Freddie Mac’s Profit Increases, Taxpayer Funds No Longer Needed

Last Tuesday, Freddie Mac reported an increase in their profits for the second quarter brought about by the decrease in credit losses. The government-owned mortgage-finance company said that it does not need extra funds from the U.S. Treasury to remain solvent.

Moreover, Freddie Mac said that it produced $3 billion in profit for the months April to June, a significant increase from $577 million of net income in the previous period.

Freddie Mac, together with its bigger sister company Fannie Mae, was controlled by the government in the year 2008 following the increase in mortgage losses.

According to Freddie Mac, the loans that were issued from 2005 to 2008, which led to its substantial losses, were becoming a minor part of its portfolio. By the end of quarter two, the loans made up 28 percent of its single-family portfolio. Moreover, the delinquency rate decreased from 3.51 percent in March to 3.45 percent at the end of June.

Freddie Mac is obliged to pay 10 percent of the government loans as dividends every quarter, just like the way credit card borrowers make minimum monthly repayments. During the second quarter, the company’s income was enough to make a $1.8 billion dividend payment to the U.S. Treasury.

Since it was taken over by the government in 2008, Freddie Mac has taken $72.3 billion in taxpayer funds, and has paid approximately $20.1 billion to the Treasury Department. It did not need government funds during the first quarter of 2011 and three quarters in the year 2009.

Meanwhile, Edward DeMarco, the company’s director, believes that letting the companies write down loan principal would increase the cost of the taxpayer bailout. In the previous week, DeMarco refused the administration’s request to help homeowners by using taxpayer funds from the bank bailout program.

Both Freddie Mac and Fannie Mae purchase mortgages from lenders and resell them as securities for investors. The two companies, together with the Federal Housing Administration, offer funds for more or less 90 percent of all U.S. mortgages.

Oklahoma’s Payday Loan Laws are Tolerant Says Survey

According to the recent national survey the small-loan laws in Oklahoma are charging the highest interest rates in the history of payday loaning in the United States today.

A research conducted by the Pew Charitable Trusts entitled “Payday Lending in America: Who Borrows, Where They Borrow and Why” has found that 13 percent of the population of Oklahoma are the highest in the payday loan customers in the market today across 32 states.

Out of 49,684 of the residents, 5.5 percent are using payday loans to pay their debts in the last five years. Payday loans are short-term loans consisting of small amounts which have the tendency to get very expensive. People who apply for these loans are usually those who do not have the qualifications to get a credit loan.

In Oklahoma, borrowers are only allowed to have only one payday loan and the state caps the lenders at $500 with a maximum fee of $65. But the District of Columbia along with 14 other states does not have any payday loan stores.

According to the State Sen. Rick Brinkley who also holds the position of chief operating officer in the Better Business Bureau of the eastern part of the state the Pew study’s classification of their payday loan laws is indeed lenient, for even if the law allows the lending there have been few customer complaints about the lenders.

Experts say that payday loans usually carry out a chain reaction for debt because the borrowers tend to renew their loans again and again until the service cost increases and becomes even more expensive.

Studies show that the minute people start to turn to payday loans it would not be very easy to get out and it would take years to pay off the whole debt.

The study by Pew has identified living expenses like rent and utilities expense to be the most common reason for people to apply for payday loans.

The Fate of Payday Stores Rest on The Hands of The People

Due to the increasing problems that the State of Missouri is facing with payday loans the Missouri Supreme Court has decided on their hearing last July 31 to put the fate of these lenders to the voters of the state on November. This decision has pleased the State Representative of Columbia, Mary Still and two other politicians who called this decision a triumph for the populace of the state.

A 36 percent limit on the interest charges will be adapted for payday loans if ever the issue will be approved in November. Currently the average interest rate according to Branson Wood is 445 percent in Missouri. Wood believes that the issue will definitely be approved by the voters since it is beneficial to both parties in the state. Many of the state’s leaders are supportive to it; among them are Katie and Branson Wood. They believe this will be beneficial of the people of the state and the economy as well.

Payday loans in Missouri have high interest rates and soon, there will be an end to them. The Woods and Still are actively campaigning on their petition by the issue; and now, only the appropriate signatures are needed so that the State Secretary’s signature can be verified and the issue will be solved.

Law makers are confident that the signatures will not be a problem for they were able to get 180,000 of them which are double than the number they were required.  The Supreme Court’s decision is now quoted by the masses as “a victory for Missouri consumers and the Missouri economy,” according to Still.

After the Circuit Judge Jon E. Beetem hadrejected the balloting for the issue, Branson Wood appealed the case to the Supreme Court and they were pleased that it has approved their call.

Four Tips to Improve Your Finances

Most people would want to enhance their finances and live a luxurious life so they seek steps on how they can boost their finances, cut down their expenses and increase their bank balance. One of the best ways to increase your bank balance and income is to have financial investments. In terms of improving your finances, here are a few tips.

First, pay all your credit bills and pay back your debts. Once an outstanding debt is disclosed on your credit report, this will definitely have a negative impact on your credit score. That’s why it is recommended to always pay your debts on time and you can even decrease your credit card limits and expenses so that your debts will also decrease.

Second, pay your outstanding credit bill as soon as possible. Contrary to belief, delayed credit payment of a bill is actually recorded in your credit report every month, together with the number of days that you missed your due date. To avoid this, make sure to always pay your bills on time because this will work against the negative effects of delayed payments and helps your credit score to increase.

Third, you should not only aim to get a high credit score but also to maintain it once you achieve it. Again, make on-time payments so that you will have a good credit score, and in order to maintain it, make sure to pay in full as well. Moreover, if you pay your bills at once, this will also enhance your score much further.

Fourth, do not throw away your old accounts because this will be reflected in your credit score as well. The longer the duration of your credit background, the higher your score will be. In addition, be more cautious in opening new accounts as this can decrease your credit score, especially if they are too much.

5 Lessons to Ensure Children’s Financial Independence

Over the past few years, there has been an increase in the number of adult children living with their parents due to financial matters. As a result, preparing them to be financially independent is currently an important aspect of parenting. The following are five key lessons to impart to children to make sure they will have financial independence in the future.

First, manage small, everyday financial decisions. Teach your children to ask themselves whether or not they need to buy something and whether or not it is the best deal. Once they have this state of mind, they will definitely save lots of money in the long run.

Second, get rich slowly. Social media and reality TV shows have caused recent generations to think they can become rich and famous in an instant but the truth is this cannot happen overnight. One example of earning money slowly is compounding interest rates, which could lead to good savings returns.

Third, teach them financial discipline at a young age. For instance, you can put a portion of their allowance into a piggy bank or savings account as soon as possible because this will teach them that saving a small amount regularly can add up instantly.  They will more likely adopt this habit when they eventually have jobs and established their careers.

Fourth, encourage your children to have the spirit of entrepreneurship. Although our society prepares us to be good employees, successful people in places such as Australia are entrepreneurs. Encourage them to put up micro businesses but do not finance their business venture.

Fifth, teach them the difference between good debt and bad debt. Good debt is taking on loans to develop appreciating assets and investments, while bad debt is using credit to purchase a depreciating item. Moreover, encourage the use of debit cards rather than credit cards.