Mortgages

Countrywide Financial Corp. engaged in "unfair and deceptive" practices to get homeowners to apply for risky mortgages far beyond their means, according to a civil lawsuit Illinois' attorney general planned to file today. The lawsuit against the nation's biggest mortgage lender -- planned for the same day shareholders were scheduled to vote on Countrywide's takeover by Bank of America Corp. -- stems from information from documents subpoenaed by Illinois beginning last fall, as the number of foreclosures nationwide began to skyrocket.

Average rates on 30-year fixed-rate mortgages surged to 6.63% this week, up sharply from 6.26% last week and the highest level since last August. Rates on 15-year fixed-rate mortgages, a popular option for refinancing, rose to 6.18% from 5.78%. Five-year adjustable-rate mortgages rose to 6.16% from 5.80%, while rates on one-year ARMs jumped to 5.49% from 5.10%. These rates do not include add-on fees known as points. The fee for 30-year and 15-year fixed mortgages averaged 0.6 of a point nationwide this week.

Rates on 30-year fixed-rate mortgages averaged 6.04% this week, down from 6.46% last week and the lowest since the week of Sept. 18. Rates on 15-year fixed-rate mortgages, popular with people who are refinancing, fell to 5.72% from 6.14%. Five-year adjustable-rate mortgages fell to 6.06% from 6.14%. One-year adjustable-rate mortgages rose to 5.23% from 5.16%. These rates do not include add-on fees known as points. The nationwide fee for 30-year, 15-year and five-year mortgages averaged 0.6 point.

You know you're in a tight spot when Bankruptcy Court begins to look like the least bad solution to a pressing economic problem. But the housing foreclosure situation is pretty ugly, so there we are. Unfortunately, U.S. Bankruptcy Court isn't allowed to be part of the solution to rising foreclosures, thanks largely to the mortgage banking lobby. It's worth asking: Why not? Consider the scale of the problem.

Widespread joblessness is causing more Americans to fall behind on their house payments, triggering a new round of foreclosures that some analysts fear could delay the nation's economic recovery. A mortgage trade group reported Thursday that more than 13% of the nation's mortgage holders were delinquent on their mortgages or in the process of having their homes repossessed during the second quarter of this year. That's the highest figure since tracking began in 1972. California's rate, 15.2%, was among the highest of all states.

Applications for home loans fell more than 16% last week as interest rates rose, according to a Mortgage Bankers Assn. survey released Wednesday. As expected, a drop-off occurred among people seeking to refinance their homes, because the benefits of refinancing are driven by rate trends. The trade group said the average rate for 30-year, fixed-rate mortgages jumped to 5.25% from 4.81% a week earlier -- the biggest weekly increase since October.

Fewer Americans applied for mortgages last week and more have been missing payments on their home equity lines of credit, according to surveys released Wednesday. The Mortgage Bankers Assn. said applications for home loans fell 8.2% last week from the week before. The figures were seasonally adjusted. As mortgage rates dropped slightly, refinancings accounted for a smaller share of mortgage applications -- 79.8% of the total, down from 82.9% two weeks ago.

For the first time since the housing crisis began, a major mortgage lender agreed Thursday that courts should be allowed to order reductions in the principal of "underwater" loans for some troubled borrowers, cracking what had been fierce and unified industry opposition. The agreement struck between congressional Democrats and Citigroup Inc. would permit bankruptcy judges to change the terms of mortgages as part of court-ordered debt restructuring.

JPMorgan Chase & Co. on Friday said it had expanded a mortgage-modification program to cover investor-owned mortgages serviced by Chase, the company's U.S. consumer and commercial banking business. Chase said its expansion of a foreclosure-prevention program announced Oct. 31 could cover an additional $1.1 trillion in investor-owned loans, including mortgages held in securitizations, or bundles of mortgages sold to investors.

The mortgage crisis is seeping into one of the last dry corners of the mortgage business, the regional network of Federal Home Loan Banks, which provide U.S. banks with hundreds of billions of dollars in low-cost funding to support lending to home buyers. The little-known network has grown in importance as banks lose access to other sources of funding because of the credit crunch.