According to an industry trade group, U.S. mortgage applications rose last week, reflecting an increase in loan refinancing even though mortgage rates are at a threee-month high.

The group's seasonally adjusted index of refinancing applications increased 2.6 percent to 1,614.4 compared with 1,573.5 the previous week.

The MBA's seasonally adjusted purchase mortgage index fell 0.4 percent to 399.0 from the previous week's 400.8. The index was below its year-ago level of 451.7.

According to Wall Street Analysts prepayments on U.S. mortgage-backed securities increased in February as rising seasonal factors and modestly higher refinancing offset a drop in calendar days. Overall fixed-rate agency prepayment speeds rose by 4 percent in February, with the paydowns increasing from $33 billion to $35 billion, according to JP Morgan. Paydowns should increase by 30 percent to $45 billion in March.

Prepayment speeds are key factors for investors to determine the value of mortgage bonds. If prepayments rise or fall too quickly, they hurt returns on mortgage securities. January prepayment levels were mostly in line with market expectations.

Mortgage lender Freddie Mac has announced James R. Egan will be starting April 3rd as a senior vice president, controller, and principal accounting officer.

Egan will report to Chief Financial Officer Martin Baumann. Prior to Freddie Mac, Egan was controller for MBNA America Bank, where he oversaw financial regulatory reporting and Sarbanes-Oxley compliance.

The decision is very important considering Freddie Mac is the nation’s second-largest buyer and guarantor of home loans and is recently emerging from an accounting scandal.

There are plenty of indications that the U.S. housing market is shifting downward, and that the days of easy money in real estate are over.

On Jan. 10, the National Association of Realtors, a trade organization based in Washington, D.C., issued a forecast for 2006, saying that the housing market will "normalize" this year. For 2005, the nationwide appreciation rate for existing homes in the U.S. is pegged at around 13%. That's not expected to continue. NAR predicts that this year the housing market will stay strong, with the second-highest number of sales on record. But price appreciation will slow to just over 5%.

In several markets, brokers say that whereas sellers have been able to get what they ask, these days buyers have more room to negotiate and ask for concessions from sellers.  It is a prooven trend that in most cities spring is the best time to sell a home but this does not prove true in all markets.  A word of advice.  If you are thinking of selling do not wait too long to list your home because the longer you wait in this market the more competition you will have.

A former loan officer, Jose Alfredo Ramirez, 28, was sentenced to four years' probation Tuesday for fraudulently obtaining home mortgage loans for people who lacked sufficient income or who were not U.S. citizens.

A condition or the probation includes 400 hours of community service work for Habitat for Humanity or another agency that assists people with affordable housing. The amount of restitution he must pay in the Jefferson County cases has not been determined.

Ramirez has also been sentenced to five months in prison in addition to five months in a halfway house on a similar set of charges filed by federal prosecutors. He also has been ordered to pay $140,000 in restitution in that case. 

Investors don't despair completely. Though interest rates are rising and pricing jumps have been steep in homes not everything has gotten out of reach. If you stick to properties that are less vulnerable to rising interest rates, and are willing to consider some out-of-fashion cul-de-sacs of the real estate market, you can still find deals that pay an attractive income and have the potential for capital gains.

To make money in real estate in 2006, focus on the sectors that will reap immediate benefits from a strong economy and be extremely choosy. Real estate investment trusts (REITs) that own hotels or apartments might be good choices because they can raise their rents relatively quickly in a strong economy as opposed to office building owners, whose tenants are protected by long leases.

Another option are rental properties in blue-collar neighborhoods of cities in the heartland. As a landlord, you have the opportunity to upgrade the property to increase its income-generating potential.

Real estate won't be the surefire investment in 2006 that it has been in recent years. But carefully chosen investments still make sense as part of a diversified portfolio.

Two former vice presidents at Countrywide Financial Corp. settled an insider-trading lawsuit with the Securities and Exchange Commission that claimed they profited from trades using yet-to-be-released company earnings reports. They agreed to pay back their earnings plus interest and paying a fine equal to their profit.

Prior to earnings reports during the third quarter of 2004, Cao used inside information to turn a profit, by borrowing 15,000 shares of the Calabasas, Calif.-based lender’s stock then selling it prior to the earnings report. To cover the short-sale, he repurchased shares shortly after the earnings announcement precipitated a decline in share price. He shared the information with Shi, who made a similar move to cash in on the company’s declining profit announcement.

A Michigan woman and her niece were arrested in Atlanta by the FBI at the closing of a $1 million mortgage loan in an alleged mortgage fraud scheme.  Donna June Baker allegedly used the stolen identity of a retiree who is actually living on Social Security and a small pension in Florida, at a closing on a million-dollar mortgage loan to refinance a property, according to officials.

The closing, however, was a sting operation set up by the federal government. Baker planned to walk away from the closing with nearly $100,000 in cash, but instead left in FBI handcuffs, according to officials.  Baker allegedly used the name and Social Security number of a permanently disabled retiree.  The complaint alleges Baker, using the identity of the retiree, claimed that her income was $23,500 a month to the mortgage lender. According to the complaint, this million-dollar property was originally bought using the same stolen name and social security number in September 2005 from Baker's niece, Mixon-Hampton, who is also charged in a criminal complaint.

This past Monday Wells Fargo Home Mortgage and Dublin, Ohio-based builder, Dominion Homes, announce they will form a mortgage unit to replace Dominion’s financial services affiliate. The company, which has not been named, will offer Wells Fargo products, underwriting, compliance, and loan-processing services. San Francisco-based Wells Fargo & Co. will hold a major stake in the endeavor, which will operate as a mortgage bank in central Ohio, Kentucky, and Indiana.

Former Fannie Mae chief executive Franklin Raines used Fannie Mae Foundation grants totaling $12 million to discourage probes into policies that led to $10.8 billion in accounting errors, according to a suit filed in the U.S. District Court in Washington.

The grants were to groups such as the Brookings Institution and John F. Kennedy Center, sacrificing the independence of other directors on the foundation’s board who had ties to the organizations, the lawsuit alleges.

The case’s plaintiffs include the Wayne County Employees’ Retirement System and the Pirelli Armstrong Tire Corp. Retiree Medial Benefits Trust.

The commercials for Citibank identity theft have made us laugh.  The idea of a middle age man wearing a leather bustier because it lifts and separates would make anyone laugh.  Unfortunately Identity theft is a real and scary thing. We have all heard the horror stories or maybe been a victim ourselves. 

Project Higgins from IBM Corp. could be the answer. This open-source software will allow consumers to manage their personal identifying information on the internet, in an attempt to combat fraud and ID theft. In theory, it would allow a consumer to store numerous login names and passwords for banking, shopping, and email services, and supply them to service providers when needed.

The software could allow banks and other web sites to stop storing users' personal data, which is becoming a liability. IBM isn’t the only one trying to combat this problem; Microsoft Corp. introduced a similar project, dubbed InfoCard, a few weeks ago. Just because the solution may be here there is the hurdle of convincing developers and users of the advantages of adopting their systems. Previous attempts at providing such software, such as Microsoft's Passport service, have failed.