A new pyramid scheme: United First Financial
Recently, someone on my consumer awareness site Pink Truth asked about United First Financial. I did some quick research and came to the conclusion that it was a typical multi-level marketing scheme… basically a pyramid scheme that relies on the continuous recruitment of new members. I didn’t think another thing about the company.
But a fellow blogger on the personal finance site WalletPop recommended the company today and I couldn’t believe it, so I had to do some research again. She promoted United First Financial as a program that is “the debt snowball on steroids.” She spent $3,500 to sign up for their “program” to help her reduce her debt.
So what did I find today? United First Financial is a multi-level marketing company which depends upon the endless recruitment of new members. They sell their $3,500 program to people who can least afford it, and it’s not worth the money. The name sounds vaguely familiar and legitimate, doesn’t it? I’m quite sure that’s part of the scheme.
I began my research with the company’s website. They’re a little different from other MLM schemes in that they don’t mention the “business opportunity” on the main site. I think they’re trying to keep that part a little hush-hush. In searching other sites, I found many people who were questioning whether or not it was an MLM. It is, but it seems that fact is supposed to not be widely quoted.
The company seems to get credibility from articles in industry publications. In reality, those articles are nothing more than fluff pieces meant to market the company. None of the articles offered a critical look at what they’re selling or who they’re recruiting.
UFF has a sales force with no expertise in anything. You can be a representative for the company and not be trained or educated about it. Their disclaimer says: “United First Financial, its agents and subsidiaries provide Internet web based software and support services. United First Financial does not provide accounting, tax, legal, real-estate, mortgage, or investment advice.” So the representatives know nothing about anything, but they’re going to help you reduce your debt? (Update: There are apparently some licensed individuals who are representatives for the company, but there are no qualifications required.)
So what is this $3,500 system you’re supposed to buy? It’s called the Money Merge Account System (MMA). You get access to a software package that tells you what bills to pay when. The key? Finding excess cash to put toward debt to get your debts paid off faster. But I just told you that for free! You don’t need a computer to tell you that if you make a consistent effort to pay more toward your debts, they’ll be paid off faster than if you don’t make that consistent effort.
As part of the program, you use an equity line of credit instead of your regular checking account. This way, when you have extra money, say $1,000, that would have been sitting in your checking account doing nothing…. It is instead applied to reduce your mortgage balance which saves you interest. When you need that $1,000 again, you can get the money back off the equity line of credit. Your debt balance goes back up to where it was before you had that extra $1,000, but you benefit because you saved a little interest while you didn’t need to actively use that $1,000.
That sounds like a good idea, doesn’t it? Yes, in theory. In reality, how many of the consumers signing up for it really understand the process? Do they really understand the risks of this program? Do they understand the drawbacks? It’s more complicated than it needs to be, but mathematically the process can help you pay off your mortgage sooner.
But there are just too many drawbacks to United First Financial.
Here’s a comment I found from a consumer on another site who sat through a UFF presentation:
First, the printed promotional materials stated “Pay off your 30 year mortgage in as little as 6 to 12 years”, “No alteration to your current standard of living”, and “Your 30-year mortgage can now be paid off in approximately 6 to 12 years, with no change to your lifestyle, without increasing your income or monthly mortgage payment or refinancing of your existing mortgage.” Hmm… Sounded too good to be true.
And I was right. THE MATH DOESN’T WORK! I’ll explain.
I just refinanced my house on a 30 year mortgage at 6% interest. How exactly could I pay off my house in 6-12 years without increasing my monthly mortgage payment? Even if my mortgage was at 0% interest and 100% of my payment went to principal, it would still take nearly 14 years to pay it off without increasing my mortgage payment. (Go ahead, do the calculation yourself. Multiply your monthly 30-year amortized mortgage payment not including tax and insurance impounds by 168 months. The answer should be a number slightly higher than your original loan balance. If not, than you may be calculating an interest-only payment or discounted flex payment from and ARM.)
My point is… Interest is interest, whether it’s in a first mortgage or a HELOC. If I have a $100,000 mortgage at 6% and I pull $20,000 off a 6% HELOC to pay down my first mortgage, I still have $100,000 in debt at 6%. It’s now just split between two loans. The idea they promote is that you put your whole paycheck (let’s use $5000 per month as an example) into the HELOC to reduce the balance, then pay for your living expenses out of the HELOC. The HELOC is also used at certain “strategic” times to pay down the first mortgage.
So let’s separate fact from hype. FACT: You might save some interest if your HELOC interest rate is very close to your first mortage interest rate. However, the interest savings only amounts to an average of $10-15 per month using the above example of $5000 per month income. What does that translate to? About 1.5 to 2 years off your mortgage term (paying off your 30 year mortgage in 28 years). That’s a bit different than what they’re promoting.
In the presentation, they passed out a sample report from the software. I filtered through the numbers that they gave (paying off a 30-year $150,000 mortgage at 6.5% interest in 8.4 years). The mortgage payment was listed at $850 per month (which should have actually been closer to $950). They even make the reports difficult to read, but here’s how they arranged to pay off that mortage in 8.4 years: They took $5000 in monthly income and applied $2845 per month toward the “system” (note that the amount is three times the original 30-year amortized payment). My first question is, how exactly do you triple your mortgage payment “without altering your current standard of living” and “without increasing your monthly mortgage payment”?
Now here’s the good part: Let’s take that original loan amount of $150,000 at 6.5% interest. The MMA program was going to pay it off in 8.4 years by applying $2845 per month toward the first mortgage and/or HELOC. Now what would happen if we didn’t use the MMA program and just paid $2845 per month toward the first mortgage of $150,000 at 6.5%? Ready for this?… 5.2 years! That’s 3 years faster than using the MMA program, just by simply paying the same amount directly to your first mortgage. But how many people can afford to triple their mortgage payment anyway?
The bottom line is that UFF is in the software business. This system was created from a simple concept (accelerated mortgage reduction) and made extremely complex so the average person couldn’t understand how the numbers really work. Then they make it look like they’re going to save you $100K or more in interest without affecting your lifestyle, so $3500 for a piece of software that’s really worth a small fraction of that seems like a bargain. DO THE MATH! They’re complicating a simple concept to make you think you need to give them $3500 for a piece of software.
And another commenter who actually paid for the system:
I have been going back and forth with this MMA. I have the MMA program for about 5 months. I spent the 3500 to try it for myself because as a Mortgage Professional I wanted to see what it does and can it really help people. I have debate back and forth with Calvin and others on this thread but I also paid attention to what they were saying and I have come to the conclusion that the MMA product as of now is no more than a glorified spreadsheet. I have to see something more than what I am seeing now with this MMA program. So for now I’m on hold with this until further notice. The more I look at MMA the more I say this can be done with a simple spreadsheet. Maybe I’m missing something here but I don’t think so.
The biggest drawback to United First Financial is the $3,500 fee. It is not worth it, and you could accomplish the same thing this program claims to help you accomplish without paying the fee. There are legitimate banking and mortgage products available to consumers that could accomplishe the exact same thing without the fee. Check out this article about “mortgage accelerator loans” from Bankrate.com. This is the concept that UFF is selling, and you can get it for a very small annual fee.
Quite simply… you don’t need fancy software to be able to pay more on your debt. In fact, you should keep your $3,500 and use that toward your debts!
United First Financial wants you to think they’re just like any insurance agency or mortgage broker… just offering a product that’s supposed to help consumers. Like the more successful MLMs out there, they have a “revolutionary” product like nothing you’ve ever seen before.
Other companies sell magic berry juice. UFF sells magic debt reducer juice. But there’s nothing magic about it and you don’t need to spend $3,500 to get it. Stay far, far away from this plan.
Related Posts
- United First Financial: Don’t believe the hype
- United First Financial scam: You’re using the bank’s money to pay down your mortgage
- Fun with numbers: I can save you $19,714 (without United First Financial)
- What does another expert say about mortgage acceleration programs like United First Financial?
- United First Financial made simple
Wardent7, UFirst agents have to pass a multiple choice test to sell the MMA. If they fail it, they simply retake the questions they got wrong until they pass. No diploma, degree, or any true test of competency required. They redefine financial words at random, and can’t even use basic English, often using the wrong words in general, such as mistaking “hear” for “here”.
UFirst agents, as a group, are perhaps the least intelligent people working in the “mortgage” industry today.
Who cares, they’re going bankrupt anyway. Their owners are slime and their idea was good but they got too greedy. Sure it’s a great idea but $3,500 is way too much for anything. Gladly, they finally are going under because of the economy and some crappy crappy decisions made when they switched to V4 which lost many customers. But I think the main one is the money. They say you’re paying the $3,500 for customer support but when they go under, that’s not going to be there. Yeah, you will still have the software, they did at least make sure that was contracted to a third party in case they went under. So….the question now lies, if you payed 2/3 of that money for customer service…shouldn’t you get that money back since that won’t exist?
Their idea was a scam from the start, and when they go bankrupt or simply shut their doors, I have my doubt about the software being accessible. It might be hosted on a server somewhere, but if there is a technical issue that crops up later, don’t expect it to be fixed. A few thousand people will be holding login credentials that are even more worthless than they are today.
No, it’s not just on a server located somewhere, it’s contracted out to another company. So people aren’t confused, the software will still work. Whatever U1st goes out with will be the last “version” so obviously no touch ups will be made. Another issue that possibly can turn up would be bugs in the software, but I’ve heard they now have a V4.2 or something which apparently got rid of those previous bugs. Basically you will still be able to use your software but no changes can be made to it, as far as I know anyway. Just think of it as Windows Vista U1st style
But it will be usable. If you do happen to be a customer, give U1st a call and ask them that concern 866-307-3201. For all i know, the third party hosting the software will be able to do some updates, but I know just as much about that fact as the people bashing United First on here.
And will this hosting company continue to host the software into infinity after UFF is bankrupt? Doubtful. Sure, there may be a contract and a payment in place to guarantee the software is operational for a period of time, but it’s not going to go on forever. And isn’t that what consumers are being marketed? A $3500 piece of software that they can use forever?
That’s why I’m urging people who do have the software to call and ask if that is a concern for them (and hopefully it is). No one on here can say if it will work or not with sufficeint proof until it actually happens.
Why do you assume UFirst will suddenly start looking out for their clients *now*? If this was a legitimate product, they could market it differently, sell it for a reasonable price, and be the darling of the personal financial software industry. They aren’t. They’ve sold very few MMAs, at hyper-inflated pricing, and the only legitimate media coverage warns against the MMA. The magazines that promote the MMA exist to promote products – not provide consumers with unbiased advice.
Even if the servers remain powered up, there is no reason to assume they will remain up and running. Databases require maintenance. Web apps require fixes as small bugs are found. When UFirst goes, so do their employees, especially their IT staff, as incompetent as they have been shown to be. So with them gone, nobody can expect the MMA software to stay online for more than a few days or weeks.
I realize you haven’t bought the product so you haven’t delt with some of the U1st customer service. I know quite a few of the reps that were back in the day and they did take care of customers who called in. With that in mind, you can’t say they haven’t taken care of customers, because they have. As I mentioned already, you nor I know what their plan is, as we don’t work for them so you’re assumption is just as valid as you state mine is. It is stated in one of the contracts signed by customers (I think) or in some of the paperwork shown to customers that it will stay up and running. And I’ll say it for I think the thir time, if you do doubt that statement, give them a call and ask particularly about that, because I would imagine by now they have recieved numerous calls about that particular problem. Also, please don’t bash their IT staff. Those problems had to do with owners decisions and their inability to plan, not IT. They did an excellent job mopping up after all the problems owners have caused.
Put simply, when UFirst goes bankrupt, any agreement with them won’t be worth as much as the paper it is written upon. How do you get a hosting company to fix your bugs? That’s not what they do – they host servers.
You seem to know some people in CS, and you also seem to know the department was gutted by layoffs. The writing is on the wall. Sales are down 89% since January 09, and they still have rent to pay and a payroll to make.
As for the IT staff, perhaps you’re right. Version 4.0 may have been rushed and poorly planned. But even before the bugs, it was a slower way of repaying debts. A simple “pay discretionary income towards your higher interest debts” approach beats the MMA by months and thousands of dollars, even if the MMA were free. Why couldn’t the MMA have simply done that, instead of insisting on some intermediate account? The answer is simple – it would be easy to see what is happening, and it would never sell.
This is not a company worth crying over when they are gone.
If you read what I said before I wouldn’t have to repeat it. There could possibly be bugs later on, but people will still be able to manage their accounts, as they previously did before V4 came out and supposedly that has been fixed, as customers haven’t been complaining about those particular problems. Also, don’t throw percentages at me unless you know they’re correct. Those aren’t. Instead of telling customers on here that they’re stupid for purchasing the software, why don’t you try to bash a company worth bringing down such as aol?
We don’t “bash” any company on this site. We provide information to consumers… the information that the companies selling sham products and services don’t want them to know.
HM – You are simply guessing about what will happen when the company goes under. You know no more than we do about that. You don’t even know what the contract says, but you assume it says something about that. You want us to ask the company what will happen. What do you think they’ll so? “On yes, if we go out of business, the software will be even more useless than it is now.”
LOL – Please find something constructive to add to this conversation. And if you’re interested in talking about AOL, go start your own website and do that.
You’re also guessing. That is the point I’m trying to make to you. You have said alot of things off of assumption on this site. Both of you aren’t directly calling people stupid but are making the notion that they are. They alerady made the choice to buy the product. Just give them a break and lay off.
No, the people who bought this are victims, and I would never denigrate them, and I’ve advocated on the behalf of a few. One client is on the payment plan, and his request for a refund was denied. He has cancelled his credit card, and will now wait to see if UFirst does anything about it. If they don’t, that will be good information for a lot of people. They aren’t stupid – they just don’t know much about mortgages, and they had a moment of weakness in front of some slick salesmen. Happens to the best of us.
Many of the agents are also victims, as only the top ~1% of agents make a living at the typical MLM. We know of agents who have fallen on hard times because they thought the MMA would be the “business” for them. Ex-agent Jaime Buckley recently lost his house.
As for the numbers, MMA sales have been leaked almost monthly, almost all year long:
Jan 3,473
Feb 2,177
Mar 2,428
Apr 2,058
May 1,353
Jun 1,092
Jul 849
Aug 710
Sept 583
Oct (no data)
Nov 369
That represents an 89% decline since January. If you choose not to believe those numbers, fine. You know there have been massive layoffs, and entire departments have been gutted. You know the CEO, CMO, COO, two lead developers, and other top-level people have left, and no replacements have been announced. That UFirst is on life support is obvious, and the source of the numbers above has always been correct before. Further, we have no reason to lie, and we have not lied in the past.
curious you say that United First is going bankrupt. I have been told they practice what they preach and are totally debt free as a company. I can’t find any news about them going bankrupt or having financial difficulties. Are you speaking in the hypothetical? I have worked with a number of software companies and all of their clients would be in the same boat if any of them went bankrupt – but I have never heard of any that are debt free. Surprising that a company with the reputation of Ernst and Young would give this company an award if what they provided was suspicious. Looking forward to hearing more as I am considering their offer. I have too many years of trying to ‘do it on my own’ and finding little success. My intentions are good and I am more disciplined than most but life has a way of taking over.
Steve – I’m afraid that if your problem is “life taking over,” that UFF MMA will not solve that problem. Life will happen, and you’ll just be $3500 more in debt. MMA doesn’t stop life from happening.
Ernst and Young did not choose them for the award — they just sponsored it. But UFF will mention this award several times in their sales sessions.
If you decide to us the program, keep this in mind … (wished I had known this before wasting my money)
Anyone can be an agent. They do not have to be licensed or certified. Get an agent who actually uses the program themselves. Good luck.
Your agent and sales people do not work for UFF. They can tell you anything, and UFF will not back them up.
You are not buying software. You are buying a login to UFF’s servers. If the company does fold, then you no longer have the software. And the folks at UFF can see every move you make with the program.
Ask about the guarantee, and make sure you understand what it is. If they tell you it’s a satisfaction guarantee, don’t believe them. Call UFF directly and ask about them about the guarantee. You need to be okay with no chance of a refund after handing over your money, no matter what happens.
Document everything. Get everything in writing – every problem you have, every phone call, every question, every promise made to you. Know that UFF keeps a record of every phone call made to you, and if you don’t answer (like if you’re working or whatever) it’s noted that you were unresponsive.
Read the contract. Note that it is against your contract to save a screen shot of the program. So if you have a problem, you will have a hard time proving it. Don’t let anyone change anything on your program to fix the problem until it’s resolved and you are satisfied, or your proof is gone. Make sure UFF documents the problem in your records and get them to send you proof. They probably won’t, but you may need proof later.
UFF got down to a D- rating with the BBB in 2009. That’s another entire issue. Filing a complaint to the BBB will not get you a refund if you have issues with UFF.
You also need to be okay with your bank account getting down to zero, and living off borrowed money.
It’s not as easy as they make it out to be. Every time you spend money, pay a bill, or move money around (and you will move money around a LOT) you have to document it. You will constantly be thinking about money. Maybe that’s good for some people, but it gets old real fast. And it takes time, much more than you are told. And you’re doing this every day or every week for years.
You CAN do it yourself. Even UFF says on their QA that you can. If you take all your leftover money at the end of the month and send it to the bank, you just did it yourself. Ta-Da!
The complaints about United First Financial are interesting and yet the specific situation is no different than what we daily face with many other companies. Getting a password to use a piece of web based software is a technology that many companies use It goes by various names like SAS software as a solution, Data Centers. hosted software etc. Many insurance agencies for instance now store all of their data, which is your personal data, off site on a server provided by their software vendor. Welcome to the modern age of technology. United First Financial does not have any of its clients account data only the balances in their accounts I am told. My guess is anyone reading this column is a regular computer user and has probably purchased items over the Internet. given your credit card numbers and even the security code – either to a person directly or typed it onto a form. Sounds like we all put our trust in businesses and people on a routine basis.
Not sure what Sue means about Ernst and Young awarding versus sponsoring – they both sound like an endorsement to me.
Bottom line – if people could do this on their own – why are we so in debt? I have a very solid hand on my finances, always have, and while I am not in debt to the level of many folks who are losing their homes I have been hoodwinked into believing that a low monthly payment and low interest rates are where I should be focusing. My banker and mortgage lender and even the guy who sold me a car with financing had me focusing on the monthly payments, not the total cost of ownership. If you are mature enough to own a home you should be smart enough to understand an amortization schedule and realize that refinancing is not the answers to all your worries. Paying interest to third parties is what is robbing you and I of realizing our dreams and goals. Heck it is even in the bible for those that lean that way.
Also – I checked the Better Business Bureau in Utah about this company and they have a B+ rating and the complaints are minimal – it is important – especially in researching a company with forensic detail – to be truthful and honest. Due to the person hosting this column I would hope the information could be more factual and less emotional which is why I choose to refer to this website
I stand corrected … UFF got down to a D+ rating with the BBB in 2009, not a D- (sorry, a typo). Then later it went back up to a B+.
I doubt everyone who had a problem with UFF filed a complaint with the BBB. It’s a long process and not much gets resolved. Even a “resolved” case may not mean it’s resolved to the satisfaction of the consumer.
I’m in Iowa. I ‘bought into’ the MMA idea in August of ‘08. The ‘agent’ didn’t know how to explain the system to me (found out later she didn’t even use it herself) so she just said, “You’ll understand it once you start using it “. I’m a real estate agent, commissions only! After getting all my numbers into the program, she came over to ‘attempt’ to help me get going. Well, she did something that erased ALL the numbers!! We called the company. They re-entered numbers but they were wrong. When the light went on and I realized how the program was intended to work, I also realized that it wasn’t a program that I would be comfortable with. If I had extra to put toward my principal (which I rarely did), there was no guarantee I wouldn’t need that ‘extra’ money just to live on the next month! I tried to ‘talk’ to someone at UFF about a refund but got nowhere. I did the lengthy BBB complaint and got nothing there either. I just spoke to someone again tonight and am getting NO PLACE with them. I may have to get an attorney involved. Any suggestions?
Hi Steve,
quote I have been told they practice what they preach and are totally debt free as a company. unquote
quote United First Financial does not have any of its clients account data only the balances in their accounts I am told unquote
Curious who told you this? and why you would necessarily believe them?
Steve are you a u first agent? Coz if you really were not, and you have spent the effort to find this site and have read all of the various posts here I find it hard to believe that you or anyone would still consider u first as a legitmate business opportunity or product offering.
Oh and by the way, that Ernst and Young plug that all the agents keep going on about. Do a little research to really find out what that is all about. Its been brought to light here that it is really nothing more than a sponsered promo. In fact, its a bit of an ongoing joke that probably half of the companies that are nominated for these awards end up bankrupt within the next year or two following. Now I can’t back this up but it is has been a bit of a joke in the business community since the high tech melt down last decade.
good luck with your decision.
yours truly Geo
Anyone who makes assumptions about something without first hand knowledge has about as much validity as an apple complainging about being an orenge.
NN – Then thank goodness that I have plenty of firsthand knowledge about the UFF product, how it works, and how it is being marketed.