Companies like Bank of America recently started offering jumbo loans at lower rates again. “We decided it was time to really go after that market,” says Vijay Lala, a product management executive for the bank. More and more lenders will most likely join in and start offering these loans again.

According to HSH Associates, a publisher of consumer loan information, the rates on 30-year fixed0-rate jumbo loans averaged 6.5% for the week ending with March 27th, which is the lowest since May 2007.

Lenders no longer have many institutional buyers for their jumbo loans, forcing them to keep the loans they write on their books. Banks held back when cash was tight. But banks have more money to lend these days, as consumers have taken money out of the stock market and put it into safer investments.

To read more about the return of jumbo mortgage head on over to The Wall Street Journal.

The Federal Reserve expects the unemployment rate will probably “rise more steeply into early next year before flattening out at a high level over the rest of the year,” according to minutes from the central bank’s March meeting released Wednesday.

To read more about Obama’s top economic advisor: ‘free-fall’ ending head on over to The Associated Press.

The study says that policies that directly help homeowners overcome the source of the problem such as job loss may be a more effective method of combating foreclosures. “Foreclosure-prevention policy should focus on the most important source of defaults,” the economists wrote in a study released on the Boston Fed’s website late last week.

“One of the most influential strands of thought contends that the crisis can be attenuated by changing the terms of ‘unaffordable’ mortgages,” the economists wrote. But policies that focus on loan modifications directly “face important hurdles in addressing the current foreclosure crisis,” they wrote.

To read more about modifying loans may not stem foreclosures: Boston Fed head on over to Reuters.

It’s not that the loan modification programs are not working. Faith Schwartz, the executive director of the Hope Now Alliance says that “Our members are reporting to us that they have been increasingly using loan modifications during 2009,” when referring to the mortgage lenders that have joined the alliance.

However, the report found that borrowers that have already obtained a loan modification are quickly falling behind on the new loan. Of borrowers that had their loan modified last year about 35% have missed at least three payments within the first nine months and about 57% have missed at least one payment.

The report showed that if a borrower receives a lower payment for the loan modification they are more likely to stay current on the new loan. However, during the fourth quarter of 2008 58% of the loan modifications did not end up with a lower monthly mortgage payment.

“I am like everybody else — I want to be a optimistic. But studies like this don’t promote optimism,” said John Taylor, president of the National Community Reinvestment Coalition. “The re-default rates of these modifications show they are not effective enough.”

To read more about aid to borrowers not preventing rising delinquency head on over to The Washington Post.

“These predatory scams callously rob Americans of their savings and potentially their homes,” Treasury Secretary Timothy Geithner said today. “We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar.”

Over all the Federal Trade Commission has sent out warning letters to 71 companies that they believe have been running suspicious advertisements and has filed five new civil cases to stop illegal activities by loan modification scams. Attorney General Eric Holder said that the FBI is investigating about 2,100 mortgage fraud cases. “If you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you, and we will punish you.”

To read more about scam artists trying to exploit Obama’s mortgage rescue plan head on over to Fox News.

“Mortgage rates followed other interest rates lower this week amid reports of slower economic growth” said Frank Nothaft, Freddie Mac vice president and chief economist. “The final estimate of economic growth in the fourth quarter was revised lower and personal incomes fell 0.2 percent in February, below the market consensus.

He also added that “home sales rose 2.1 percent in February, marking the second increase in three months as potential home buyers are taking advantage of historically low mortgage rates and falling home prices. Serving as a spur to sales, housing affordability reached an all-time high in February 2009 since the series’ inception in 1971, according to the National Association of Realtors®. By region, sales surged by nearly a third in the Northeast and Midwest, but fell in the West.”

To read more about Freddie Mac’s Primary Mortgage Market Survey head on over to their website.

Brooklyn U.S. Attorney Benton Campbell said that “the defendant engaged in fraud to steal money from innocent home buyers and financial institutions.” These condo pre-construction prices ranged between $90,000 and $160,000 per unit at 770 Lefferts Ave and 6130 East New York Ave.

Once Ezagui got people to buy the units he then took out over $18 million in mortgages against the already purchased and occupied units. He paid the mortgages on the properties for a little while and then fled to Israel after The News broke the story. He then flew back to the US where he was arrested by the FBI at JFK Airport back on July 13th 2008.

To read more about Brooklyn developer Eliyahu Ezagui indicted in $18M mortgage fraud head on over to The Daily News.

The order states that 2nd Chance Negotiations was not licensed and legally authorized to perform loan modification services. And that they received millions of dollars in interest, upfront charges, or advanced fees from California customers for performing mortgage modification services.

“While the current market has created some wonderful opportunities for those looking to buy, it has also fostered an environment ripe for abuse,” DRE Commissioner Jeff Davi said. “With so many folks struggling to stay in their homes, foreclosure rescue scams have risen dramatically. The department is aggressively pursuing individuals and companies trying to cash in on Californians in their time of need.”

Loan modification scams have grown from the 10 complains that the California Department of Real Estate received last year to the over 500 pending investigations they currently are working on. In addition to this the Department of Real Estate has issued over 60 Desist and Refrain Orders involving loan modification scams.

To read more about State officials issue desist and refrain orders against loan modification firm operating unlawfully head on over to EarthTimes and The state of California Department of Corporations.

Freddie Mac’s vice president & chief economist Frank Northaft accredits the lowered interest rates to the Federal Reserve’s continued purchasing of mortgage backed securities which will continue for the next six months. He also stated that “potential home buyers are taking notice of these historically low mortgage rates. Both new and existing home sales rose 5 percent in February. First-time home buyers accounted for half of all existing home sales, according to the National Association of Realtors. In addition, mortgage applications for home purchases consecutively rose over the first three weeks in March, based on figures published by the Mortgage Bankers Association.”

To read more about Another record low set for long-term mortgage rates this week head on over to Freddie Mac.

According to the research note “These two factors could lead to heavy volume of mortgage originations over the next several months, but there is some concern in the market about originator capacity constraints potentially softening the impact.”

Efforts by the Federal Reserve have managed to push interest rates on 30-year fixed-rate mortgages to 4.85% which is the lowest Freddie Mac has recorded since they started surveying back in 1971.

“The 30 percent decline in employment in the mortgage industry and the reduction in warehouse credit lines available for non-bank lenders indicate a sharp decline in overall origination capacity,” the analysts said. It also stated that current mortgage lenders only have the ability to process approximately $2.1 trillion new loans this year. In addition to the lowered employees banks have lowered their warehouse and credit lines to smaller lending sources by approximately 90% to $25 billion.

To help offset the lowered ability to accept new mortgages the Federal Reserve said that it would increase purchases of mortgage backed securities through this year by as much as $750 billion on top of the $500 billion already being spent through June.

To read more about mortgage originations may double to $3.1 trillion head on over to Bloomberg.