Analyzing CMG’s early-mortgage-payoff program

Two years ago I wrote a fairly critical piece about CMG Financial's Home Ownership Accelerator (HOA) loan program that did not do it justice. HOA is fairly complicated and this time I took a harder look. HOA is a permanent mortgage that has some features found only in a demand deposit account at a bank and other features similar to those in a home equity line of credit (HELOC), except better. HOA as a Deposit Account: An HOA can be used as if it were a checking account. A borrower's paycheck, instead of being deposited in a bank account to earn little or no interest, pays down the mortgage balance. The borrower thus earns the mortgage rate starting the day of deposit. As the borrower spends money by writing checks, withdrawing cash from an ATM or using a bill-pay service, the mortgage balance rises. Even if the balance at the end of the month is the same as at the beginning, the average balance -- and therefore the interest charge -- is lower. HOA as a Line of Credit: Bot...