The latest news in terms of mortgage lenders is the current report circulating that the FBI is investigating Countrywide. Countrywide is the largest of home lenders in the US, and one of the biggest subprime lenders. Countrywide has been sustaining serious losses due to subprime writedowns and foreclosures. Since the subprime mortgage crash, Countrywide has lost billions of dollars.  Indeed, in an effort to stem the flow, Countrywide has agreed to entertain an offer by Bank of America to purchase the ailing company.

And the FBI might be investigating Countrywide. CNN Money reports on the issues that the FBI might be looking into concerning this giant among mortgage lenders:

“The FBI has been investigating potential fraud in the mortgage/sub-prime lending industry, however, we can not confirm or deny which companies are under investigation,” said FBI spokesman Richard Kolko.

Even though Countrywide has not been officially and specifically named, the CNN cites a “government official” for the news that Countrywide is indeed one of the 16 companies under investigation for questionable mortgage lending practices.

And, apparently, this isn’t exactly news. The New York Times reports that the FBI has been stepping up mortgage fraud cases over the past few years:

For years, the F.B.I. has been warning that mortgage fraud is a significant and growing problem. In the 2006 fiscal year, it documented 35,600 reports of suspected mortgage fraud, up from 22,000 the year before and 7,000 in 2003.

Not that this is a really big surprise to many consumer advocates and others. However, the fact that mortgage fraud and other questionable mortgage lending practices are finally leading to the downfall of the US economy is shedding light on a problem that has been steadily growing in an era of cheap credit, corporate greed and unchecked consumer spending.

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Rumors are flying that an emergency Fed rate cut could be in the works. While many expect a 75 basis point cut on March 18, the latest interest rate news is that an emergency Fed rate cut may be needed before next week’s scheduled meeting. The last emergency Fed rate cut came just eight days before a scheduled Fed meeting. At which time the Fed cut rates again.

24/7 Wall Street offers this insight on why current measures to stimulate the economy with rate cuts have been unsuccessful:

With oil-based products and gasoline taking more of the consumer dollar, a relief on the credit side would be more than welcome. The problem the Fed has is that most banks are not passing lower rates on to businesses and consumers.

Even though banks are getting lower rates, and they have been getting lower rates with the Fed funds rate at three percent. they still aren’t passing them on. Perhaps the rate cuts will be passed on when the Fed funds rate makes to an expected two percent by the end of April.
In the case of mortgage interest rates, though, it doesn’t matter that much anyway. Last week, mortgage interest rates went up. And an emergency Fed rate — or any Fed rate cut for that matter — is unlikely to change anything.

The reason for this lies in the fact that mortgage interest rates, with their long-term nature, are more tied to 10-year Treasury notes than they are to the short-term Fed funds rate. This means that when inflation goes up (and it is on its way) mortgage interest rates follow the bond rates higher.

If you haven’t refinanced to a fixed mortgage rate yet, you could be in for a bumpy ride.

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Right now, the mortgage industry is a little tight. And that means that if you shop around for a good home mortgage loan, you could find yourself in luck. If you have good credit, you can ask for a better interest rate, and maybe even better terms. You should consider getting quotes from a variety of mortgage lenders so that you can compare. You have the chance to get a good deal on a home mortgage loan, and you should press your advantage.

But what if you have bad credit? Can you still get a home mortgage loan? The answer is probably yes. But are the terms what you want? And in these times, it is important to watch out for less than savory mortgage lenders who may try to take advantage of you. This funny Homestar Runner video sort of illustrates the point.

At any rate, if you have bad credit, you should work on bringing your credit score up before you jump into a home mortgage loan. Give yourself a few months to improve your credit score, and then see if you can get a better deal when you shop around, comparing mortgage lenders.

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