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Category: Mortgages

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Freddie Mac: Record low mortgage rates haven't rescued housing


Lenders were offering 30-year fixed-rate mortgages to solid borrowers at an average of 3.95% this week, according to Freddie Mac, the ninth consecutive week of rates at or below 4%.

That wrapped up a year of record lows for the survey, which dates back to 1971. In 1981 and 1982, the average 30-year mortgage carried an interest rate of more than 16%, and the typical rate was above 8% as recently as 2000, Freddie Mac said. This past year, the average was 4.45%.

Despite the record low rates, applications for mortgages to buy homes dropped as the year ended, even after seasonal adjustments, the latest Mortgage Bankers Assn. survey found. Even the demand for refinance mortgages, which accounted for more than 80% of all applications, fell slightly.

“Remarkably low rates are not enough," said Mortgage Bankers Assn. economist Michael Fratantoni, noting that many homeowners have difficulty refinancing because of "lack of equity in their properties, poor credit and a weak job market.”

With loans hard to get and demand for home loans waning, Morgan Stanley analysts titled their housing outlook for 2012 "The Year of the Landlord."

"While we had forecast lower prices [for 2011], we did hold out some hope that at the very least transactions would pick up slightly from 2010 levels," said the report from a team led by analyst Oliver Chang.

"However," the report said, "it proved to be too optimistic a prediction. Not only did total home sales fail to rise, but also mortgage applications for purchase continued to fall -- indicating that not only is tight mortgage credit limiting demand, but even the desire to buy a home continued to wane."

The recent bottom in rates stems from anxiety over the European debt crisis, which has increased demand for U.S. Treasury securities. That has depressed the yield on Treasuries, which act as a benchmark for mortgages.

This week's typical offering rate of 3.95% on the 30-year loan was up slightly from an all-time record low of 3.91% set a week earlier. The 15-year fixed loan, popular with refinancers, averaged 3.24%, up from 3.21%. Start rates on adjustable loans also were up very slightly from record lows, Freddie Mac said.

Borrowers would have paid about 0.75% of the loan amount upfront to obtain the fixed rates, Freddie Mac said. Its survey asks lenders across the nation what rates they are offering to borrowers with 20% down payments or home equity, good credit and income sufficient to repay the mortgages.


Big-city home prices falling

Realtors overstated home sales

Payroll tax cut may hurt housing market

-- E. Scott Reckard

Photo: Culver City home for sale, November 2011. Credit: Genaro Molina / Los Angeles Times

BofA to pay $335 million to settle Countrywide mortgage bias probe


The post has been updated. See below for details.

Bank of America Corp. has agreed to pay $335 million to settle allegations that Countrywide Financial, which it now owns, systematically discriminated against minority home-buyers at the peak of the U.S. housing boom.

The Justice Department and the Illinois attorney general had alleged that Countrywide charged higher interest rates and other housing-related fees to African American and Latino home buyers than to white applicants with comparable income levels and credit scores.

The company frequently pushed minorities into risky subprime loans rather than into safer prime loans. The collapse of the subprime market beginning in 2007 sparked the U.S. mortgage bust and the brutal recession whose lingering effects continue to reverberate nationwide.

The $335 million will be distributed to alleged Countrywide victims. An independent monitor will be appointed to contact potential recipients and distribute the proceeds to them. People who think they may qualify for compensation can seek information by emailing

A Bank of America spokesman would not discuss specifics of the settlement but said the alleged wrongdoing occurred before the giant bank bought Calabasas-based Countrywide.

“I want to make it very clear this pertains to Countrywide activities prior to Bank of America's acquisition,” said the spokesman, Dan Frahm. “Bank of America practices were never in question.”

[Updated at 12:19 p.m. Dec. 21: Frahm also issued this statement on behalf of Bank of America: “We reached this settlement to resolve issues about Countrywide’s alleged historic practices that occurred before Bank of America acquired the company.  Bank of America’s practices are not at issue.

"We are committed to fair and equal treatment of all our customers, and will continue to focus on doing what’s right for our customers, clients and communities. We discontinued Countrywide products and practices that were not in keeping with our commitment and will continue to resolve and put behind us the remaining Countrywide issues."]


Four House members got VIP Countrywide loans

Bank of America, Calpers settles suit over Countrywide

SEC seeks to introduce new evidence in upcoming trial of ex-Countrywide execs

-- Walter Hamilton

Photo credit: Los Angeles Times

California sues Fannie Mae and Freddie Mac

California Atty. Gen. Kamala D. Harris in L.A.

California Atty. Gen. Kamala D. Harris has filed suit against mortgage titans Fannie Mae and Freddie Mac for refusing to answer subpoenas issued to the companies this year.

The suits, filed Tuesday in San Francisco County Superior Court, comes after investigators with the state attorney general's office presented the two firms with questions regarding their foreclosure, lending and mortgage-related practices in the state.


California Sues Fannie Mae

California Sues Freddie Mac

The subpoenas ask the government-controlled finance companies to answer questions about their activities in California, including their roles as landlords that own thousands of foreclosed properties, The Times previously reported. The attorney general's office is also seeking details of Fannie and Freddie's mortgage-servicing and home-repossession practices.

In addition, investigators want to learn more about the companies' purchases and sponsorship of mortgage-backed securities in the Golden State. According to separate suits filed by Harris against Fannie and Freddie, the two companies refused to answer the questions. The filing of the suits was reported earlier by the Wall Street Journal.


Banks' foreclosure activity picks up

Many Americans say they will have to work until they're 80

Victims of improper foreclosure practices can submit claims

— Alejandro Lazo

Photo: Atty. Gen. Kamala D. Harris in downtown Los Angeles. Credit: Al Seib / Los Angeles Times

4 House members got Countrywide VIP loans, Rep. Darrell Issa says [Updated]

House Oversight Committee Chairman Darrell Issa
This post has been updated. See below for details.

Four current House members received special VIP loans from Countrywide Financial Corp., and their names have been forwarded to the Ethics Committee for possible action, Rep. Darell Issa (R-Vista) said.

Issa, who chairs the House Oversight and Government Reform Committee, said an ongoing  investigation by his panel discovered the information. He did not name the members in referring the matter to the Ethics Committee in a letter Friday.

"Testimony and documents show that Countrywide used the VIP program to build relationships with government officials and others positioned to advance Countrywide's business interests," Issa wrote to Ethics Committee Chairwoman Jo Bonner (R-Ala.) and top Democrat Linda T. Sanchez (D-Lakewood). The loans often came at lower interest rates and fees than were available to the public.

A spokesman for the Ethics Committee would not comment on the letter. The committee usually does not talk about specific allegations or referrals until it reaches a finding.

The oversight committee received about 100,000 pages of documents related to the VIP loan program after issuing a subpoena in February to Bank of America, which now owns Countrywide, the former Calabasas lender. The VIP program also was known as "Friends of Angelo," a reference to Countrywide's former Chief Executive Angelo R. Mozilo.

Under Mozilo, Countrywide helped fuel the subprime mortgage boom and cultivated relationships with Washington policymakers. Last year, Mozilo agreed to a $67.5-million settlement of civil fraud and insider-trading allegations by the Securities and Exchange Commission.

Although Issa's letter did not name the current House members, Rep. Edolphus Towns (D-N.Y.) publicly has acknowledged receiving two mortgages from Countrywide. Staffers for Towns have said he doesn't believe the loans came with any special benefits.

[Updated at 12:42 p.m., Dec. 19: Towns spokesman Charles Lewis said the lawmaker was not involved in a VIP program at Countrywide and received no benefits that were not available to everyone else.]

In 2009, the Senate Ethics committee cleared Sen. Kent Conrad (D-N.D.) and former Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) of violating rules in receiving VIP mortgages from Countrywide.

The senators said they didn't think they were getting any special treatment. But the committee said they "should have exercised more vigilance" in their dealings with Countrywide to avoid the appearance of preferential treatment.

The House Oversight Committee has been investigating the Countrywide VIP program since 2008. The committee issued a report last year finding that Countrywide made 173 preferential mortgages over about a decade to employees of housing finance giants Fannie Mae and Freddie Mac, which purchased many of the company's loans.


Senators cleared in Countrywide ethics probe

Countrywide's Angelo Mozilo made exceptions for VIP mortgages, exec testifies

Countrywide made preferential loans to Fannie Mae and Freddie Mac employees, congressional panel finds

 -- Jim Puzzanghera

 Photo: House Oversight Committee Chairman Darrell Issa. Credit: Getty Images

SEC details lawsuits against ex-Fannie Mae, Freddie Mac executives

SEC Enforcement Director Robert Khuzami
This post has been corrected. See note at the bottom for details.

Federal officials said Friday that six former top executives of Fannie Mae and Freddie Mac -- including two former chief executives -- intentionally and repeatedly misled investors about the exposure of the companies to risky subprime loans.

In court papers and at a Washington news conference, Securities and Exchange Commission officials detailed numerous comments -- allegedly misleading -- made by the executives in regulatory filings, at investor conferences, in media interviews and even in testimony before Congress.

The statements were made as Fannie and Freddie were trying to increase their share of the housing finance market as the subprime real-estate bubble was inflating, and then collapsing, between 2006 and 2008, the SEC said.

"Throughout this period, as they were driving up their market share, Fannie, Freddie and their executives sought to maintain the illusion that their business involved minimal and manageable credit risk," said Robert Khuzami, director of the SEC’s Enforcement Division.

The SEC filed the civil suits in New York. The executives named included former Fannie Mae Chief Executive Daniel H. Mudd and former Freddie Mac Chief Executive and Chairman Richard F. Syron.

Also named were Fannie Mae's former chief risk officer, Enrico Dallavecchia, and Thomas A. Lund, former executive vice president of the company's single-family mortgage business. The other Freddie Mac officials were Patricia L. Cook, former executive vice president and chief business officer, and Donald J. Bisenius, former executive vice president for the single-family guarantee business.

The Freddie Mac complaint said that between March 23, 2007, and Aug. 6, 2008, the company told investors that the exposure of its single-family guarantee unit to subprime loans was $2 billion to $6 billion, or 0.1% to 0.2% of its portfolio.

But the SEC said the real exposure started at $141 billion at the end of 2006 and rose to about $244 billion by June 30, 2008 -- 14% of its portfolio.

The court filing quoted Syron as telling an investor conference in New York on May 14, 2007, that “at the end of 2006, Freddie had basically no subprime exposure in our guarantee business.” Three days later, Cook made the same exact statement to an investor conference in London.

Continue reading »

Nevada sues major foreclosure processing firm

A bank-owned home for sale in Las Vegas

This post has been updated. See below for details.

Nevada has filed suit against a major player in the foreclosure business, Lender Processing Services, claiming the company is responsible for perpetrating widespread consumer fraud in the Silver State.

The lawsuit against Florida-based LPS and several of its subsidiaries alleges that the company falsified, forged or fraudulently filed “countless” documents in foreclosure cases across the Silver State, requiring employees to execute or notarize as many as 4,000 foreclosure documents a day. The company is used by many major banks to process foreclosures, and the suit said the company is responsible for more than 50% of foreclosures annually.

“The robo-signing crisis in Nevada has been fueled by two main problems: chaos and speed,” Atty. Gen. Catherine Cortez Masto said in a statement. “We will protect the integrity of the foreclosure process. This lawsuit is the next, logical step in holding the key players in the foreclosure fraud crisis accountable.”

The suit also alleges that the company fraudulently notarized documents and forged signatures and hid the scope of the problem by “misrepresenting” that the problems were clerical errors. The suit also alleges that LPS imposed “inappropriate and arbitrary” deadlines on foreclosure attorneys working for them, leading to errors in the foreclosure process.

The suit also alleges the company blocked communication between those attorneys and their clients and demanded improper referral fees from those attorneys.

[Updated at 1:25 p.m., Dec.16: LPS, in a statement, said it had been cooperating with Masto’s office for more than 14 months, and that it would defend itself against the suit “vigorously.”

The company also accused Masto’s office of violating Nevada law by using a Washington firm, Cohen Milstein Sellers & Toll, to investigate the company. The company said that it has discovered problems with its past document practices, but added, "The company is not aware of any person who was wrongfully foreclosed upon as a result of a potential error in the processes used by our employees."]


Banks' foreclosure activity picks up

Many Americans say they will have to work until they're 80

Victims of improper foreclosure practices can submit claims

— Alejandro Lazo

Photo: A bank-owned home for sale in Las Vegas. Credit: Robyn Beck / AFP/Getty Images




Freddie Mac: 30-year mortgage rate ties record low

Freddie sign - AP - Pablo Martinez Monsivais
The average interest rate on a 30-year fixed-rate mortgage dropped again this week to 3.94%, tying a record low set in October, according to housing finance giant Freddie Mac.

Freddie Mac's weekly survey pegged the rate for a 15-year fixed-rate mortgage at a record low of 3.21%. Loans fixed for five years before becoming adjustable also set a new record, with an average start rate of 2.86%

The survey, released each Thursday, asks lenders to report rates they are offering to well-qualified borrowers who pay about 0.75 of a percentage point in upfront lender fees and discount points. The rates are for loans of up to $417,000.

Freddie has conducted the survey of 30-year loans since 1971, 15-year loans since 1991, and five-year adjustable hybrids since 2005.

The record lows have touched off the latest surge in home refinancing. But while sales of homes increased slightly in California last month, scheduled foreclosure sales have risen sharply and the environment for housing remains rough overall, as Freddie Mac's chief economist, Frank Nothaft, pointed out in announcing the latest survey results.

"In its Dec. 13 monetary policy announcement, the Federal Reserve reiterated the housing market remains depressed," Nothaft wrote. "Over the first nine months of 2012, households lost almost $400 billion in property values, which contributed to a $1.4 trillion reduction in overall net worth.

"In addition, serious delinquency rates (90 or more days delinquent plus foreclosures) on mortgages increased slightly between June 30 and Sept. 30 of the year, breaking a six-quarter consecutive decline, according to the Mortgage Bankers Association.”


Scheduled foreclosure auctions soar in California

California small businesses can't get loans

California's home sales up 4% in November
-- E. Scott Reckard

 Photo: Freddie Mac's headquarters in Virginia. Credit: Pablo Martinez Monsivais / Associated Press

With mortgages at 4%, demand for home-purchase loans rises


With 30-year mortgage rates still averaging a rock-bottom 4%, applications to purchase homes rose after Thanksgiving to the highest level in four months.

Freddie Mac's weekly report on home lender offerings, released Thursday, showed the typical rate for a 30-year loan at 3.99%, the sixth straight week at or slightly below 4%.  Last year at this time, the 30-year fixed loan averaged 4.61%.

Fifteen-year fixed-rate home loans, a popular option for people refinancing homes, averaged 3.27%, down from last week's 3.3%. A year ago, the 15-year loan averaged 3.96%, Freddie Mac said.

The big government-backed mortgage buyer asks lenders what rates they are offering to borrowers with good credit and 20% down payments or 20% equity if they are refinancing. The rates are for loans of up to $417,500 with the borrowers paying about 0.75% of the loan amount in lender fees and points.

The typical mortgage rate for larger "jumbo" loans was running about a third of a percentage point higher, according to another report this week, this one from the Mortgage Bankers Assn. Jumbo loans are priced higher because lenders can't sell them to Freddie Mac and Fannie Mae, the other big government-sponsored mortgage buyer. 

Offering a bit of hope for housing at a time when foreclosures are drawing angry protests and government investigations, the mortgage bankers said applications for loans to buy houses reached the highest level since early August.

Refinances still made up about three-quarters of all applications for home loans, however.


California, Nevada team up to investigate foreclosure fraud

OECD report cites increasing income inequality in U.S.

Proposed: Short, sweet credit card form that puts costs in big type

-- E. Scott Reckard

Photo: Occupy LA protests a foreclosure auction in Norwalk. Credit: Genaro Molina /Los Angeles Times

California, Nevada team up to investigate foreclosure fraud

Atty. Gen. Kamala Harris to join California's foreclosure probe with Nevada's investigation
California and Nevada, two states at the heart of the nation’s housing crisis, will join forces to investigate allegations of foreclosure fraud and other types of mortgage improprieties.

The agreement to share resources and work jointly is the latest sign that the nation’s state attorneys general want to be out front in cracking down on bank practices the housing crisis — from the selling of mortgage-backed securities to the handling of foreclosures.

At a joint news conference in Los Angeles on Tuesday, California Atty. Gen. Kamala D. Harris and Nevada Atty Gen. Catherine Cortez Masto said their offices would share litigation strategies and evidence would link their offices' civil and criminal teams.

The announcement comes less than a week after Massachusetts said it was suing the nation’s five largest mortgage servicers over alleged foreclosure illegalities. The move marked the first such litigation to be filed by a state.

Harris' office has opened a number of its own probes of the mortgage business. Investigators have subpoenaed information from Fannie Mae and Freddie Mac as part of a wide-ranging inquiry into lending and foreclosure practices in the state, The Times has previously reported. Her office also is investigating Bank of America and its mortgage arm Countrywide Financial, along with Citibank, seeking information on their sale of mortgaged-backed securities in California.

The new alliance between Harris and Masto comes as banks are working to strike a deal with a coalition of attorneys general who are working to seek relief for consumers allegedly wronged by faulty mortgage servicing and foreclosure practices.

Harris formally withdrew from those talks earlier this year. Masto has said Nevada officials would evaluate any proposal the talks might produce but would also push ahead with their own work. New York, Delaware, Kentucky and Minnesota also have signaled they are unhappy with the direction of the talks with the banks. All of those states have expressed concern that the banks could be let off too easily.


Banks' foreclosure activity picks up

California AG subpoenas Freddie, Fannie

BofA settles mortgage suit for $315 million

-- Alejandro Lazo

Photo: California Atty. Gen. Kamala D. Harris. Credit: Brian van der Brug/Los Angeles Times

Freddie Mac: Mortgage rates stuck in low at 4%

The mortgage engine seems stuck in low.

For five straight weeks, Freddie Mac's survey of the rates offered by home lenders has averaged at or below 4% for 30-year loans.

The most recent Freddie survey came out Thursday at an even 4% -- a level that would have seemed hallucinatory not so long ago, before the Federal Reserve pulled out the interest-rate stops to support to the economy.

The 15-year fixed loan, at an average of 3.3%, also remains in record low territory, and Freddie Mac said the start rates on adjustable mortgages have dipped to all-time lows.

Something else also appears to be lower, though, despite the record rates: desire for new home loans.

A Mortgage Bankers Assn. count of applications showed an 11.7% decrease last week even after adjusting for seasonal factors such as the Thanksgiving holiday. The previous MBA weekly survey had also shown a decline as the latest wave of refinancings begins to subside.

A Fed report this week on regional economic conditions described residential real estate markets as generally sluggish. But the report also said the economy expanded at a moderate pace in 11 of the Fed's 12 Districts -- a fact that provided encouragement to Freddie Mac economist Frank Nothaft.

"The extraordinarily low mortgage rates of the past month may provide a needed spur to housing activity," Nothaft said, hopefully, in the latest Freddie Mac release.


Click here to find out more!Fewer mortgages going bad

One in five American homes 'underwater'

-- E. Scott Reckard

File photo: The troubled mortgage business concerns Treasury Secretary Tim Geithner. Credit: Reuters / Jason Reed

CalPERS, other investors, settle suit against Countrywide, BofA

California's giant public pension fund and 15 other large investors settled lawsuits accusing former mortgage goliath Countrywide Financial Corp. of costing them billions of dollars in stock losses by failing to disclose the severity of the risks posed by the easy-money loans the Calabasas lender handed out during the housing boom.

A filing Monday in U.S. District Court in Los Angeles disclosed the confidential settlement. The filing did not reveal how much Bank of America Corp., which acquired Countrywide in 2008 and was also a defendant in the case, would pay to the California Public Employees' Retirement System and the other plaintiffs.

Bank of America's spokeswoman for legal affairs, Shirley Norton, declined to comment. An attorney for CalPERS and the other 15 investors didn't return a call Tuesday, and CalPERS officials declined to describe the settlement.

The 16 big investors, mostly pension and mutual funds, were among 33 plaintiffs who opted not to participate in a $624-million settlement of class-action litigation that U.S. District Judge Mariana R. Pfaelzer approved in February.

The opt-outs believed the proposed settlement was "shockingly cheap," Columbia University securities law expert John C. Coffee said at the time, citing a discussion with one of the lawyers representing those institutions.

Seventeen additional institutional investors who decided against participating in the February settlement still have claims pending in the case.

This week's settlement, if approved by Pfaelzer, would end the 16 plaintiffs' claims against Countrywide, Bank of America, and former Countrywide executives Angelo R. Mozilo, David Sambol and Eric P. Sieracki.

Accounting firm KPMG, which had audited Countrywide's books, is also a defendant in the case but did not settle with CalPERS and the other funds. It was a participant in the $624-million settlement finalized in February.

Bank of America, based in Charlotte, N.C., has struggled to put Countrywide's woes behind it since it shelled out $2.5 billion in stock for what was then the country's largest mortgage lender.

After running up more than $30 billion in losses on its investment, Bank of America still has undetermined liabilities outstanding for claims against soured Countrywide loans and the mortgage securities that were backed by them.

The Countrywide troubles have caused regulators to pressure Bank of America to increase its capital cushion against losses, and investors have punished the bank's stock, which has declined by 59% this year. Bank of America closed Tuesday down 12 cents, or 2.2%, at $5.37.


Lender proves to be a costly buy for Bank of America

Judge OKs Countrywide settlement but big investors opt out

California reportedly subpoenas BofA over toxic securities

-- E. Scott Reckard

Photo: Dark glasses can't conceal Countrywide Financial co-founder Angelo Mozilo. Credit: Los Angeles Times / Irfan Khan



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