usage rate? This company is dying a slow death, and there’s no evidence to suggest otherwise. Good riddance.

Joe

• Money Merge Account Analysis Pt 10
• Money Merge Accounts
• Money Merge Account Analysis Pt 32
• Money Merge Account Analysis Pt 3
• Money Merge Account Analysis Pt 33

• Use a Corporate Blog to Build Customer Loyalty and Product Awareness
• Weekend Personal Finance Review
• What To Think About When You Sell
• New Bank Overdraft Fee Laws For Your Debit Cards & Checking Accounts
• How Corporate Executives Should Be Paid

written by JOE \\ tags: money merge account, Mortgage, UFirst

The Pyramid is Collapsing. And I’m happy to show you what a collapsing pyramid looks like courtesy of my Fellow Nay-sayer, Tracy Coenan. At her Fraud Files Blog, she recently posted;

Sent: Thursday, July 01, 2010 10:59 PM
Subject: Proposal for a New Company!
From: Richard Schaffer
Everyone,

In lieu of all the challenges and difficulties that we have all been struggling with over the last 12-18/m,  I genuinely believe that it is time that we all accept a few very harsh realities. But before I get into that, the primary reason for this e-mail is that I have an idea, a proposal really, that I truly believe with everything in my soul can absolutely change the direction of our Company moving forward!

What I am about to say is not intended for anyone (nor has it been shared with anyone) not included in this e-mail. But I think it’s time that someone said what everyone is already thinking – but everyone is apparently afraid to actually say out loud. Let me begin by trying to set the stage with 10 main points regarding what is really happening, how everyone (actually) feels, and what is going to inevitably occur if we don’t take some very drastic measures fast!

The ‘Network’ is dead, and it’s not coming back. This is not intended to be negative, it is simple being honest and realistic. I don’t think it even matters if we launch V5, complete ‘Step’ 3, change the Company/Product name or change our comp plan or the MLM commission platform. There has simply been too much damage done for too long. Read the rest here if you wish at Tracy’s Ufirst Financial: This is what a collapsing pyramid looks like.

Amazing that this program is still being sold. It’s nearly two years that I’ve been writing about this scam, and despite my inclination to just call it quits, it’s tough to ignore a scam like this as it offends my senses. The sellers of this scam are taking advantage of people’s ignorance. The letter excepted above is at least an indication the end is near. Let’s hope so.

Joe

• My New Year Goals
• A Thought on 15 vs 30 year Mortgages
• Money Merge Account Analysis Pt 28
• Money Merge Account Analysis Pt 26
• Money Merge Account Analysis Pt 14

• iJango Scam
• How to Avoid Home Repair Scams
• Enjoy Lighting 372631 Burgundy Distressed Pomegranate Passion Scented Wax LED Pillar Candle, 3-Inch by 4-Inch
• Are you planning your wedding to please your parents?
• I enrolled in my company's 401(k)

written by JOE \\ tags: money merge account, Mortgage, UFirst

I used to think the concept of refinancing one’s mortgage was simple, but lately, I’m not so sure. Let me take you through the process with an example of how I’d approach this. You have a balance of $250K on your mortgage and are paying 6%, Your payment is $1791.

photo credit: Rev Dan Catt

You find a 5% mortgage, and the payment is $1342. Wow, nearly $350 per month savings, right? A $3500 closing cost doesn’t look too bad, a 10 month breakeven. Ok, time to think about this. What’s missing? Well, when you told me the payment is currently $1791, I calculated you have 20 years left, on a mortgage that started at nearly $300K. So to understand the savings, you should look at the new rate, but use the remaining time from the old mortgage, got that? In other words, even though it’s a new 30 year mortgage, calculate the payment with the new rate, but a 20 year term. That will give you $1650. This is you actual savings, $140/mo. The $350/mo we first calculated comes at the expense of ten more years of the mortgage. The savings produce a breakeven of 25 months. This may still be worth going after, but it’s far less than you thought, and if you have any idea of moving before then it may not be worth the refinance. Any questions on this approach, post a comment, let me know.

Joe

• Money Merge Account Analysis Pt 10
• Keep Your Program, BOA
• Money Merge Account Analysis Pt 9
• Fun with Schedule A
• Money Merge Account Analysis Pt 16

• Comparing fixed-rate and adjustable-rate mortgages
• Will Refinancing My Mortgage Save Me Money?
• Feeling Rewarded without Spending
• How Much House Can I Afford?
• How To Save Half Your Income

written by JOE \\ tags: Finance, Mortgage, refinance

I’m back with another post on the mortgage acceleration scam by UFirst called the Money Merge Account.

I continue to get comments on a number of my posts in this ongoing series, and even though I’ve moved on from the weekly updates, I’ll still add a post here and there when appropriate. This week, I was led to a YouTube Video. Success and Progress: Lunch. In case the video is taken down, let me summarize this one minute clip. “If instead of spending $7 per day on lunch, you invest $2000/year at 6%, over a 45 year career, you will have $10 million.” Note, the video itself doesn’t mention UFirst, but it was linked from their fan page on Facebook, and the posters YouTube account references MMA.

A very well done video, but one problem, the numbers above don’t come close to the claimed $10M. Before I tell you the return you’d get, I’ll share how close I got using my fingers. Remember the days before calculators, we counted on our God-given ten fingers. The rule of 72 says to take that 6% and divide into 72 to figure the number of years to double. So it takes money 12 years to double when invested at 6%. When you have a yearly deposit of the same amount each year, the lump sum figure is somewhere in between. In other words, that $2k/yr for 45 years will be equal to a lump sum invested over some number of years, certainly less than 45, it wasn’t there the whole time, but more than 0. Kind of obvious, no? I don’t know, really, every time I claim “obvious” I’m told the math is beyond mere mortals. Back to that 12. If the time-weighted average were 24 years, our $90K would double twice and we’d have $360K, if 36 years, $720K. No where near that $10M. Even if the whole $90K were invested for the full time, and then some, after 48 years it would be $1.4M, still hardly $10M. Note: The video author rounded $1750 to $2000, first claiming 250 work days per year, but then saying ‘about $2000′ per year. That’s okay. This is what discussion and ‘back of napkin’ math is about. 36 years of 6% will actually turn $90K into $733,252, a bit more than my $720K counting on finger calculation, a 2% margin of error.

The punchline to this critique is that the result is nowhere near $10M, it’s actually $425,487. Still between the $360K and $720K as I guessed, until I had more computing power available, but a factor of over 20X from the agent’s claim.  With nearly 600 hits on that video, one imagines that one of the hundreds of agents would catch this kind of error, or more so, that UFirst would notice it before publicizing on their blog. With claims that their software watches every penny, isn’t it a bit scary that an error of this magnitude slips by, and no agent steps up to correct it? For Pete’s sake, we are talking about being wrong by a factor of 20, I’m not splitting hairs here. The software has its own errors, already discussed in past posts. I’m shocked this scam continues.

By the way, a 16% rate of return would produce nearly that $10M, but no one expects that kind of growth. No one. Call it a simple mistake by the video poster, I’ll accept that. It’s that not one of 600 viewers had any issue with it which concerns me. And also why no agent catches any mistake when they create their so-called analysis when roping in their next victim.

(phone credit – Me. It’s my favorite calculator, small, portable, accurate. There are newer models available which help to make this scam look more like simple math and less like magic.)

Joe

• Money Merge Account Analysis Pt 27
• This past week's blog reading
• A New Year’s Resolution Roundup Part Two
• Money Merge Account Analysis Pt 20
• Moral Hazard

• A credit card for debt reduction
• How to Evaluate Your Financial Risks
• Khmer Rouge Prison Chief Sentenced to 19 Years
• Personal Finance Links (Avatar Edition)
• Top five ways to kill your retirement dreams

written by JOE \\ tags: mma, money, mortage acceleration, scam, UFirst

We are now in our house 14 years. We are on our fourth mortgage and I just submitted an application for what should be one last refinance. We started with a 30 yr fixed rate at 7.625%. Fixed, because I remembered the inflation of the late 70′s even though I was a teenager at the time, and 30 year as we were planning a child and knew there would be some expenses early on that would later go away. Fortunately, rates were falling and within two years we dropped the rate to 6.75%, keeping the balance pretty much the same. But, as rates fell further, and the expense of the nanny went away, we paid a nice chunk to principal, refinancing to a 20 year at 5.65%. In 2004, the 15 year rate was low enough, 5.24%, that for just a slightly higher payment, we went from the remaining 18 years down to 15. Now, with 9 years left, the same bank is offering  a 4.99% 10 year loan. The bank took the application over the phone and I expect to hear back within a day or two.

photo credit: woodleywonderworks

Crazy, right? Each refinance was with no costs. Zero. On a $200,000 mortgage (for example) normally the closing fees would be $2500 or more, so a 1/4% savings would make little sense, breaking even in 8 years when you plan to pay it off in 7. With no fee at all, a $25/mo savings is worth it to me. $2100 over 7 years for 15 minutes of my time on the phone, and maybe a half hour to sign the paperwork at the bank. This product, and my prior refinanced were all called Home Equity Loans, fixed rates, not to be confused with Home Equity Lines of Credit (HELOC) which are variable. There’s little difference in this and a standard mortgage, except no fees, and the rate is a bit higher than what you might find if you were willing to pay points and closing costs.

It can’t hurt to see what your local lenders are offering. $25 may not seem like much to you, but I’m sure you’ll find a way to spend it. If that’s a problem, just add it to your retirement savings.

On a final note – the targeted payoff date isn’t random, I’d like to have the mortgage paid in full by the time our daughter starts college in 2017. We’ve saved specifically for this, but should we be in for post graduate college bills, it will be nice to have no mortgage and know we can do this for our daughter.

Joe

• Time to Refinance?
• Choosing between a 15 or 30 year mortgage
• Money Merge Account Analysis Pt 13
• College Financial Aid
• A Thought on 15 vs 30 year Mortgages

• How to Take Advantage of Falling Mortgage Interest Rates
• Options For Refinancing A Mortgage Loan With Bad Credit
• Wall Street Journal's Tips for Surviving this Financial Nightmare
• Buying I-Bonds Online
• Year End Income Tax Guide (Part 2)

written by JOE \\ tags: Debt, Mortgage, refinance