Fact or Fiction: Mortgage free in 1/2 the time?

By glblguy

merge sign

While at football practice, one of the parents passed out a flier for their business. Being an entrepreneur and Guerrilla Marketing fan myself I gave it a read. The pamphlet read:






WEBSITE: www.u1stfinancial.net

How is this possible?

I frequently find that the old saying of “If it looks too good to be true, it probably is”. In this, it did indeed look too good to be true, but my curiosity led me to do a little digging. I first visited the referenced website to see what I could learn.

The product offered is a money merge account or MMA. The primary intent of the MMA is to payoff your mortgage earlier by reducing the interest accrued. The process is a bit complex and requires 3 primary components: 1) A Checking Account 2) A HELOC (Home Equity Line Of Credit) and 3) A first mortgage.

Once an MMA is set-up, it works as follows:

  1. Your paycheck is transferred from your checking account into your MMA line of credit (your HELOC).
  2. Throughout the month you pay your bills using your HELOC. The amount of money remaining after your bills are paid remains and reduces your mortgage balance.
  3. The MMA software will guide you on when to make money transfers from your HELOC to your mortgage and from your mortgage to your HELOC.

Software you ask? Yes, software. The MMA is really software that uses mathematical algorithms to direct you on when to make money transfers. The software is designed to minimize the amount of mortgage interest you pay, thus reducing the term of your mortgage.

Fact or Fiction?

It’s all fact, at least from what I’ve read. But let’s dive a little deeper. Back to the software. The software for this program runs $3,000 – $4,000. Without the software, you can’t use the MMA. Yes, $3,000-$4,000.

While the software does in fact optimally manage your payments, and reduce paid interest, this is something you could just do yourself by paying extra on your mortgage. The MMA is basically leveraging the money sitting in your checking account to reduce the mortgage interest. By making your own extra payments you are essentially doing this yourself, although with the MMA program you should pay less interest and therefore pay off your mortgage sooner.

Is It Right For You?

The decision to use an MMA or not is really a personal choice. If you are very disciplined and can pay extra on your mortgage, than it’s probably better to do it yourself. If you aren’t and desire to pay your mortgage off sooner, than it may be a good option to consider. I would highly advise you spend some time reading about it and researching it in detail before making a decision.

Another point to consider is that the MMA basically recommends that you keep no money in your standard accounts. It seems to advise placing your savings and other related money into the MMA, and that doing so will further reduce the payment period. While this is true, that would mean in the event of an emergency or unplanned expense, you would have to borrow from your HELOC, further putting you in debt.

Which brings to the forefront my biggest personal issue with this plan: it requires a loan. With the MMA, you are basically living off of a line of credit, and relying on that line of credit for emergencies. This is something I don’t think I would be comfortable with given my journey to be debt free.

One of the biggest issues people seem to have is paying the $3,500 or so for the software. This kind of fee screams “scam” to most. Others would argue that $3,500 is a low price to pay to cut your mortgage in half.

Other Resources

What is your take? Anybody have an opinion on MMAs? How about any additional insights to the “inner workings”?

16 Responses (including trackbacks) to “Fact or Fiction: Mortgage free in 1/2 the time?”

  1. plonkee Says:

    I can’t believe you have to pay for extra for these things. Over here, you can get them for free but the interest rate is slightly higher than a regular mortgage. They are generally considered to only make (financial) sense if you have a very irregular income.

  2. glblguy Says:

    Hi Plonkee! Yes, based on my research, most if not all of these types of plans/accounts have an associated fee. I saw the info on the English plan that is similar. You make a good point that I probably should have mentioned, having an irregular income would be another potentially good reason to consider one of these plans.

  3. Dan Says:

    I just read through the lengthy comments at The Simple Dollar, and can sum them up like this:

    The people who think MMA’s are a good deal are the people who are selling them.

    The people who don’t think MMA’s are worth it are the ones who have done the math on it.

  4. Dan Says:

    Here’s a repost of my pick for best comment on The Simple Dollar post. It discusses the company the football parent was promoting, and MMA’s in general:

    A real estate agent who is a friend of my niece sent a proposal regarding a United First Financial Money Merge Account to my niece the other day (Sept. 17, 2007). My niece asked me if I knew anything about this kind of account. I didnÂ’t then but I googled the topic and read quite a bit about it last night, including most of this thread. It was very interesting to see the opinions from both sides. I was skeptical of the MMA to begin with, but at one point I actually started thinking this might be a reasonable strategy if your goal is to pay off your mortgage as fast as possible (which I personally donÂ’t think is a great idea for most people anyway). But I was only fooled for a short while.

    The following is a summary of what I learned and that others considering the UFF MMA may find helpful. I apologize in advance for the length of this post, but I believe it is extremely important that people have all the proper information on this.

    The UFF MMA is probably the most perfectly packaged, well-crafted scam or pseudo-scam IÂ’ve ever heard of. ItÂ’s so good (i.e., bad) that I think my nieceÂ’s friend and maybe hundreds of others in the real estate profession might be promoting it thinking that it really is a good idea and worth the upfront fee ($3500) that is taken out of the HELOC or ALOC (as UFF calls it) to buy the service. ItÂ’s ingenious on UFFÂ’s part that they pull the wool over the eyes of people in the real estate industry who then go out and sell the service believing it is worthwhile. This makes them come across genuinely to potential customers rather than having to act genuine, as they would if they knew that the service is really pretty much worthless. IÂ’m sure many of the agents (maybe most) know that itÂ’s all but worthless, but they can make their commission by using the misleading information built into the analysis program to sell MMAs. Some of them may have fallen for the scam themselves and later realized or had someone else point out to them that theyÂ’d paid $3500 and gotten very little. So now they are selling it to make back that money and then some. (Ponzi, pyramid,“multi-level marketing”?)

    The MMA program funnels all of your income through the HELOC to capture interest savings that are available because the mortgage interest is assessed at the end of month while the HELOC interest is based on average daily balance. By timing transfers from the HELOC to pay down mortgage principal along with paycheck deposit timing and monthly bill pay timing, the program maximizes the interest saved. This interest savings along with all of your income over and above your monthly expenses (”discretionary income”) is used to pay down more of the principal on the mortgage. This sounds fantastic until you realize that the program’s interest shuffling algorithms only result in savings of a few dollars per month. Therefore, you could have just deposited your paychecks into a proper interest-bearing account of your own, paid your monthly bills, and then sent everything you had left (your “discretionary income” plus the small amount of interest earned for the month) with your normal mortgage payment and had it applied to pay down principal. The tiny amount of interest you would earn each month, when maximized by paying your bills with a credit card that you always pay off each month, should be slightly more than the interest saved by the MMA program’s “advanced” algorithms. So this method would actually end up paying off your mortgage slightly faster than with the MMA and, most important, you will not have wasted the initial $3500.

    In the initial analysis, UFFÂ’s agents enter how much discretionary income per month will be going to pay down principal based on your monthly income and expenses. With fairly small monthly amounts used to pay down principal, you get pretty dramatic results in shortening the mortgage term and overall interest saved. Of course it is widely known that making the equivalent of one extra mortgage payment per year reduces a 30-year mortgage by about 7 years. So the UFF MMA is just taking that method to the extreme. They claim these tremendous amounts of overall interest saved by eliminating your mortgage, but they wonÂ’t admit (or in some cases perhaps donÂ’t realize) that almost all of that saved interest is due to prepayment and very, very little is from the interest juggling exercises the MMA program does.

    Further, few or no complaints are registered about this scheme because the smokescreen that is built into the initial analysis makes most customers believe 6 or 8 months into the deal that the program is magically doing even better than the initial analysis showed that it would. The smokescreen that UFF uses on the initial analysis is that if you are paid weekly, they consider 4 weeks of pay to constitute the month. If you are paid every 2 weeks, they consider two paychecks to be your monthly salary. This ends up leaving 4 pay weeks out of the initial calculation. So as the first several months go by and you have a month or two with an “extra” payday in it (5 paydays in a month for weekly earners; 3 paydays for bi-weekly earners), all of that extra paycheck ends up going to pay down your mortgage principal. Therefore, your results look even better than the initial analysis projected as far as how quickly your mortgage is paid off and the overall interest saved. This is why UFF’s agents will sometimes say that the program doesn’t work well if you are paid monthly or twice a month instead of weekly or every two weeks. It’s not that it wouldn’t work pretty much the same for these people; it’s that it won’t have the built-in deception of 4 weeks of pay going straight to mortgage principal to make the program look like magic. Absolute genius! (as well as absolutely immoral and unethical!).

    Because of the way the MMA is put together, it probably isn’t illegal. The “sophisticated” algorithms that the software uses to manage the interest on your primary mortgage and the HELOC by timing proper amounts being transferred from the HELOC to the mortgage, along with the timing of your incoming salary deposits and outgoing monthly payments, actually does reduce the interest you would otherwise pay each month by a very small amount. So it has some monetary value, but nowhere near $3500. But because it has some value in this way, along with the supposed “value” of the ability for users to monitor how every bit of money they spend or decide not to spend affects the projected payoff date of their mortgage, it is probably not illegal. So I’d call it a pseudo-scam rather than just a scam.

    All of this discussion doesnÂ’t even go into the opportunity cost of using all of your discretionary income to pay down a debt at 5 or 6% interest when you could be investing that money elsewhere and over time almost certainly earning a better annualized return in mutual funds, ETFs, stocks, bonds, or other investments.

    UFF and many of their agents will make a lot of money selling this nearly worthless service to people who donÂ’t know better. It is a tremendously well-crafted and insidious pseudo-scam that will claim many victims before some kind of mainstream media coverage exposes it for the sham that it is.

    To anyone reading this original post (Sept. 21, 2007) and who will be looking for information in previous posts in this thread: Good information has been provided by Ron, Chris, and Ted, among a few others. Bad information has been provided by Bryan, Benjamin, Al, and especially Jason V, among others. They may not be bad people, but they definitely provide bad information.

    To Ron, Chris, Ted, and anyone else on the correct side of this issue: Please feel free to excerpt any or all of this message to post elsewhere or to repost here at a later date. I may repost a version of this myself now and then, here and there in an effort to inform as many potential victims as possible. If any of you feel this information needs clarification in spots, please post what you think should change. IÂ’ll check back later.

    To Bryan, Benjamin, Al, Jason V., and others on the wrong side of this issue: Note that I will not be engaging in any discussion on this thread. Why? Frankly, there is nothing to discuss. It is all about what is right and what is wrong. The information you are posting here is wrong. If you are an agent for UFF and are selling MMAs after reading and understanding the information in this thread and elsewhere that I have summarized here, you are not just wrong—you are unethical and immoral and your actions are reprehensible. If you simply don’t understand this summary, there’s not much else I can do to help you. But please stop promoting something that is simply unnecessary (other than the fact that you make a commission every time you sell it so you create more discretionary income for yourself to pay down your mortgage faster). I am not posting this material for any monetary gain, which Jason V has so often wrongly accused Ron of in this thread just because Ron is in the mortgage business. My line of work has nothing at all to do with mortgages, finance, or anything even remotely related to this issue. There are intelligent and scrupulous people in all businesses, and my guess is that Ron is one of the many in his line of work. By the way Jason, if there were no Ron’s out there creating mortgages, you’d have to find some other scheme to use to bilk innocent people out of $3500.

    My advice to anyone who has read this far is to remember that each personÂ’s situation is uniquely their own. Paying off a mortgage as fast as possible might be right for someone in some particular situation in life. But buying the UFF MMA is not the most efficient and effective way of doing that for anyone because the very first thing the program does is add $3500 to the debt that you are trying to eliminate. That can only be the proper first move if that $3500 is somehow going to be made up later. The good information in this thread and in this summary should make it clear to all that the program has no special algorithm or payment timing that can come close to making up the extra debt youÂ’ve taken on when you sign on the dotted line.

    Thank you for reading.
    Bill @ 5:37 pm September 21st, 2007

  5. glblguy Says:

    Dan, based on the comments at SD, I would agree. Thanks for reposting Bill’s comment, it’s very well written and provides some detailed insight.

    I picked up on the minimal savings as well compared to just paying it off yourself, and noted that in my article.

  6. ChristianPF Says:

    Yea I stumbled upon one of these and really investigated it quite a bit – The gist of what is going on will really save you money, but the key seems to be that you have to stay on top of it and spend a lot more time managing your money.

    I understand these guys are trying to sell the software, but the thing is once you understand what is actually going on that is saving you the money – you don’t need the software. Granted, it will probably make the process easier, but you could build something comparable on EXCEL for free.

    Bottom line, if done correctly it will save you money, but it would be a big time consuming hassle. I think that is the trade-off that people need to decide on

  7. RobY Says:

    99% Fiction!

    Below is part of a private email I sent to a friend with my findings on this and similar program.

    These programs are based on an ounce (maybe 2 ounces) of truth so I can’t call them a complete scam. However, I have no problem calling the MARKETING of most of these programs a SCAM. They are often very deceptive.

    The pitch is that by following the advice of the software you will use all of your cash flow to lower the balance of your mortgage (actually the HELOC). You are turning the tables on the banker and making the compound interest work for you instead of against you. This is where the ounce of truth comes in and I agree with it assuming the interest rate on the HELOC doesn’t have an offsetting or negative impact when compared to your first mortgage.

    However, the scam is in the presentation of the significance of this technique. While following it can save you a little money it is nowhere near the amount needed to pay off your mortgage in 1/3 the time (8 years vs. 30). The marketing also misleadingly claims you will have more equity in the first month than most people get in the entire first year. So how can they say this stuff?

    The true power of these programs is to calculate the effect of using 100% of your discretionary income toward paying off your mortgage. When you punch in the numbers you will put in your monthly income, your monthly expenses and then anything left over (i.e. that you canÂ’t remember or account for) is where the real savings takes place. Think about this simple alternate strategy instead:

    A) Enter your monthly income: _________
    B) Enter your monthly expenses: _________
    C) Subtract B from A: ________

    To pay off your mortgage in record time and to save tons on interest send your normal payment plus the entire amount in “C” to your mortgage company each month.

    See how easy that is to understand and how it will obviously work (assuming you have money left in C)? It is this same type of extra principle payment that is at work with the “money merge account” programs. This is the reason they are claiming (but not explaining) that you will pay off your mortgage in 1/3 the normal time. It has less to do with the compound interest aspect and more to do with extra payments being applied to your principle.

    Is this realistic in the real world? Not for most Americans! I can assure you that the amount of money that should be left in “C” and what is left in the wallet at the end of the month is very different. Where does it go? Beats me… but I don’t have it and therefore it won’t make it to the mortgage company.

    So anyway, if you want to compare apples to apples then take my “A-B-C” strategy above and run the numbers. Then compare it to the “money merge account” which adds the compound interest savings. The amount of money you save (if any, depending on the variables) is not so impressive. If presented truthfully a lot less people would plop down $3500 to learn this strategy. So instead in their “scam marketing” when they compare they include the equivalent of part “C” in their numbers but not in the “old way” numbers. This is an apples to oranges comparison but of course makes the cost of the program look tiny compared to the savings. When in the real world it doesn’t work for you, they will say that you didn’t follow the program because you spent that “C” money elsewhere (i.e. real life).

    I confess that this program could work for some people for the following reasons:
    1) Seeing the numbers could help you understand finances better (educational benefit).
    2) If you actually do it for a while you will see bottom line results (motivational benefit)
    3) They tell you exactly what to do and when to do it (discipline benefit)
    4) The technique is based on an ounce of truth (technical skill benefit)
    5) You just have to follow and trust it rather than figure it out (convenience benefit).

    If it were promoted in that manner with honest numbers instead of confusing smoke and mirrors then I wouldnÂ’t take issue with it. People would know going in that the cost of the program is mainly for the support and tools it provides to get them to actually do it when they otherwise wouldn’t take action.

    Instead however, the marketing of these things is designed to appeal to peopleÂ’s greed, gullibility and lack of financial understanding. Greed also appears to be the motivating factor of most of the promoters.

    Also, for the average American I think this program puts many of them at greater risk. Discipline is a serious problem and having easy access to their equity in the HELOC (home equity line of credit) will be tempting to abuse. Many will end up in worse shape when it is all over.

  8. Ryan Healy Says:

    I think you mean Guerrilla Marketing (not “Gorilla”). ;-)

  9. glblguy Says:

    @Ryan – HA, I sure do! Man…can’t believe I didn’t catch that! Thanks!

  10. Ubuntu Says:

    Why not just hack the software and use it for free if the fee is what you are complaining about

  11. jay Says:

    I found software that comes with a book that does the same thing for $199.00. After seeing how the software allocates the money I can do it without ever needing the program.

    The Programs only benefit that I see is that it gives you clear numbers of what should be in the Heloc, mortgage and other accounts on a monthly basis so this would help keep you on track. If you have self discpline you don’t need the software. I say just buy the book it on Amazon it is called “Own your home years sooner” it tells you excatly what you need to do don’t buy the software that cost $3500 it is truly a waste.

  12. Carl Says:

    After reading a lot about this, and also talking to friends in the UK that have “offset” accts I came to the same conclusion as many here:

    — The basic idea is sound, i.e. minimize interest by offsetting daily vs. monthly interest. It’s significantly more effective than simply sending in an additional principal payment once a month.

    — You can do this yourself provided you have a mortgage with no prepayment penalty, a HELOC, a checking account, Web access to do all the transfers, and time on your hands.

    — For the above two reasons these accounts are very popular in the UK and Australia, where the bank will do it for you automatically.

  13. Mortgage Accelerator Says:


    While the banks in the UK and Australia do this for you they do charge a substantial fee for refinancing into a loan like this and the client ends up with their entire mortgage on an adjustable rate.

    Check them out here.


  14. JimmyDaGeek Says:

    Here is a link to MMA’s overview: http://www.u1stfinancial.com/Portals/2/Flash/15_minute/ and here is a link to my spreadsheet showing how doing it yourself beats MMA by over $3600, before you add in MMA’s $3500 fee.: http://spreadsheets.google.com/pub?key=pszjmlNnSFKhwM90Q3dWHVg
    The green table is do-it-yourself and the blue table is MMA with the HELOC.

    You don’t need a HELOC or MMA or spreadsheet to pay off your mortgage. All you need is discretionary income. Unfortunately, when combined with its $3500 fee and its wasteful way of using HELOC interest cancellation, MMA costs much more than simply doing it yourself.