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Investors seeking to buy higher yielding, riskier slices of home-loan bonds sold yesterday by EverBank Financial Corp. were told they would have a better shot if they also purchased some of the AAA rated classes, showing weaker demand for the top-ranked debt, Bloomberg News reported yesterday. Bank of America Corp. and Barclays Plc, the underwriters of the deal, pushed investors to purchase the debt in a package as relative yields widen on AAA portions of securities tied to new mortgages without government backing. Greater demand for junior-ranked debt signals some investors are willing to take on the risk of homeowners defaulting on larger mortgages for higher returns. At the same time, rising spreads on the AAA debt as issuance accelerates may hamper the pace at which the U.S. government can scale back its role as it seeks to reduce the influence of mortgage guarantors Fannie Mae and Freddie Mac.

Large global banks' legal tab is poised to soar beyond $100 billion as investors, insurers and municipalities pursue damages for actions tied to the mortgage meltdown, the financial crisis and the rate-rigging scandal, the Wall Street Journal reported today. This month, Citigroup Inc. agreed to pay $730 million to settle claims that it misled investors in four dozen bond and preferred-stock offerings. Deutsche Bank AG cut its 2012 profit target by 60 percent, citing higher U.S. mortgage-litigation reserves. Government-controlled mortgage investor Freddie Mac sued more than a dozen big banks, claiming that they colluded to manipulate the London interbank offered rate. The largest U.S. banks—Citigroup, J.P. Morgan Chase & Co., Bank of America Corp. and Wells Fargo & Co.—together have paid $61.3 billion to settle credit-crisis and mortgage claims over the past three years, according to SNL Financial. Research firm Compass Point Research & Trading LLC estimates that U.S. banks will wind up owing a further $24.7 billion related to the repurchase of faulty mortgage loans.

MF Global Holdings Inc. is facing some last minute opposition to its creditor payback plan, one from an old adversary in the case and another from the federal bankruptcy watchdog, Dow Jones Daily Bankruptcy Review reported today. Sapere Wealth Management LLC, an MF Global creditor that lost in a bid to have its claims treated better in the case, is now fighting the way it's treated under the plan. U.S. Trustee Tracy Hope Davis also says that MF Global's proposal, if confirmed, will too broadly protect certain third parties from being investigated or sued later.

At least eight federal agencies are currently investigating JPMorgan Chase over a number of possible infractions, including the Federal Deposit Insurance Corp., the Commodity Futures Trading Commission and the Securities and Exchange Commission, the New York Times DealBook blog reported yesterday. In a previously undisclosed case, prosecutors are examining whether JPMorgan failed to fully alert authorities to suspicions about Bernard L. Madoff. And nearly a year after reporting a multibillion-dollar trading loss, JPMorgan is facing a criminal inquiry over whether it lied to investors and regulators about the risky wagers, a case that could accelerate when the Federal Bureau of Investigation and other authorities interview top JPMorgan executives in coming weeks. A recent misstep points to the growing friction between JPMorgan and regulators as well as to the concerns within the bank. JPMorgan misstated how the bank may have harmed more than 5,000 homeowners in foreclosure. The bank's primary regulator, the Office of the Comptroller of the Currency, is expected to collect a cash payment from the bank to remedy the flawed review of loans.

New York Attorney General Eric Schneiderman asked a federal judge for permission to complete a $410 million settlement with J. Ezra Merkin, using his law enforcement powers to compensate the former Bernard Madoff investor's victims, Bloomberg News reported yesterday. Madoff brokerage liquidator Irving Picard, who seeks to collect $500 million from Merkin for different investors, is trying to block the deal. Schneiderman has argued that Picard has no claim to the settlement money and lacks power as a bankruptcy trustee to stop the state from enforcing the people’s legal rights. U.S. District Judge Jed Rakoff began a hearing in Manhattan federal court yesterday by asking the parties to address the state's argument that Picard had waited too long to try to block its suit. David Ellenhorn, a lawyer from Schneiderman's office, told Judge Rakoff that investors refrained from bringing their own claims against Merkin in reliance on the attorney general's suit.

The trustee wrapping up the affairs of fraud-riddled mortgage lender Taylor Bean & Whitaker Mortgage Corp. has asked a judge to cement a deal with banks that is part of the chapter 11 plan of a Taylor Bean finance vehicle, Ocala Funding LLC, Dow Jones Daily Bankruptcy Review reported today. A condition of Ocala's chapter 11 plan requires that the unit's claim against the money raised in the Taylor Bean bankruptcy be boosted from $1.6 billion to $1.75 billion.

While many of the lawyers may be ready to toast an upswing in deals, one prominent mergers' banker thinks it is too early to expect a boom, the New York Times reported yesterday. Mark Shafir, co-head of global mergers and acquisitions at Citigroup, said that professionals in the business of mergers and acquisitions are still trying to find their footing after the financial crisis. Many of the factors that should lead to an enormous recovery in deals are in place, he said, but there are enough potential problems that the market is lagging behind where it should be. Western Europe continues to be an extreme laggard, leaving a hole in the market that has yet to be filled. By one measure, the deal environment has not markedly improved from last year, according to Shafir. The number of deals this year whose value surpassed $1 billion disclosed is 95, just one more than in the period a year earlier. That is even after the announced sales of Dell, H.J. Heinz and Virgin Media.

U.S. regulators yesterday warned about the dangers lurking in the booming market for loans to struggling companies, acting to combat concerns over emerging bubbles in parts of the financial sector, the Wall Street Journal reported today. The Federal Reserve and other banking regulators said that the controls and quality checks applied by lenders when extending leveraged loans have deteriorated. They also questioned whether some banks are doing enough to accurately gauge the risks of these practices. "Financial institutions unprepared for such stressful events and circumstances can suffer acute threats to their financial condition and viability," the regulators said. The warning came in the form of guidance, which lays out regulators' expectations for how banks should act. It said that regulators will closely monitor banks' underwriting of the loans, typically used to finance buyouts or acquisitions, as well as the ability of firms to manage their lending and withstand loan-related losses.

Auto lender Ally Financial Inc.'s banking unit said it would sell its remaining mortgage servicing rights portfolio to online lender Quicken Loans Inc. for about $280 million, Reuters reported yesterday. Ally, which is 74 percent-owned by the U.S. government after a series of bailouts, has been exiting the mortgage business as part of a plan to focus on auto lending and Internet banking. Detroit-based Quicken is buying collection rights on $34 billion of non-delinquent Freddie Mac and Fannie Mae mortgages. Quicken, which has a $90 billion mortgage servicing portfolio, said that it would become a top-10 servicer after the purchase.

Bankruptcy Judge Martin Glenn said yesterday that Residential Capital LLC should try to negotiate a new foreclosure-review process with federal regulators before seeking a bankruptcy court order to halt the $300 million program, Bloomberg News reported yesterday. Judge Glenn said that he would not rule immediately on the company's request to suspend its obligation to find any damages suffered by borrowers who went through foreclosure. ResCap, through its GMAC Mortgage unit, agreed to the review under a settlement with U.S. regulators before filing for bankruptcy last year. The review, which may cost about $300 million, is a waste of money because a new federal policy allows a lump-sum payment to be split among borrowers, a lawyer for ResCap said today. That would be cheaper than paying PricewaterhouseCoopers LLP to conduct the review, the company said.