Mortgage weidness

[Tuc at Beach House]

Replies inline, hopefully I get this right with GMAIL...


On 4/9/07, Derek Atkins <warlord at mit.edu> wrote:
>
> "Tuc at Beach House" <tuctboh at gmail.com> writes:
>
> > Hi,
> >
> >      More oddities. I signed up for an "Equity Accelerator".
> >
> >      My first transaction on my statement is a $2002.50 withdrawl. Ok,
> 2000
> > is the mortgage, 2.50 is the fee. I split the transaction, but since the
> > payment actually wasn't made, what do I mark it against?Equity?
> Liability?
>
> What do you mean, "payment actually wasn't made"?


      On April 14th the  "equity accelerator" company deducts $2002.50 from
my bank account.  For that 2002.50, 2.50 is a fee they collect for
themselves for providing the service to me. The $2000 they hold on to .  On
April 28th they take another $2002.50 out of my bank account. They keep the
2.50 for themselves, and still hold onto 2000 of it. On May 5th when my
mortgage is due, the equity accelerator company takes the $4000 they have
and give it to the mortgage company. The $5 doesn't get sent since its a fee
I pay to the equity accelerator company. So when they collect the $2000 each
time, its REALLY not in my banks hands yet. I guess I could just say that
its as good as the bank having it and call it a day. I was just asking if
because of some of the below then it might make sense to keep in a "holding
account" of some sort before it actually gets used to pay the actual
mortgage.

Ignore what the statement says for a minute.   What DID you pay?
> Did you pay $2000 or $2002.50?


     I paid the 2002.50 to the equity accelerator company, but they keep
2.50 as a fee, and hold onto the rest until my mortgage payment is due.

The next question to ask yourself is, in YOUR eyes (again, ignoring
> what the bank says), how did your payment get allocated?


     $2.50 equity accelerator company fees
     $2000 mortgage payment

Note that generally a "fee" is an expense, not equity.

>      The second transaction is the same, so it'll be whatever is mentioned
> > above.
> >
> >      But now, since they held my monies for a little while, there was a
> .36
> > "Interest paid to customer". Where/how do I record that? Its not an
> asset
> > technically since its not in my hands, right? Or is it since if I left
> them
> > I could get it back?
>
> "Interest paid to customer" would be "income".  So that .36 would come
> from income.  As to where that money goes... That all depends on where
> the money goes.  If THEY are holding it, then I suspect it would be an
> Asset..   OR you could consider it a Negative Liability.  It all depends
> on the initial setup.


     Ok, so  I put the .36 in income on the one side, but where is the other
side? It came from thin air. They do hold onto it, and then you'll see what
happens to part of it below.

>      The NEXT transaction they take that .36 away for me against my yearly
> > enrollment fee. I can understand one side being
> > "Expenses:Mortgage:Accelerator Fee", but what would be the other side ,
> > which part of the line above?
> >
> >      This type of cycle keeps happening, with them sometimes making
> $5700 or
> > so payments which means a large principal payment in addition to my
> normal
> > payment.
>
> I guess I don't understand the actual transactions going on here,
> so I can't really answer this.  This isn't a Loan product that I'm
> familiar with.


     Its not a loan, its a company that the loaning bank  works with to help
customers pay off the loan earlier. I think you can see a little about them
at :
 http://www.equityaccelerator.com/ea/learnmore.jsp?key=ea

     I pay a yearly fee for this, AS WELL as a transaction fee. As part of
it, as they say " In most cases, you receive interest on funds held in a
custody account pending a full loan payment."

     So what happens is that that .36 I earned above, it gets taken right
back away from me and goes against my yearly fee. So the yearly fee would be
entered as "Expenses:Mortgage:Accelerator Fee", so it would have to take out
of wherever that .36 ended up above. I guess if I put it into Assets, then
thats the answer. I just need to know what the other side of "Asset" would
be above when I originally get the .36. Income:Mortgage:CustodyInterest" ?

     They then keep taking the $2002.50 out of my account every 2 weeks. NOT
twice a month, but every 2 weeks. My loan is monthly though. SO, at one
point, they've taken much more money out than is needed to make the payment.
Some of it they use against the yearly fees, and the rest they put against
my principal.  This is why I thought I needed some sort of holding account
since it may not always be $2002.50 out of bank accout, $2002.50 out, $4000
mortgage paid, 5 fee paid. It might be $2002.50 out, $2002.50 out, $4000
mortgage paid,$5 fee paid,  $2002.50 out, $2002.50 out, $2002.50 out,$4000
mortgage paid, 7.50 fee paid,  $1800 extra principal paid, $200 yearly fee
paid, and .90 interest in... :)

Thanks, Tuc

> Thanks, Tuc
> >
> > (I'm still trying to suss out Cam's help for my rental stuff. Thanks
> again
> > Cam!)
>
> -derek
>