Mortgage | featured news

Mortgage rates jumped dramatically this week amid a sell-off of all kinds of bonds, according to data released Thursday.

Rates on fixed mortgages dropped to their lowest levels in decades this week after the Federal Reserve unveiled a massive bond-buying program to help spur economic growth.

Grocery store owners William and Esperanza Casco were making enough money to stay current on their mortgage, but when JPMorgan Chase & Co. offered a plan that reduced their payments, they figured they could use the extra cash and signed up.

The mortgage-finance company warned that foreclosure delays could lead to higher costs, as it asked the Treasury to provide a $2.5 billion infusion.

The total cost to rescue and then overhaul mortgage giants Fannie Mae and Freddie Mac could reach $685 billion, according to estimates by Standard & Poor's.

The housing and mortgage markets aren't likely to improve much over the next year, which will make it harder for the government to reduce its support of the sector, Freddie Mac's chief executive said on Monday.

That figure, projected through 2013, represents a worst-case scenario that assumes a double-dip recession, the Federal Housing Finance Agency says. The finance giants have so far received about $148 billion in taxpayer funds.

A six-month decline in mortgage rates has spurred a surge in refinancing while doing little to increase property demand as US unemployment hovers near 10 percent.

Officials in 49 states have launched a joint investigation into allegations that mortgage companies mishandled documents and broke laws in foreclosing on hundreds of thousands of homeowners.

Bank of America, the country's largest mortgage lender by assets, said on Friday that it was reviewing documents in all of its pending foreclosure cases to evaluate if there were errors made.