We received this inquiry sent in by a gentleman who was approached by someone at his church. He had recently paid about $3,000 as a down payment on a program that promised a quick pay-off of his existing mortgage. His question to us – was this a good deal? He was starting to worry that something was wrong.
Here’s some of what he told us:
“One of the benefits that accompany membership in this educational club is rapid acceleration of debt payoff. If I’m accepted into their club and “complete the educational requirements,” their proposal is to pay off my 30-yr. fixed mortgage with Chase Manhattan (through straightforward language closing docs signed at a title company). I then make 12 payments to their mortgage company at the same P & I as existed w/ Chase Mtg. I become responsible for taxes and insurance. In the 13th month they declare the mortgage paid in full and release the unencumbered title to my wife and myself. The promise is that we will then own our property “free and clear.” (They have a similar program for auto loan payoffs.)
Their claim is that large institutions have enormous borrowing power created by our signatures on the loan once approved, and those institutions retire their side of the debt we created within the first year of loan repayment.”
Frankly, nothing in the plan makes sense. If I loan money to my neighbor, it doesn’t matter whether I used money from another loan to provide the funds or whether it was funded from my checking account. Banks are accountable to others regarding their money. They simply can’t go writing off debts because someone has made a few payments. Those would be considered “bad debts” and would hurt the financial institution’s access to more funds. So far, the plan is not sounding good.
The writer then pointed out that some of his due diligence had uncovered ties to a group that had recently been shut down by the FTC due to mortgage fraud. I think he already knew the answer as to whether he should proceed.
Megan Hughes voluntarily spent a good part of the next day searching corporate and state records and found nothing referring to this company. They had not incorporated in any of the states nor had they properly registered for trademarks as they had indicated. Since they never returned any of our calls or responded to email inquiries, we haven’t heard their side of things.
I’m sorry for the writer. It sounds like he lost some money on the deal. I guess the lesson was additional proof that you need to trust your advisors. I’m glad, though, that $3,000 was all he lost.