Mortgage acceleration, current economy and frozen HELOC

What is everybody's take on mortgage acceleration in an economy like today's?  My thought is that now is obviously the best time to pay your house down as fast as possible and a plan like mortgage acceleration is worth it. 

So what happens if your HELOC is owned by a bank that has gone bankrupt or been bought?  Do you run the risk of your HELOC being frozen?  I know as housing prices have fallen dramatically in certain parts of the country lending institutions in those areas started freezing HELOC's.

Do consumers of banks that have failed, such as WAMU and Wachovia, now have to worry about their HELOC's becoming frozen?

Any thoughts or advice on mortgage acceleration in a down economy and housing market? 

Anyone with a HELOC should be concerned with their lines being frozen, if it hasn't happened already.  It's not just the banks in trouble...they are all doing it.  Lines are either frozen or the limits are cut.

Even credit cards, I think all but one or two of mine got cut back on limit and I generally pay mine off or just carry for 2-3 months and pay off. American Express were idiots, they cut my limit down to about a 1/4 of what it was WHILE I still had my normal balance that was going to be paid off the next month, moron's caused my credit score to take a nose dive being over the limit. And osme of the other cards cut limit back to what the balances were causing score to tank again as now it looked like I was maxed out instead of normal 15-20% of limit. Got them all paid off and then still use and pay normally, score is still way off even though it went up after doing so. Went from a 790 to 670 now.... f'n credit system is so flawed. If I run into the CEO of Amex they are going to get pimp slapped

Chris, why don't you call AmEx and see if they will have the over-the-limit mark erased for you?

Creditors are also increasing the rates -- even if you have never been late or have a low balance.  Bank of America is the one who I have heard mentioned the most.

Jen:

Lines are either frozen or the limits are cu

So the question is does mortgage acceleration still make sense or is it still feasible?  How can it work if your HELOC is frozen?

go back to the broker that got it for you and ask him/her to give you a personal line of credit.

blondon:

So the question is does mortgage acceleration still make sense or is it still feasible?  How can it work if your HELOC is frozen?

I don't see how it can work but the United First people say they have come up with an alternative.  Maybe it's a personal line of credit. Bleh, they'll get cut too.

Back to what Chris said about AmEx, I saw on the news last night that many credit card companies are slashing credit limits and credit scores are going down because of it.  Even if it doesn't make you over the limit, your percentage of credit used will go up dramatically and cause your scores to drop.

Somebody more knowledgeable on the subject correct me if I'm wrong but it sounds like MA is great in theory but if there is a credit crunch it just doesn't make sense. 

Say your HELOC is frozen suddenly and you don't have access to your latest paycheck?  Then you are forced to use credit cards which by the way your cc company just lowered the limit so now you don't have enough available to pay your bills or your credit score has taken a hit because your percentage of credit has skyrocketed.   

The above scenario sounds like a very real possibility.  So it looks like it is best to hedge your bets and put on hold any MA program and pull out any funds from your HELOC to stockpile some savings in case of a freeze.

How long would it take to repair your credit score if it took a hit like Chris's due to your credit card limits dropping thus raising your credit percentage? 

I would agree with your assessment.  Sylvia S. (she's also a MND member) has been saying the same thing for some time now.

I think the only people who will tell you otherwise are the ones selling the program.

Mortgage Acceleration is frozen today...

and cash is King...

so absolutely not...

I would love to see a class action suit against the folks peddling the Money Merge Accounts aka Mortgage Accelerator.

This making a quick buck off of someone, anyone, anyhow, must stop.  At least in our industry.  Unfortunately, the mortgage industry had more than their fair share of scammers (probably many the dot commers of yesteryears) that moved to the MMA/MA sales.  I am not sure where they have migrated to, but I am willing to bet it's not where a whole lot of skill is needed.

Keep your eyes open and ears to the ground....I am sure some lawyer somewhere will take this on.  Of course the particpants wind up with very little, but there is a satisfaction of seeing them shut down.  OTOH, if this crisis gets much worse, it won't matter.

I am actually on the Money Merge Account(for 1.5 years now) and love it. Not sure where why you are thinking it's a scam.

Hey Bobby!  Nice to see you make it over.  For the record on the hotly debated topic of MA, my issues with MMA do not come from me thinking it's a scam, but rather that it has been "productized" (albeit intelligently from a business sense) to a large degree..  I think that's a disservice to the industry.

People should have access to education on complex financial concepts free of charge.  It can be argued that MMA and CMG do that, but then the "catch" is that people that learn about MA from them are made to feel due to their sales pitches that clients must spend money to make it work for them.

Although I'm not opposed to people being compensated for delivering quality to the market, I do think it cheapens the perception of loan officers.  I authored a mortgage acceleration presentation and freely educate people on it.  My compensation comes when they want to do a loan with me.  People don't need software if they understand the concept well enough.  But that's the trick!

I finally made it! That is the trick but we both know the majority of families are not disciplined enough to do this on their own. They won't even do the bi weekly program knowing it cuts 7 years off their loan. My view is that they can spend $3500 for the software and have a financial GPS to guide them along the way or refinance into a HELOC(spending about the same $3500 to do so in closing costs) and use that as your checking/deposit account. I am on board with either one and think they are both great programs that can rapidly build equity for the families we help. Our job is to educate the public on these so they become more mainstream because who likes seeing our clients refinance themselves every few years back into a 30 year loan. The One account has been around for over 15 years and it seems to be working great for Australians.

I agree with Bobby, in that I'm not sure how it is a scam unless the loan officer tricks the borrower somehow.  When companies charge for MMA they are essentially billing you for the software they offer as an enhancement.  I would consider it a scam if the loan officer said the only way for MMA to work is to buy the software.  I'm sure there are plenty of people that would still buy the software after being educated on MMA simply to have something to look at and help keep them on budget. 

I see nothing wrong with offering to educate a consumer on something and then offering a complementary product, and MBSDaily is right it makes loan officers look sleazy if they don't first educate you and let you know that it can be done without software. 

MBSDaily is also right in that it can still bring loan officers more business.  Speaking from somebody that is not in the business I can say that my loan officer closed my loan on the fact that he offered an MMA webex free of charge.  I was looking to refinance and had heard of MMA so I started looking around and found my guy, attended the webex and had several more conversations about it all while shopping for loans.  In the end I thought MMA was for me and went with him for my loan.  I can honestly say that even if I had decided MMA was not for me I would have gotten my loan through him because he had built trust.  He also assisted me with finding a good bank to handle my HELOC which further enriched the customer experience hence resulting in more referrals. 

Look at it like this.  First of all educating somebody on a topic builds a certain level of trust.  When you are willing to sit down with them for an hour or more and explain how something works instead of trying to sell you on a loan and close as fast as possible they now view you as honest.  Trust is key because most people view loan officers like used car salesmen.  Second it makes the loan officer look more advanced over those that don't even offer MMA or don't know what it is.  If you seem more intelligent and on top of things the customer will believe in you and again trust you more than the next guy.  Now I know some of you will argue that it is only about who offers the lowest rate and how well you get your name out there.  I will argue that may be true and sometimes the client might take that new found knowledge and close with someone else but they are now educated on the subject and will probably talk about it to others they know and might even send them to you.  It is another tool you can add to your belt to provide better customer service. 

Personally I have an MMA and love it.  It took me a little bit of time to get the hang of it and to work out the kinks with my bank but it has been smooth sailing since the second month I started it.  There is an inherent danger with an MMA, and the sudden access the borrower has to more cash, but that is why it is clearly not for everybody.  Again if the loan officer educates the borrower and makes it abundantly clear that they run the risk of running up more debt then I see no harm in it.

Did I hear someone say HELOC? 90%, no appraisal required, CALL ME!~@ :)

<<ADMIN EDIT>>  No soliciting in these forums please.<</ADMIN EDIT>>

See some people just don't get it. 

Nick is the used car salesman I referred to in my previous post.  I would never get a loan from that guy because all he cares about is closing.  Nick you completely derailed this thread for personal gain which gives not only yourself a bad name but the whole industry. 

Try adding substance to the thread and then discreetly throwing in the service you provide in a relevant manner to the conversation. 

Build an emergency fund of liquid assets.  The last thing you need to be doing when money is tight is going further into debt.  I'm no shining model of this but I try and it sucks to dig out of a hole.

I would argue build a liquid emergency fund I use ING paying just under 3% right now.  I can have money transfered straight into my checking account the next day.

I'm torn on the whole issue. I believe very strongly in mortgage acceleration. JUst not sure if I'd recommend it in todays market. I showed a client two years ago who had a 5.75% 30 yr fixed the mortgage acceleration product from CMG and he calls me every time the 1 month LIBOR drops to tell me how thankful they are to be in the product. Currently they are at 1 mo. LIBOR + .75 margin. The product is a 1st lien HELOC and hasn't been frozen. In two years time he's paid off more principal on his loan than he did in 6 years at his old 30 yr fixed at 5.75%. The husband just lost his job a month ago so he's extremely thankful he can tap his homes equity if he needs it. 

On the other hand, I don't know if anyone should be paying more than interest only on their mortgage with home values continuing to fall. It seems like a waste of money when they could be using the portion thats going towards principal to build up an emergency account or pay off credit card debt. 

Most people think home equity is a safe investment and tend to forget that a homes value has no bearing on their current mortgage balance. I talked with a potential client last week who spent their life savings ($100K) as down payment to buy their dream home in Florida last year and now thats been completely wiped out.

I'm sure that in hindsight they would have been better off if they didn't put as much money down and kept their savings in a more liquid account other than their home.