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jbarto65 · Joined: 04 Nov 2007 Posts: 622 -0.15 Dollars($)

great post guys, lots of good information. thanks

livinginnky · Posted: Mon Dec 03, 2007 1:45 pm Post subject:

scraig · Joined: 27 Nov 2007 Posts: 7 5.85 Dollars($)

Livinginnky,

The excel sheet will show the example in full detail. What is occuring is that there are times when the customer hits a $0 balance. But then using this as their checking account, say drawing $500 cash. Balance moves from $0 to $500 and starts accrues interest again. Think of it like how your checking account is moving up and down with your daily usage.

The excel sheet will show the first time they hits $0 is 30.07 years, but then the expense for the month come in and they have a positive balance.

At 31.97 months they go constantly negitive (in terms of balance owed) at this time they are building up the account. Flip the account in your mind at this point from a debt to an asset.

livinginnky · Posted: Mon Dec 03, 2007 2:07 pm Post subject:

Why would you do that though? That is my question. Once you hit $0 you should be done. And then use your $3500 for whatever you want. Why would you continue to pay interest on your own money?

Again nonsense. 30.07 years? You would have the mortgage paid off in 31 months the conventional way. Thats months not years. After 31 months you have no mortgage at all.

So you say at 31.97 months the bank owes the customer at that point? Does CMG pay interest on the difference?

livinginnky · Posted: Mon Dec 03, 2007 2:10 pm Post subject:

Also I want to confirm that you are saying the rate can adjust as high as 11.5%. And that there is no "cap on the low rate" meaning if the Libor goes down, then the rate can go below the start rate.

livinginnky · Posted: Mon Dec 03, 2007 2:31 pm Post subject:

Ok I looked at your spreadsheet.

At what point does the borrower get charged this interest?

Your spreadsheet only shows the debits and credits it never factors the actual interest charge it just lists it to the side.

If the interest is calculated daily... is it charged daily? OR monthly?

If you look on the second day the balance would really be $90,016.25 as per your own numbers NOT $90,000 and so on and so forth. I don't actually see anywhere when the interest is actually accounted for on the principle side. And on the second day it would be $90,232.58 NOT $90,200 like you show. See how the math starts to change as you add the extra interest into the equation? Your spreadsheet is wrong from day 1 and is already off by over $30 on the second day alone.

scraig · Joined: 27 Nov 2007 Posts: 7 5.85 Dollars($)

Livinginnky,

The answer to your first question, about how the balance is moving up and down. This is a occurance with the account, you can stop your direct deposits at anytime, they are not required. So you hit zero you can stop putting money into the account and would stop using the account as your primary banking relations ship (for daily transactions).

Sorry if I puts years into the earlier reply today, that was a typo. You have the ability to link this account with any other account. So you could transfer money from the CMG account to an investment account, money market, etc. The account does not pay interest.

2nd post.

You are correct the life cap of the loan is 5% over the start rate. So it can not increase beyond that. Our customer starting at 6.5% woudl have an automatic cap of 11.5%

Your second statement is correct. You may cap the increase of the rate, but CMG does not cap the lowering/ falling of the rate. libor goes to 0%, you will rate would them be margin only.

livinginnky · Posted: Mon Dec 03, 2007 2:47 pm Post subject:

Now I am going to go through your last post line for line so nobody gets confused.

livinginnky · Posted: Mon Dec 03, 2007 3:00 pm Post subject:

scraig · Joined: 27 Nov 2007 Posts: 7 5.85 Dollars($)

Livinginnky,

The quote was directly from the guidelines for the loan. It is required to sign up for a ID and password to get there. Nothing I can do about that and this is pretty common for most of the other lenders that we use.

900c3 and 900c5 are the program codes that put a limit to the upward movement of the loan. C3 has the intermediate rate cap for 3 years and C5 has the 5 year cap. Same verbage, but uses 5 instead of the 3 number.

Your question about rate movement. Yes I am verifing that the rate can go up and that their is no floor on this loan.

When the excel sheet is released you can verify my numbers for your next question.

Finally, liquidity song and dance. So how would you prefer me to talk about the cash being freely avaliable to the customer at any time? There is a major point that the customer is able to temporarily lower their balance throughout the month. They are effecting their daily balance but putting everything through the loan. A normal loan is an installment debt and has no way to pull the cash out if needed, Home Ownership Accelerator has that ability.

livinginnky · Posted: Mon Dec 03, 2007 3:21 pm Post subject:

Yes but what I am saying is this... "you sell a home ownership accelerator" Correct? Available money has nothing to do with accelerated payoff. I don't want you to change the subject everytime I prove you wrong.

And you still haven't accounted for the missing interest charges in your spreadsheet. I have your spreadsheet in front of me now.

scraig · Joined: 27 Nov 2007 Posts: 7 5.85 Dollars($)

First, I am growing tired of your constant personal jabs at me.

I am here to explain the loan program and to clear up confusion. I would appreciate some common courtesy and avoiding the personal attacks.

The daily interest charges are calculated by the bank, this is done automatically and seamlessly. They take your end of day balance and calculate the interest that would be accrued on that day. That is totaled up and billed to the customer the following month. This is also why I broke the 6.5% interest into it's daily component of .000180556 on the excel sheet.

livinginnky · Posted: Mon Dec 03, 2007 4:19 pm Post subject:

Ok, but the interest is never tallied into the running balance. The balance magically stays at whatever the debits or credits are. When is the interest calculated. If you had a balance of $97,000 and paid interest for that day the next days balance would be $97,017.27. Or am I incorrect and the interest is added on later? On your spreadsheet the interest is never calculated into the running balance.

I too am growing tired of this. You continue to beat around the bush and are not answering a direct question. Where does the interest go? It is still there, you have to account for it... hence, you either don't want to OR cannot.

The interest is done automatically and seamlessly? Ok, but it is still there and it is not counted on your spreadsheet. So what do all those interest charges add up to, and when does that money get paid off?

livinginnky · Posted: Mon Dec 03, 2007 4:38 pm Post subject:

According to the CMG website in my state you actually charge a prepayment penalty. Is that not true of the accelerator program?

livinginnky · Posted: Mon Dec 03, 2007 4:57 pm Post subject:

Whats also funny is I am now playing with the calculator found on the site you provided... and with the numbers we have been using in examples shows that the CMG plan would be paid off in 3.2 years. That is much longer than the info you provide. Could you explain the difference between what you are saying about CMG and what CMG's own website says?

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