The idea is that instead of leaving your money in the bank earning 1 percent or less until month-end, when it is used to repay the 6 percent mortgage, you borrow on a home equity line at 4 percent and use it to pay down the balance of the mortgage immediately. By using your paycheck when it is received to pay down the 4 percent line, and by taking advantage of the grace period on credit cards (30 to 50 days), you minimize the amount kept in the bank.

It sounded plausible, but I was skeptical. In the first place, nothing is said about the interest rate on the credit line, which is not always going to be below the rate on the mortgage. My gut told me the scheme couldn't possibly work if the credit line rate was higher. Furthermore, you can take advantage of the grace period on credit cards without tying it to a mortgage. I have been doing it for 40 years.

In addition, I had the feeling that customers of Mortgage Relief should have gotten a spreadsheet for their $45, and wondered why they hadn't? So I set out to develop a spreadsheet of my own that could quantify the benefits – if there were any.

The major question I wanted the spreadsheet to answer was “how large is the benefit of using the Mortgage Relief scheme if you don't have any surplus income but only just enough to make the scheduled payment?" This is the critical question because we know that if you use surplus income to make extra payments to principal, you pay down the mortgage more quickly. This is the case whether you apply the income directly to the mortgage, as most borrowers do, or whether you follow the Mortgage Relief procedure where you use a credit line to pay down the mortgage and current income to pay down the credit line.

I spent much of my time on an airplane between Philadelphia and San Francisco on this project, and finally gave it up. Once I removed surplus income from the equation, I could not find a way to make the Mortgage Relief scheme work.

I could be wrong. If the proponents of the scheme can develop a worksheet that will show a benefit from other than the application of surplus income, I will publicly apologize and send them lots of business.

Will My Mother Lose Her Home?

"My mother has had an FHA Home Equity Conversion Mortgage for some time and has reached her $70,000 credit limit. The lender has sent her a letter saying that they are transferring the account to HUD. She is worried she will lose her home…?"

Not to worry, so long as she is paying her property taxes and doesn't rent out rooms, her home is safe.

Under HUD rules, a lender can assign a loan to HUD once the total amount owed by the owner – the sum of all payments to her, upfront fees that were financed and accumulated interest – equals the "maximum claim amount." This is the largest amount the lender can collect – it is $70,000 in your mother's case.

On assignment, the lender is paid that amount and HUD becomes the owner. HUD will appoint a servicer to handle the loan, who could be but probably will not be the one your mother has been dealing with. The switch to a new servicer is the only change your mother will notice.