Credit Repair Commandos

The US's AAA credit rating could be at risk even if it keeps making bond payments but can't meet other obligations
Story by [email protected] (Filip De Mott) • 54m ago

Despite partisan friction, the two sides have struck a positive tone about the negotiations, indicating that a deal may be in sight. For this reason, Moody Investors Service, Fitch Ratings and S&P Global Ratings — the latter of which downgraded the US following 2011's debt ceiling standoff — are all maintaining their steady outlook.

But with time running short, a default still remains on the table. Previously in March, Republicans had offered the idea of avoiding the crisis by "prioritizing debt," or paying off certain obligations ahead of others. For instance, the government could keep making payments on bonds while skipping payments to some contractors.

Further delays on a debt ceiling resolution could do more than harm US credit. According to Goldman Sachs, even if a default is avoided, liquidity could be drained as markets help restore the Treasury Department's cash balance. As of last week, the Treasury General Account had $60.6 billion, a significant drop from the previous week's $114 billion.

REAL ESTATE
Mortgage demand drops as interest rates hit a 2-month high
PUBLISHED WED, MAY 17 20237:00 AM EDTUPDATED WED, MAY 17 20239:05 AM EDT
by:
Diana Olick

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.57% from 6.48%
Mortgage applications to purchase a home dropped 4.8% last week, compared with the previous week.
Applications to refinance a home loan fell 8% for the week.
Higher mortgage rates and a severe shortage of homes for sale are taking their toll on mortgage demand.

Mortgage applications to purchase a home dropped 4.8% last week, compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was 26% lower than the same week one year ago.

“Purchase applications decreased to the slowest pace in a month, as buyers remain wary of this rate volatility, but also as for-sale inventory in many parts of the country remains scarce,” wrote Joel Kan, an MBA economist, in a release.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) increased to 6.57% from 6.48%, with points remaining at 0.61 (including the origination fee) for loans with a 20% down payment. That is the highest rate in two months. The 30-year fixed stood at 5.49% the same week one year ago.
Mortgage rates increased last week, even as Treasury yields were essentially flat, with the spread between the 30 year-fixed rate and the 10-year Treasury rate widening to 310 basis points.

“Mortgage rates have generally been struggling versus Treasuries since the Fed ended reinvesting its bond portfolio proceeds in late 2022,” explained Matthew Graham, chief operating officer of Mortgage News Daily. “More recently, elevated supply of mortgage debt owing to the FDIC’s various liquidation efforts have weighed on the sector.”

Applications to refinance a home loan fell a steeper 8% for the week, as refinances are much more sensitive to weekly rate changes. Demand was down 43% year over year. With rates more than twice what they were in the first years of the Covid pandemic, there are very few borrowers left who can benefit from a refinance.

The Companies That Take Money Straight From Your Paycheck
By Ron Lieber

Some lenders and retailers have a pretty neat business model: You pay them before your wages ever hit your bank account. And sometimes they give you no choice.

At any given time, millions of workers are overdue on at least one bill. But it is the rare employer that is late in cutting its paychecks or that bounces them altogether.

Therein lies an opportunity for lending companies like Kashable and OneBlinc and for retailers that do business at sites like payrolljewelry.com and purchasingpower.com: Put yourself at the front of the repayment line by drawing directly from those reliable paychecks. Let other billers wait around to see if customers bounce a payment from their bank account or don’t bother to make one at all.
This clever maneuver is possible thanks to payroll mechanisms that go by terms like “allotment” and “split deposits.” As long as your employer allows it — and some notable big ones, like the federal government, do — employees can set it up themselves.

The customers who agree to this often lack good or any credit history. Without a better option, they put their paychecks on the line and, with a chunk of their wages every pay period, they pay for goods or repay debt within a few years. Some retailers include the cost of their payment plans in their prices and don’t technically charge interest, while the lenders charge up to a 35.99 annual percentage rate.

What Is Financial Abuse?
Financial abuse is a type of domestic mistreatment where victims lose access to financial resources and often have their credit ruined.
Oct. 12, 2022,
By Beverly Harzog

October is Domestic Violence Awareness Month. People tend to associate domestic violence with physical abuse, but financial abuse can also be devastating.

One study from the Center for Financial Security showed that 99% of domestic violence survivors had also experienced financial abuse in the relationship.

Financial abuse, also called economic abuse or financial exploitation, differs from financial infidelity. Financial infidelity involves actions such as hiding a credit card account or purchasing an expensive item without discussing it with a partner. These actions do break trust, but couples can often work through it.

But financial abuse goes far beyond lying about income or hiding credit card accounts.

Financial Abuse Definition
Financial abuse is when one partner limits or prevents the other partner from accessing financial resources. The abuser then wields money like a weapon, such as limiting spending, ruining your credit or forbidding you to get a job.

Signs of Financial Abuse
A financial abuser's goal is to take control of the relationship. This type of abuse can make you feel like you couldn't support yourself (or your kids) if you left. Basically, the victim feels powerless and unable to escape from the situation.

|Refuses to share financial information: Economic abusers often take control of the family finances and take actions without your consent, such as opening new accounts or making major purchases without your knowledge.
Gets angry when you ask questions: The abuser is quick to anger when you ask about the family finances. This is an intimidation tactic to keep the victim unaware of the couple's financial status.

Limits your spending: It's not unusual for an abuser to put the victim on an allowance. In extreme cases, the amount of the allowance decreases to the point where the victim is unable to meet basic needs, such as obtaining medical care and food.

Sabotages your career: The abuser discourages the victim from obtaining employment. If the victim is employed, the abuser might show up at the workplace and harass the victim or berate them before an important meeting so they don't do well. If the abuser is successful, the victim leaves the job and becomes financially dependent on the abuser.

Ruins your credit: The abuser takes steps to destroy your good credit by making late payments – or not paying at all – on accounts in your name. Or the perpetrator commits identity theft by opening an account in your name solely to destroy your credit.

Forces a power-of-attorney agreement: This enables the abuser to sign legal documents in your name. When this happens, you can't stop the abuser from stealing your money or property.