Mortgage, Financial Industry | featured news

Investments that were vulnerable in the last financial crisis and believed to be gone for good have largely escaped new rules that were made to prevent another crisis.

Ten major banks and mortgage companies agreed Monday to pay $8.5 billion to settle federal complaints that they wrongfully foreclosed on homeowners who should have been allowed to stay in their homes.

Citigroup Inc said quarterly profit plunged on a $4.7 billion write-down of its stake in a brokerage operated by Morgan Stanley, but mortgage lending increased and capital markets results rebounded.

It is an open secret in the banking world: the interest rates for many mortgages and loans are based on a benchmark that is largely guesswork. The flaws in the rate-setting process, which is used to determine the pricing for trillions of dollars of financial products, have been exposed by the latest banking scandal. Regulators around the world are investigating whether big banks gamed the rates for their own benefit before and after the financial crisis.

House lawmakers hold their first hearing about how to restructure the mortgage system.