Wells Fargo to pay $125 million in mortgage suit (AP)

NEW YORK – Wells Fargo & Co. has agreed to pay $125 million to a group of pension funds and other investors to settle allegations the bank failed to warn investors of the risks the poorly-written mortgage backed securities.

The proposed settlement was filed Wednesday in a California federal court and represents lawsuits filed by the pension funds of Detroit, Alameda County, New Orleans, Guam, and other plaintiffs. The settlement is subject to court approval.

The mortgage-backed securities were sold by Wells Fargo in 2005 and 2006. The investors said in their complaint that in its bid to collect fees, the bank misstated and omitted details that show the securities were backed by poor quality mortgages sold to people without proper documentation. The bank denied any wrongdoing.

Rate on 30-year fixed mortgage rises to 4.60 pct. (AP)

WASHINGTON – Fixed mortgage rates rose this week by the most in four months.

The average rate on the 30-year loan increased to 4.60 percent, up from 4.51 percent a week ago, Freddie Mac said Thursday. It hit its lowest level of the year three weeks ago, at 4.49 percent.

The average rate on the 15-year fixed mortgage, a popular refinancing option, rose to 3.75 percent. It reached its low point of the year two weeks ago, at 3.67 percent.

Rates typically track the yield on the 10-year Treasury note, which has been rising. And mortgage rates could rise further now that the Federal Reserve's $600 billion bond buying program has ended.

The Fed has purchased around $75 billion worth of bonds each month since November. That drove the yield on the 10-year Treasury note lower than 3 percent this spring. As a result, rates on mortgages and other loans also fell.

Still, low mortgage rates and plummeting home prices have done little to boost the troubled housing market. Tougher lending standards and bigger down payment requirements have prevented many people from taking advantage of the ultra-low rates. Many people who can qualify are holding off, worried that prices have yet to bottom out.

Most economists say home prices will keep falling through the rest of the year. Many forecasts don't anticipate a rebound in prices until at least 2013.

To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.

The average rate on a five-year adjustable-rate mortgage rose from 3.25 to 3.30 percent. Last week's rate was the lowest on records dating back to 2005. The average rate on a one-year adjustable-rate loan rose to 3.01 percent, just above the record low of 2.95 percent.

The rates do not include extra fees known as points. One point is equal to 1 percent of the total loan amount.

The average fees for the 30-year and 15-year fixed loans were 0.7, according to Freddie Mac's survey. The average fees for the five-year and one-year ARM were 0.6.

BofA loses bid to end HAMP mortgage lawsuit (Reuters)

NEW YORK (Reuters) – Bank of America Corp lost its bid to dismiss a lawsuit accusing it of reneging on promises to help borrowers modify their mortgage loans under a much-criticized federal program.

The bank, however, claimed a partial victory, citing District Judge Rya Zobel's decision to dismiss claims by borrowers who sought to participate in the two-year-old Home Affordable Modification Program, or HAMP.

Zobel nonetheless ruled that homeowners who contend they did not get modifications for which they qualified under HAMP, to avoid foreclosures, could pursue claims against Bank of America.

The complaint "meticulously" detailed each of these plaintiffs' compliance with loan modification conditions, but said the bank "willfully failed" to modify the loans, either in bad faith or for its own economic benefit, Zobel wrote. Such allegations are "sufficient" to let the lawsuit go forward, she added.

Zobel rejected claims by borrowers who claimed they were "intended beneficiaries" of HAMP but never entered the program, saying they had no contractual right to relief.

She also rejected a request to block Bank of America while the lawsuit is pending from foreclosing on 37 borrowers said to be in "imminent danger" of losing their homes.

In a statement, Bank of America spokeswoman Shirley Norton said the company is pleased that four of the eight counts in the complaint were dismissed.

The lawsuit combines 26 cases that had been brought in 19 states, and sought class-action status for various plaintiffs.

"The Court's conclusions will likely help hundreds of thousands of families to convert temporary mortgage modification plans into permanently lower monthly payments. Tens of thousands of foreclosures are likely to be prevented," said Gary Klein, a lawyer for the plaintiffs, adding that he expects the case to get class certification quickly.

Last week, Bank of America said it would take $20 billion of charges for various mortgage matters, including over its 2008 purchase of Countrywide Financial Corp.

Like several rivals, the Charlotte, North Carolina-based bank has also been in talks with state and federal regulators to resolve claims over alleged foreclosure abuses.

HAMP was created in 2009 as a centerpiece of efforts by the Obama administration to boost the nation's housing sector.

While it provides incentives to loan servicers to encourage modifications, HAMP has been widely derided as ineffective.

Through May, 731,451 borrowers had received permanent loan modifications, far below the original goal of 3 million to 4 million.

The Republican-controlled House of Representatives voted in March to wind down the program, though the Democrat-controlled Senate is not expected to follow.

Bank of America, JPMorgan Chase and Wells Fargo & Co are the largest servicers participating in HAMP.

The case is In re: Bank of America Home Affordable Modification Program (HAMP) Contract Litigation, U.S. District Court, District of Massachusetts, No. 10-md-02193.

(Reporting by Jonathan Stempel; editing by Carol Bishopric)