Sunday, September 9, 2018

Retro Review: Calculated Industries Qualifier Plus IIImx, Model 3440


Retro Review:  Calculated Industries Qualifier Plus IIImx, Model 3440




General Information

Company:  Calculated Industries
Type:  Finance/Banking
Display:  9 digit alpha-numeric display
Power:  2 LR44 or 2 A76 batteries  
Memory:  1 independent memory (store, recall, M+, M-)
Years:  2004 – late 2000s
Original Cost: $49.95
Documentation:  Manual, though it is no longer available online

Introduction and Features

The Qualifier Plus IIImx is a finance calculator that seems to be made for a specific client, World Savings.  The model has a World Savings logo on it, and any Armadillo Gear protective cover that came with it. 

Interesting to note that in 2006 that Wachovia Corporation purchased Golden West Financial Corporation, World Savings’ parent corporation, only for Wachovia itself to be purchased by Wells Fargo in 2008.  [[S1]]

Let’s get to the regular known features of the Qualifier Plus IIImx:

* Time Value of Money (payments are assumed to be monthly, but can be adjusted), this can include price and down payment
* Amortization of Loans
* Interest Only Payment Calculations
* Payment Calculations:  P&I (principal and interest), PITI (principal, interest, property tax, property insurance), TOTAL (PITI plus monthly expenses)
* Qualifying Loan Amounts (two slots to store two ratios, Qual 1 defaults to the standard 28:36 debt/income ratio)
* Rent vs. Buy Analysis: given monthly rent, loan amounts, property tax, property insurance, the renter’s income tax bracket
* Date calculations:  2-digit year entry. I’m not sure what this time period covers because the pocket guide doesn’t state.  Through entering various dates and using www.dayoftheweek.org, the dates seem to range from January 1, 1960 (Friday) to December 31, 2059 (Wednesday).

One neat thing with the Qualifier Plus IIImx (this really goes for all the Calculated Industries financial and real estate calculators) is that some of the entries can determine percentage rates or dollar amounts without additional key strokes.  Generally, any entry of 100 or less is treated as a percent, above 100 is treated as dollars.

Example: 

20 [ Dn Pmt ] sets the down payment at 20% of the price

20000 [ Dn Pmt ] sets the down payment at $20,000

Other keys that work this way:  [ Shift ] [ 7 ] (annual property tax), [Shift] [ 8 ] (annual property insurance), [Shift] [ 9 ] (annual mortgage insurance)

So far, so good.  Now let’s get to the controversy…

Negative Amortization:  The MARM Loans

I am grateful that when I bought the calculator it still had its pocket reference guide [[S2]] otherwise I would have no idea what all the MARM keys were about.  I still don’t understand all the details, but the MARM keys calculates such loans that were called “pick-a-payment” loans, which were popular and heavily advertised during the housing boom in the mid to late 2000s. 

In general, “pick-a-payment” loans allowed borrowers to set a payment where the payment is less than the interest charged for the initial period of the loan.  Any interest that wasn’t paid was tacked to the end the loan.  Furthermore, none of the principal has been paid down during the initial time.  I think you can see the problem, by paying too low in the beginning resulted in a higher loan balance (principal plus unpaid interest).  Furthermore, MARM loans are rate adjustable.  Even with the presence of caps, it’s not all that comforting when the deferred interested and delay of paying off principal are taken into account.

In 2010, Wells Fargo (having acquired World Savings and Wachovia) made a minimum of $50 million in a class action lawsuit over these types of loans [[S3]], including promises to modify any loans of the borrowers who made such “pick-a-payment” type of mortgages.  Wells Fargo would get in trouble again 2012 when the loan modifications were denied to a lot of affected borrowers. [[S4]]

It shouldn’t be surprising to see why Calculated Industries discontinued this model and took down any documentation for this calculator. 

My personal take: if the mortgage or loan has any hint of negative amortization – RUN! Don’t even consider it. 

Verdict

Because of the controversial and perhaps infamous nature of some of this calculator’s features, I am not going to issue a verdict or recommendation. 


Sources:

[[S1]]  Wells Fargo.  “World Savings is Now Wells Fargo” https://www.wellsfargo.com/about/corporate/worldsavings/  Retrieved September 5, 2018

[[S2]] Calculated Industries.  Model 3440: Pocket Reference Guide. 2004 Guide is not available online. 

[[S3]] Orlofsky, Steve – Editor.  “Wells Fargo to settle lawsuit over pick-a-payment loans” Reuters.  December 14, 2010.  https://www.reuters.com/article/wellsfargo-settlement/wells-fargo-to-settle-lawsuit-over-pick-a-payment-loans-idUSN1427719820101215?feedType=RSS  Retrieved September 5, 2018.

[[S4]] Reckard, E. Scott.  “Wells Fargo settlement over ‘pick-a-pay’ home loans is challenged”.  Los Angeles Times.  December 11, 2012.  http://articles.latimes.com/2012/dec/11/business/la-fi-wells-suit-20121211  Retrieved September 9, 2018.

Eddie

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