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
- What does another expert say about mortgage acceleration programs like United First Financial?
- United First Financial scam: You’re using the bank’s money to pay down your mortgage
- United First Financial made simple
- Fun with numbers: I can save you $19,714 (without United First Financial)
Tracy,
The $500 a month doesn’t go further with a HELOC, like I thought it did. Why did I think that? When you send $500 extra to your mortgage, the next month your regular payment “goes further” for you, right? In that monthly payment, the amount that goes to principal is more than it would have been had you not made the extra $500 payment. In my case, it would be like one dollar more. Doesn’t seem like much, but it adds up (and reduces the length of your mortgage). Each month you do this, you reduce the length of your mortgage in two ways. One, you skip monthly payments. Two, your monthly payments “go further”. This is something we all agree on, right? That making extra monthly payments helps reduce the length of your loan, thus reducing the interest you will pay on the loan.
My thinking with the HELOC was that instead of doing it month by month, you do a large chunk up front. Let’s say, $6,000, since that’s what you’ll pay after 12 months, doing it month by month on the previous example. So, on your next regular monthly payment, more goes to principle than just an extra dollar or two. It’s more like an extra $20 or $25. Joe Taxpayer mentions this in his “Heloc Shuffle”. I thought that this difference would mean that the HELOC “goes further” than the other option. But as Joe says, their is not really much of a benefit to doing it that way. I also tried the numbers in an amortization schedule and it didn’t really seem to save more than a month or two by the end of the mortgage.
So, seems best to do the month by month option, if indeed you do send all of your discretionary income to your mortgage each month. Yes, you can even calculate how much discretionary income you have each month and manually send it to your first mortgage, but I prefer setting up an automatic option with my mortgage company. I may not “maximize” it that way, but it sure makes things easier for me.
Mark – Even if you DID “maximize” it, the small savings from that maximization is not even enough to cover the $3500 the MMA costs. Joe Taxpayer has done the calculations about 100 times with a bunch of different scenarios, and the MMA loses every time.
I wish MMA didn’t lose. I wish people got value for their $3500. They simply don’t.
And it’s hard to convince people. We have nothing to gain by telling the ugly truth about MMA. But those selling it certainly have something to gain by getting you to believe it works. Yet it’s still so hard to make users of MMA believe us, when we have no self-interest whatsoever.
Tracy, I wish I had read this earlier, like 2 months earlier. I did a Google search for paying down mortgages, and came across UFF’s Money Merge Account. I looked through the website, testimonials, etc. I was sold before the agent even contacted me. The agent was excellent. Young, but excellent. Totally different circumstances of life from me – I am much older with many more accounts, loans, investing vehicles. I was told that there was a “Multiple Properties Option” – I figured “PERFECT!” and signed up all enthused, fired up, ready to go.
It was a painful process getting my accounts in order, figuring out monthly expenses, entering up to date balances of all my credit cards, checking account, mortgages. I spent SO much time the first month just getting it all lined up and accurate, and being a very anal Virgo, everything had to balance to the penny. In the process, I found that my HELOCs couldn’t be used because of the limit on number of checks that could be written, and thus was put into a checking account – savings account instead of checking – HELOC, and because I can’t write checks from my savings account, I opened another checking account and named it savings for the MMA. The “Multiple Properties Option” was a joke, no one really knew what it would do, it would cost me $29/month more forever, and would mix personal checking/savings with investment income/accounts. A big no-no if you ever have business income and expenses.
Well, here I am, 2 months later, experiencing on-going problems with the program such as it going change crazy when I executed actions out of order (like paying a bill too early) or executing actions in the exact order listed (like depositing paychecks to the checking account, then paying or transferring funds from the checking account), Really! Sometimes the program would red light and show a budget meltdown if I paid an installment for my daughter’s college tuition (even with available funds in accounts). I would have to wait until customer service chat line or phone service was open (I am in the Hawaii time zone) and they would say hold on, and then do something on their end to fix it, and even though I asked them what they did so I could duplicate it myself, I was not taught – even though I also signed up as an Agent.
Okay, so now you might think I must be really dumb. You may think that, but I am actually very good at numbers, figuring things out, and easy to teach. Where I am foolish is hopefully believing that companies like United First Financial are in business to help others, not just take their money.
Long story short, I asked for a refund, and was told NO because there is no satisfaction guarantee. The guarantee is that the program works. I asked for a 16 year detailed “Action Plan” to prove the payments/deposits/transfers would work as projected. The current Action Plans only carry forward for 3 months at most. I have received zilch.
I am still fighting the denial, and the “Client Special Services” has twice denied any refund based on the “senior committee” decision. I wrote a very decent letter and asked that it be forwarded to the higher ups, and have been ignored. For $3500 and only 2 months of use, I really must be a dummy.
If anyone has been successful in getting a refund (someone mentioned 80% have kept it, so does that mean 20% have been refunded?) please let me know how. Or, if anyone knows how to contact the higher ups in that corporate ladder, please send me the contact info. It seems like a gated fortress and no one is willing to open any doors once they have your money.
Thank you Tracy, for exposing companies that rip people off. I am embarrassed and pissed off at the same time.
Honolulu, thanks for sharing your story. I had major issues with the program as well, and of course was denied a refund. The only thing you can do is get your story out there so that others who are considering the program can learn what it’s really like before they buy into it. If UFF gave us a chance to try the program before we bought it, or gave a money back guarantee, they wouldn’t make any money. You’re not alone!
I am not an agent however I got my mom into the program since I have a mortgage back round. In six months she reduced her mortgage by $4,500 she owes about 240k bottomline I have seen it w/ my own eyes & am considering selling the program myself no matter what you say Tracy. Oh by the way last year I met a guy from New Zealand who told me a 1/3 of the people in Australia pay their mortgage this way when he heard me talking about it on my phone. His qoute was” Look kid it sounds like you got a winner there. We have been doing this for over 13 yrs. you americans are far behind”. I have seen a newscast by a “legitimate” tv station in NV showed that it worked & had people at their station who used it. Tell me who benefits by this program failing to sell??? I am not accusing you however just like any other buisness If I were the major banks I WOULD PAY PEOPLE LIKE YOU TO WRITE BLOGS LIKE THIS TO CREATE CONFUSION. Since it is the major banks who really stand to lose on MMA’s success. Just a thought. Again I am not an agent yet just a guy doing mortgages for 7 yrs got my mom on it & SEEN IT WORK W/ MY OWN EYES NO MATTER MUCH YOU SAY OTHERWISE Tracy. Nice credential Tracy. The perfect mole is I was a major bank. I say that because you question the math. So either the math is right or wrong. Either UFF is legit or you are right & they somehow have convinced even some attorney generals in some states to use the program. Interesting
“I am not an agent however I got my mom into the program since I have a mortgage back round.”
Hands down, the best opening line from a UFirst shill, ever.
Tracy, how can you compete with Gabriel’s logic? He has a mortgage back round, fer cryin’ out loud. You’re only a CPA with an MBA – that’s no match for a mortgage back round.
The ending is almost as good. I haven’t heard the “attorney generals in some states use it” claim since 2008. It’s so obviously false, I don’t know where to begin.
Thanks for the laugh, Gabe.
I have been using the service and today the site is Down! Have I(we) been scammed?
I would not care to believe it do to feeling like a fool for signing up for the service!.
Very odd, I have a friend who is a rep there, she is making money off the program hand over foot by people signing up for the program. Funniest thing though, her own home was just foreclosed on and her credit is a train wreck. They use failed real estate agents and lenders that no longer could make a buck in their fields and scam the consumers who are already struggling to get ahead, into signing up $3500, what a joke. Most of the people involved have no more than a year of real estate experience and plenty of displaced homemakers working for them.
Jose, how is she “making money off the program hand over foot by people signing up for the program” when “her own home was just foreclosed on and her credit is a train wreck”???
The answer is, she’s obviously not. The 70,000 UFirst agents are making approximately 200 sales per month now. Nobody is making good money selling the MMA any more.
Well, just because you are degreed doesn’t mean you are a mathmatician, does it. This simple software solution takes advantage of reducing debt by eliminating the interest rates on cards and loans by paying the bill before the newest interest accumulation hits. REal Hard to figure out how that affects interest on a large sum of money….HUH?????As a REal Estate Broker in 2 states I find the
software refreshing! How do you call yourself a forensic accountant much less a cpa and not be able to see how absolutely exciting this is for homeowners! And Yes, the cost sounds expensive, but it does the work for you!…whILE YOU ARE EATING, SLEEPING ETC….who wouldn’t want to see their loan expire with blessingsofcash fall out of the air?Quite frankly the person who sold him the software cold have shown the man above how to fix his problems….And while it doesn’t take a rocket scientitst to figure out that paying more down on your loan will pay it off faster, it might , in this case, take a rocket scientist to figure out that a software program that does the computations for you may actually be a more precise form of cost figuration…which may actually save you thousands of hours of your time and money. Here you don’t have your marbles in the right bag.
??? Shame on you ! DUH! Throwing stuff at people who know what they are doing just because you didn’t figure this out. I do agree the cost is high but for ten years of free phone calls, what the heck. All nice people wo really see the benefit of helping people! Bet you are too gutless to post this.
It is unfortunate that you have the right to post fraud on your website for people to believe you ,tracy.
Beth – Paying a debt before the next due date doesn’t eliminate the interest owed for that period. You still owe interest for the days outstanding, even if you pay it before the next “accumulation”. You’ve been sold a bill of goods. UFF loses every time against a simple, uncomplicated, do-it-yourself method.
Beth, I’ve seen a lot of mind-numbing diatribes from UFirst agents, but yours probably ranks in the top 10.
The formula for paying off your mortgage faster is simply to make additional payments with every regular payment. Basically, pay as much as you can with each mortgage payment. That’s it. You typically can’t apply additional payments against your principal at any other time. If you don’t understand that, you have no business being a real estate agent, because you have no ability to understand your client’s ability to afford a home. Hell, you don’t even understand enough about mortgages to own a house yourself.