The First All-American Consumer Financial Protection Challenge > Mortgage Originators And Real Estate Agents Use Mortgage Portfolio Theory To Combat Tag Team Mortgage Planning Schemes, Says MIFSP
Mortgage Originators And Real Estate Agents Use Mortgage Portfolio Theory To Combat Tag Team Mortgage Planning Schemes, Says MIFSP
Atlanta, Georgia -- Jul 26, 2005 --


Mortgage originators and real estate agents qualifying for the Residential Mortgage PlannerÒ designation conferred by the Mortgage Institute For Financial Services Professionals ( are taught a scientific process that results in the determination of the “Mortgage Equivalent Yield”, part of the Mortgage Portfolio Theoryä. The process is used to assist homeowners in making mortgage-planning decisions without taking undue risk with home equity. “Mortgage originators and real estate agents want the knowledge and skills necessary to provide sound ethical mortgage planning advice rather than relying on a tag team mortgage planning scheme for a quick commission.  These professionals maybe the first ones consumers look to for mortgage advice and many recognize that a consumer’s mortgage decisions shouldn’t be made in a vacuum and see the benefits of blending sound mortgage advice with ethical financial planning strategies”, says Leon Morris, RFC, CLU, ACS, ChFC, CME, RMP, FFSI, Executive Director of MIFSP.

MIFSP teaches financial services professionals to recognize the consumer’s need for guidance in making home-buying and mortgage management decisions in line with their financial goals. However, Mr. Morris says he’s concerned about the proliferation of marketing schemes he called “tag team mortgage planning”. He described a two-prong marketing approach where the mortgage originator persuades the homeowner to pull equity from their home, then refers them to a product oriented financial planner who convinces the homeowner to put the equity into investments.

“The home is an exempt security. Therefore, financial advice on the home escapes the scrutiny of the SEC, NASD, and Federal Reserve Board. There are many financial planners and mortgage advisors who may inappropriately recommend that homeowners pull equity from their homes, and use it to make riskier investments elsewhere without any determination of suitability. This leads to a growing opportunity for fraud and misrepresentation, even if it’s committed inadvertently. Consumers may not realize risk differentials or potential pitfalls in investing ‘other people’s money’, which is what a mortgage, including home equity lines, represents”, says Mr. Morris.

MIFSP recently asked the SEC to explore the need to further define “suitability” in light of these types of equity-to-investment business models. “What should concern regulators is that there are no requirements for determining suitability when advising a homeowner to access home equity for purposes of making investments, which is analogous to trading on margin”, says Mr. Morris.

“In seminars, I recommend that homeowners ask marketers three questions when they’re approached with such schemes: (1) Is it necessary to achieve my financial goals? (2) Can you document that it will be as successful as you say? (3) Will you sign your name to that? If the people approaching you with these schemes aren’t willing to sign their names to it, you shouldn’t either”, says Mr. Morris.

About MIFSP:  MIFSP offers the only educational program in Mortgage Based Financial PlanningTM.

Contact:          Leon Morris  

Phone:           (770) 852-7489