interesting blog site with discussing money merge accounts and equity harvesting HERE
seems pretty interesting...and the editor of that blog is not a fan of UFF selling tactics either

ellory said:shillinator said:...still waiting for the first unhappy customer to show upCalvinandHobbes posted two references to unhappy customers earlier in the thread.

One you said was a stupid customer, the other you ignored. (A typical U1st tactic, change the subject, answer another question. Refuse to provide verifiable facts)

Not stupid, I believe I called her an idiot. Not due to lack of intelligence but lack of self control.
The other guy he said got his money back. Getting your money back does not sound like a scam to me and he was not here in this forum, the #1 result in search engines on the subject. Again, every customer I have met face-to-face was happy with the product they were USING. CalvinandHobbes can tell me about some guy he met on the moon too. I want to meet, whether online or elsewhere, an unhappy customer. Then the "scam" claims will hold some weight with me.

Please accept that fundamental arithmetic dictates that you cannot save interest on your x% mortgage by borrowing from (x+y)% HELOC (assuming both x and y are positive). Can one even get a HELOC at a lower rate than a primary mortgage? I don't think so.

All the malarkey about front-loaded interest and "making money on the float" is complete and utter BS. As has been said many times in the thread, the only function of the HELOC is to pay the UFF scammer for his "software" which is nothing more than a broken mortgage calculator.

Every time someone has attempted to claim that using "the software" was better than simple prepayment, it's obvious that the borrower is left holding the bag on a non-zero balance HELOC. Otherwise, the software truly does create money - and if that was the case, no one would share it at any price.

Shill, I give you a lot of credit for sticking around, but I give you a lot more credit for being so stubborn. Perhaps you are just unwilling to accept that you talked your friends/clients into wasting money under the premise of saving money. Please see the error in your ways.

delzy said:Please accept that fundamental arithmetic dictates that you cannot save interest on your x% mortgage by borrowing from (x+y)% HELOC (assuming both x and y are positive). Can one even get a HELOC at a lower rate than a primary mortgage? I don't think so.

All the malarkey about front-loaded interest and "making money on the float" is complete and utter BS. As has been said many times in the thread, the only function of the HELOC is to pay the UFF scammer for his "software" which is nothing more than a broken mortgage calculator.

Every time someone has attempted to claim that using "the software" was better than simple prepayment, it's obvious that the borrower is left holding the bag on a non-zero balance HELOC. Otherwise, the software truly does create money - and if that was the case, no one would share it at any price.

Shill, I give you a lot of credit for sticking around, but I give you a lot more credit for being so stubborn. Perhaps you are just unwilling to accept that you talked your friends/clients into wasting money under the premise of saving money. Please see the error in your ways.

I think you should read the blog from the link I posted a little while ago and better educate yourself on the subject. Get off fwf once in a while and educate yourself via other sources.
Why does the CMG product use the same concept??? is it a scam as well? How about the Royal Bank of Scotland's One Account (originally introduced by Richard Branson of The Virgin Group), is it a scam also? Are all of these malarkey?
The concept doesn't create money; it creates interest cancellation.

shillinator said:Since I cannot answer your questions, let me change the subject and ask you to defend other mortgage offers

The way U1st'rs MLM market, "sell", twist logic, and pitch false numbers is the scam. Why is another company's product even relevant? If you want an independent view on mortgage offset accounts

And why do you defend UFF /U1st / UFirst company practices?

synnyster said:shillinator said:
I think you should read the blog from the link I posted a little while ago and better educate yourself on the subject. Get off fwf once in a while and educate yourself via other sources.
Why does the CMG product use the same concept??? is it a scam as well? How about the Royal Bank of Scotland's One Account (originally introduced by Richard Branson of The Virgin Group), is it a scam also? Are all of these malarkey?
The concept doesn't create money; it creates interest cancellation.
I can play too! Here you go, read this link: Financial Voodoo

Good link, but I like this one a little better because it has a lot of people who live off their reputations (Clark Howard, Ben Stein, others) that debunk the Mortgage accelerator myth.

shillinator said:...still waiting for the first unhappy customer to show up

Using this kind of logic, I suppose you also believe that there are no rapes in the United States? After all, almost no one shows up and claims that someone has raped them. Since we don't have all that many people showing up claiming that they've been raped, surely this means that no one is being raped.

I do not use the term rape lightly, but this illustrates your fallacious logic. You should be ashamed of yourself.

shillinator said:-the latest example we have been looking at. UFF comes out 2 months ahead.

Is that this case?

Mortgage- 200,000 fully amortized 30-yr, starting April 1, 2008, monthly payment 1,199.10
Interest rate- 6% fixed
Income- 16000 per month (net), getting paid once per month
Discretionary income- 5000 per month
Interest checking for DIY- 3% per year
HELOC- 8% (assumed fixed), original balance on April 1, 2008 of 3500 (UFF fee) and limit of 60000
I think Eric and I finally agreed of a final payment of 919.99 in April 2011
UFF analysis is showing a final payoff date of Feb. 2011 (first mortgage and HELOC down to 0), doesn’t say the amount of final payment
----------------

Lacking the final payment amount, and the monthly amortization schedule, I'm having a little trouble checking their math. Do you have access to said information? It would help greatly. Could you also run the scenario with a HELOC rate of 0%? Additionally, the average daily balance of the HELOC would be divine.

Now that s1235 has explicitly stated how to construct a mathematically viable scenario of UFF coming out ahead, for future people touting the UFF software, I will again restrict my search space to any reasonable values. I'm a little disappointed. I had hoped that said information would remain hidden for a little longer.

s1235 said:delzy said:In all cases, sending your remaining discretionary income, at the end of the month, from High Yield Checking account will be cheaper (therefore paying your mortgage quicker) than buying UFF.

How's that for simple truth?

People keep asserting this, and it's not true. The situations where it isn't true are so out of touch with reality that it might as well be true, but algebraically speaking, it's not.

There are times where using HELOC to float your salary will come out ahead of high yield checking, even with a $3500 penalty.

Suppose your total monthly income is x, discretionary income is y. Monthly interest rate of checking is rc, monthly interest rate of HELOC is rh, monthly interest rate of first mortgage is rm. Total time to payoff is m months in either case, and you get d days of float on average in a month (pretend every month has 30 days). Assume a perfect money merge strategy (which UFF is not)- your HELOC is exactly equal to your monthly salary on the day it is deposited.

You save x*rm*d/30 on mortgage interest with the money merge setup, but you pay (x-y)*rh*(30-d)/30 in interest.

You save x*rc*d/30 + y*rc*(30-d)/30 with the latter setup.

m*(x*rm*d/30-(x-y)*rh*(30-d)/30)-3500>m*rc*(x*d/30+y*(30-d)/30)

For most reasonable values of rc, rh, rm, x, y and m, the # of days of float you'd need to make this workable are infeasible. That said, it's not algebraically impossible to come up with a situation where this inequality holds.

You're basically paying interest on [average monthly salary] chunk of the mortgage for only [fraction of days without float]*total length of mortgage. But you're paying at the HELOC rate, and penalized further by your HELOC generally being larger than your average monthly salary. Most people's average monthly salary won't be enough to generate $3500 in savings over a high yield checking account. But some will- by having very high salaries with large periods of float and relatively low discretionary income, which ensures a long payoff time.

Given that this happens approximately never, we can move on.

That said, anyone who could buy UFF could implement this money-merge strategy on their own (saving $3500). And I guarantee that the efficient timing is to always owe exactly what you will get paid in your HELOC on the day you get paid- transfer anything else (discretionary income) on the day before you get paid. The 'optimal timing' claim from UFF is a load of crap.
One thing you have left out in your analysis is the compounding effect of the $3500 fee that is paid upfront. I am sure that was done to simplify the analysis but it does make a big difference for longer payoff periods m.

Let me make some simplifying (but very reasonable) assumptions in your analysis:
rh = rm = r (certainly most favorable to UFF in current environment)
d = 30 (maximum possible float; most favorable to UFF).

Then the UFF float saves (x*rm*d/30-(x-y)*rh*(30-d)/30) = x*r per month
The checking a/c approach (call it DIY) pays you in interest: x*rc*d/30 + y*rc*(30-d)/30 = x*rc per month
The 3500 fee costs 3500r in interest per month (since the fee is essentially wrapped into the HELOC in UFF approach).

So the net savings per month of UFF approach over the DIY approach is: x*r - 3500*r - x*rc = x*(r-rc) - 3500*r

For UFF to win, it is necessary that: x*(r-rc) > 3500*r or
x*(1 - rc/r) > 3500.

Assuming that is true, the pay off period must be long enough so that the net savings of
x*(r-rc) - 3500*r per month, compounding at monthly rate r, would grow to 3500 or more.

Let us use some numbers now:
r = 6%/12 (monthly rates)
rc = 3%/12
x = 15000

Excel tells me that it takes well over 30 years for UFF to break even. Certainly not what UFF wants. You can certainly play around with the numbers a bit for different scenarios.

In any case, the biggest assumption favoring UFF in the above analysis is d = 30!! Free float of entire salary for a full month.

uutxs said:If we set d = 15 in the above, a more reasonable setting, here is the analysis:

The UFF float saves (x*rm*d/30-(x-y)*rh*(30-d)/30) = x*r/2 - (x-y)*r/2 = y*r/2 per month
The checking a/c approach (call it DIY) pays you in interest: x*rc*d/30 + y*rc*(30-d)/30 = x*rc/2 + y*rc/2 = (x+y)*rc/2 per month
The 3500 fee costs 3500r in interest per month (since the fee is essentially wrapped into the HELOC in UFF approach).

So the net savings per month of UFF approach over the DIY approach is: y*r/2 - 3500*r - (x+y)*rc/2 = y*(r-rc)/2 - x*rc/2 - 3500*r

For UFF to win, it is necessary that: y*(r-rc)/2 - x*rc/2 - 3500*r > 0
or y*(r-rc) > x*rc + 7000*r.

A necessary condition for the above to hold is that rc < r/2. Let us set rc = r/3 (checking interest rate is a third of mortgage/HELOC rate). We then require:

y*2/3 > x/3 + 7000 or y > x/2 + 10500.
But note that y < x.

Therefore x must be at least 21000. Say x = 25000, in which case y > 23000. Monthly income of 25k with 23k being discretionary!!! for UFF to have a snow balls chance in hell to win out. How long of a pay out period would be required in for UFF to eventually win out in that case? Dont even ask

Agree with your math. Note though,that in this sort of unlikely scenario,Do It Yourself still wins. In that case, DIY means do the HELOC shuffle, but do it without paying UFFers $3500. There is no magic in their timing,despite their protests.

So UFF still loses. Therefore, UFF does not win under any scenario