Watch Out for Multi-Level and Social Media Marketers and Especially Self Serving Mortgage Brokers!

I want to shine the spot light for you on a financial product being sold today by multi-level marketers (financial salespersons), which isn’t good for distressed property owners, and accounts for around 23% of homes in the United States. Now, this product doesn’t have the same magnitude of disaster we’ve seen so far with toxic mortgages, but you should be aware of a few important facts about this product. And I’m not going to be silent about its potential negative consequences.

This product is software that requires you to pay $5000 to help pay down your mortgage in half the time. If just 10% of homeowners would make this investment, these multi-level marketers will make a killing while pushing distressed property owners further into debt.

I began my Certified Financial Planner courses in 2005 at Kaplan University because I want to be more than just a financial salesperson. Every 30 days (for six months) I had to take a mind bending exam for my certified financial planner training. In 2006, I told friends and family to sell their homes because the real estate market in the U.S. was way overheated. Some listened. Others got out and reinvested in another state and ended up in foreclosure. I thought they realized it was a U.S. problem and not a California problem. And it turned out to be a world problem, didn’t it?

Mortgage conferences I attended summer of 2006 discussed the government requiring “suitability” laws in purchasing homes like we have for purchasing stocks. The U.S. government offered up homeowners as prey for ambitious financial salespersons. And after all of this, some politicians still think consumers don’t need to be protected from self serving financial salespeople. You’ve got to protect yourself!

I heard lots of financial professionals talking about how we were heading towards a big crash, but only a few warned the market about the fraud that was occurring. In 2004, Private Mortgage Insurance (PMI) in Walnut Creek, California, refused to write insurance on high loan to value debt because they believed the properties were over valued. Then, they went silent on the issue. I wonder who told them to hush. I’m sure you can probably guess.

My reasons for warning you about this product which promises you can pay down your debt in record time is based on my certified financial planner courses. Here is my analysis for why this product is not good for distressed property owners:

• Property values are still falling!
• Mortgage interest rates are at an all-time low
• Your age is a huge factor.
• You don’t know how long it will take for the real estate market to recover.
• You don’t need to buy software and pay $5000 to pay your mortgage down in half the time! And, you should think long and hard about sinking more money into your home than required while the real estate market is in turmoil. Diversify your investments instead.
• You simply need to understand the financial rationale for paying down your mortgage faster and just create a plan to follow and keep your $5000 in the bank or off your credit card. Most financial people can tell you how to do the same thing this software does yourself!
• You should pay down high interest rate loans such as credit cards. Pick the one with the highest interest rate to pay off first, and so on.
• Cash is king right now. You need reserves of six to nine months for emergencies. I’m sure you’ve heard Suzie Orman, the TV financial guru, talk about why it so important for you to have an emergency fund. Ms. Orman is also a Certified Financial Planner like me.

You can see my reasons why it is unwise for you to pay down your mortgage right now. The risk you are taking is huge to put more money into your home than your bank requires. If you’re able to cover your fully amortized mortgage payments at this time, then that’s good enough until we see where this economic crisis leads us.  Paying down your mortgage in half the time while interest rates are at an all time low doesn’t make a lot of sense to me. You run the risk of throwing your money down the drain. Your property may continue to decline in value and who knows what other financial challenges life will bring your way! Does my analysis make sense to you?

It would be better for you to diversify your investments to reduce your risk. If you have extra cash to invest, look for investments that will give you cash flow or a positive return based on your time horizon. Diversifying your risk was one of the most important concepts tested in my certified financial planner training.

Consolidating debt also makes sense–home equity debt consolidation. If you can get a lower interest rate by consolidating, then you will benefit by lower monthly payments right away.

If I had to choose between paying down my mortgage faster or refinancing my home, I’d refinance to get a lower interest rate.

Donald Trump said “If it sounds too good to be true, then it’s probably not true.” If a multi-level marketer says to you to buy consumer or business products and services from them and they’ll give you points towards paying down your credit cards or mortgage, it’s too good to be true. You most likely can find the same products and services on the Internet for lower prices. I would suggest you try Wal-Mart first! Don’t fall for this multi-level marketing nonsense! They’ve developed a convoluted scheme to line their pockets with your money, which offer you no real value.

Social Media Experts!

If you don’t have a finance background, I’d suggest that you don’t promote financial products. I’ve seen social media experts helping to promote this financial product and other ones recently. They said they “felt” that the products and services were the best thing to help distressed homeowners. I think they were being paid handsomely and didn’t disclose it. Some internet marketers have gone to jail for this kind of scheme recently. One marketer even had testimonials which said thousands of homeowners felt they benefited from this product.

I think social media experts should stick with social media and let licensed professionals and people with certified financial planner training judge the efficacy of financial products and services.

Just because a home owner is happy with a financial product and gives it rave reviews doesn’t mean anything about its financial value. People loved “option ARMs” and other toxic loan products until they blew-up in their faces. And that really wasn’t their fault! People buy based on emotion and emotions are running very high at this time. And your friendly financial sales person wants to take advantage of your emotional distress with product and services which promise you good things, but in reality lack sound financial benefits.

Mortgage Brokers and Subprime Mortgage Lenders

You sold consumers toxic loans like “option ARMs” based on emotion. You said things to them like “Imagine what it’ll be like when you move into your new home”! You wanted them to convince themselves to buy right now. And you’re so hypocritical because you now say it was their fault they signed onto such a ridiculous loan. And now you’re selling this software product too because your loan commissions are down.

You depend on financial professionals to tell you your options with full disclosure so you can make an informed decision. When your financial professional is more motivated to earn a commission from your financial distress, you’re in serious trouble.

You might ask: are you the judge and jury? No. I am simply pissed off because I think these multi-level marketers know they’re taking advantage of distressed homeowners for their personal gain!

I had the opportunity to sell this product two years ago and I rejected it because I felt homeowners could do themselves what this product does if they only had a 30 minute consultation with a Certified Financial Planner. If it was free to you, it might have some value. But, $5000 (I would be willing to bet) is a bit of a stretch for you today! You want products and services which offer real value and make sense for your financial situation.

The United States and the world are in big trouble today because financial salespersons sold products which had huge risks built in for consumers. These financial wannabe gurus don’t know anything about tailoring financial solutions to fit your specific situation!

Who Can I Trust for Financial Advice?–Independent Financial Adviser

Given where we are financially in the United States, I’d recommend you speak with a financial advisor who’s been through certified financial planner training. Certified Financial Planners are held to a strict financial standard. If they sell you “crap” and you find out later that it was junk, you will have more success in taking legal action against them. Most Certified Financial Planners will help you make better financial choices for your life. My certified financial planner training prepared me to objectively look at my client’s specific situation, analyze their documentation, and make sound recommendations.

I passed my Certified Financial Planner courses in 2006. You can call me at (866) 323-9123 or sign-up right now for a complimentary consultation to get my advice on your financial case. I hope whatever choices you’re considering you will first speak with a Certified Financial Planner before you get involved in a financial scam.

During your consultation with me, we’ll cover ways you can diversify your investments and other financial options you should consider for your specific financial situation.

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