Mortgage & Debt Payoff Acceleration Programs For Union Members

The “Mortgage Professor,” Dr. Jack Guttentag, a member of the faculty of the Wharton School since 1969, a former economist with the Federal Reserve Bank of New York, believes there is real merit to these strategies.

Dr. Dolf de Roos, engineer, real estate educator, investor and New York Times best selling author also agrees. De Roos is author of a forth coming book on mortgage acceleration.

Hybrid accounts have been used outside of the United States for more than 20 years. They are widely used in Australia, New Zealand and Britain.

In 1997 Virgin Financial (Richard Branson of Virgin Records, Virgin Atlantic etc. fame) got together with The Royal Bank of Scotland to promote a mortgage interest offset account called Virgin One or a Current Account Mortgage (CAM). This allows customers to consolidate mortgage balances, traditional current accounts (checking,) personal loans (home equity lines,) and even their saving accounts into one account. This requires refinancing and sophisticated banking system software to manage the account balances to the benefit of the homeowner mortgage.

These systems carry names like current account mortgages, hybrid, or mortgage payment acceleration. They all approach the opportunity in various different ways and for the primary benefit of the lender.

OUR PRODUCT EVALUATION

Recently we evaluated the mortgage acceleration programs available in the US and concluded that the Money Merge Account™ plan offered by United First Financial™ was of superior functional quality and in preferred position from a distribution and customer support philosophy.

Banks and financial institutions are slow to change. Adoption of a merged customer account strategy offered no real advantage to a bank and in fact offered a less advantageous position. This meant massive reprogramming of their existing systems and a chance to reduce their ability earn interest on customer funds. Informed and empowered customers are less profitable.

Our preference is that any system focus on the customer and not require a change to the existing mortgage structure. Strategies that benefit the financial institution first by offering convenience and therefore customer retention but required refinancing of the basic mortgage were considered to be slightly less desirable. Customer and account support is a vital element to any strategy. In one case the merged mortgage account originator handed the customer off to a generic mortgage service center that was not primarily designed to serve the mortgage acceleration customer.

Any system must deliver increased customer convenience, savings to the account holder and the financial institution, mutual loyalty and better aggregate loan payment performance for the bank.

A current account mortgage or Money Merge Account™ system should simplify a homeowner’s life. Some of these hybrid account offerings take a less customer oriented approach. It is relatively easy to determine the product mission by who is behind the product.

A loan broker wants the customer to take a new loan and maybe a mortgage acceleration strategy is offered as a competitive advantage.

Maybe this is an additional service offered by a lender to an existing customer or is it a customer tool to help simplify and manage their mortgage finances.