Risky Mortgage & Lawsuit

California-based Countrywide Financial Corp. (CFC) and IndyMac Bancorp Inc. (NDE) and 23 other defendants have been sued by homeowners asking for $100 million in mortgage-fraud damages and a halt in debt collection and foreclosures and imposition of a new standard on lenders that would limit loans to borrowers who are deemed suitable. "By extending these loans, the mortgage lenders have earned, and stand to earn over time, enormous finance and interest charges," the homeowners said in the complaint. Most of the homeowners were over the age of 60 and had fixed incomes.

This is not an outcome of an isolated incidence with a few banks. Many home-owners are at risk, in particular, with their adjustable-rate mortgages (ARM). Rising interest rates and falling home values are creating an atmosphere of panic among some borrowers who had extended their ability of purchase by selecting such ARM or interest-only mortgages and are now finding their monthly payments at unaffordable level.

But not in all cases the borrowers' greed of possessing a larger home was the sole reason for them to end up in such a miserable state. In many cases, due to heavy-handed salesmanship originating from too much of competetion among loan brokers, inconsistent loan representations regarding the benefits or terms of the loan were made by the brokers. In some cases, unnecessary disclosures which were not required by the law were asked from borrowers at the time of loan origination.

If you feel you might have been led to such a situation for such wrongful business practices, you may consider consulting a consumer-protection attorney. Most consumer-protection attorneys offer a free consultation. If you have a case, you may be charged up to one-third of any benefit obtained through the lawsuit. Some state and federal consumer protection laws provide that the lender, if it loses, pay attorney fees. To find a consumer protection attorney in your area, visit the website of National Association of Consumer Advocates (NACA), a nationwide organization of more than 1000 attorneys who represent and have represented hundreds of thousands of consumers victimized by fraudulent, abusive and predatory business practices.

Mortgage Rate Remains Flat

The mortgage market failed to get a definite direction in this week ending Thursday due to conflicting economic news from various sectors. The economy added 97,000 jobs in February, in line with consensus expectations, while the unemployment rate dipped to 4.5%. But the retail sales grew a meagre 0.1% in February, falling short of the predicted value of 0.3% gain.

According to Freddie Mac's weekly survey, the 30-year fixed-rate mortgage remained unchanged at 6.14%, also the average of last week. The rate was 6.34% one year back. The 15-year fixed rate averaged at 5.88% this week -- slightly up from last week's average of 5.86%. At this time last year this rate was 5.98%.

The Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) also did not change from last week's average of 5.90%. The hybrid averaged 5.93% a year ago. One-year Treasury-indexed ARMs averaged 5.42%, down from 5.47% of last week. This rate averaged 5.37% a year ago.

New ETF Based on Chart Patterns

The PowerShares DWA Technical Leaders Portfolio (PDP) is one new Exchange Traded Fund (ETF) in the street that is being billed as the first ETF implementing a process based on purely technical, rather than fundamental, factors. So, instead of talking to executives, analyzing financial statements and projecting items such as revenue and cash flow, the new fund will try to beat the market by judging chart patterns based on price movements.

PDP tracks an index of some 100 stocks created by the Richmond, VA -based Dorsey Wright & Associates. That benchmark is built around the firm's expertise in technical research for institutional investors.

According to Dorsey Wright, their back-tested data indicates its index would've beaten the S&P 500 index by an average annualized 8.76 percentage points from 2001-2006. However, last year, the index trailed the general market by more than 4 percentage points.

The index had 72.83% of its assets in large-cap stocks entering 2007, with a slight leaning to value names. Another 14.37% was weighted in midcaps. The ETF has an expense ratio of 0.60%.