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The Treasury Department Secretary Jacob J. Lew said that the department will start an initiative to revive the market for mortgage securities without government backing as part of an effort to aid recovery of the housing market, Bloomberg News reported yesterday. The Treasury also will begin offering financing for loans for affordable apartment buildings and extend aid programs for troubled borrowers for an additional year, Lew said yesterday. “Middle class families continue to find it difficult to find affordable housing,” Lew said. “And more than 6 million Americans still owe more on their homes than their homes are worth. That is why we remain focused on providing relief to responsible homeowners, rebuilding hard-hit communities, and reforming our housing finance system.” Homeowners having trouble making their loan payments will now have until December 31, 2016 to apply for a mortgage modification under Treasury’s Home Affordable Modification Program and other Treasury-run aid programs. The affordable apartment building loans would be backed by Federal Housing Administration and state housing agencies.

Purchases of new homes in the U.S. in May showed the highest increase in 22 years, indicating the industry is rebounding from a winter-induced lull at the start of the year, the Washington Post reported today. Sales surged 18.6 percent, the biggest one-month gain since January 1992, to a 504,000 annualized pace, figures from the Commerce Department showed Tuesday. The reading was the strongest since May 2008. The report, following data on Monday showing a pickup in existing-home sales, indicates that housing is gathering momentum as employment improves and borrowing costs stabilize. The median sales price rose 6.9 percent from May 2013 to reach $282,000, the report showed. Purchases climbed in all four regions, led by a 54.5 percent jump in the Northeast. The supply of homes at the current sales rate dropped to 4.5 months, the lowest since June 2013, from 5.3 months in April.

Anna Raytcheva’s mortgage-bond bets for Citigroup Inc. lost billions of dollars as the financial crisis raged, but amid new rules meant to curb banks’ risky trading, she’s gambling again, Bloomberg News reported today. Raytcheva’s group in New York manages more than $1 billion for the bank and doesn’t have clients. She has a rare mandate after banks cut or reassigned scores of proprietary traders, driving many to join hedge funds ahead of regulations that will limit the once-lucrative business of speculating for the accounts of the nation’s biggest lenders. The rules, designed to prevent future calamities, haven’t stopped her team: It’s designed to fit within exemptions to foster markets for government securities. Citigroup may be interpreting the exemptions more liberally than other firms, even after past missteps, according to Clifford Rossi, a former risk manager at the bank. The third-largest U.S. lender’s catastrophic losses during the credit crisis prompted a $45 billion taxpayer bailout. Now led by Chief Executive Officer Michael Corbat, 54, it failed a Federal Reserve stress test in March for the second time in three years.

MBIA Inc. asked a judge to order Credit Suisse Group AG to turn over internal records that the bond insurer says bolster its contention the bank lied about how it processed loans packaged into mortgage-backed securities, Bloomberg News reported yesterday. MBIA said in a court filing yesterday that Credit Suisse has withheld evidence about how the bank’s actual practices diverged from its representations — including documents identified as exhibits in other lawsuits based on the same allegations. The bond insurer asked Justice Shirley Werner Kornreich in New York State Supreme Court to force the bank to search documents and e-mails on its policies and practices including those related to loan underwriting and origination, due diligence and post-acquisition quality-control review. MBIA, based in Armonk, N.Y., sued Zurich-based Credit Suisse in December 2009, saying that it made “pervasive and material misrepresentations” about the loans underlying $1 billion worth of mortgage securities.

Bank of America Corp. failed to win dismissal of a U.S. Justice Department lawsuit in which it’s accused of misleading investors about the quality of loans tied to $850 million in residential mortgage-backed securities, Bloomberg News reported yesterday. U.S. District Judge Max O. Cogburn Jr. in Charlotte, N.C., gave the Justice Department 30 days to revise the suit after a magistrate judge earlier found the government’s complaint was deficient and recommended it be dismissed. The case is part of a U.S. bid to punish companies for actions it says helped trigger the financial crisis. The Bank of America case and others like it rely on a law dating to the savings-and-loan crisis of the 1980s that allows the government to punish actions taken too long ago to be covered by other laws. It also lets the U.S. seek larger damages awards. Bank of America will still have a chance to challenge the amended complaint and could appeal any ruling against it.

BlackRock Inc., the world’s biggest money manager, and Pacific Investment Management Co. are among investors that sued banks including Citigroup Inc. and Deutsche Bank AG over their roles as mortgage-bond trustees, Bloomberg News reported yesterday. The banks knew the loans underlying trillions of dollars worth of residential mortgage-backed securities were misrepresented and failed to invoke their rights to force the sellers to buy them back or act against servicers, causing billions of dollars in losses, according to copies of the complaints reviewed by Bloomberg News. The filings couldn’t be immediately confirmed yesterday in New York State Supreme Court in Manhattan. Bank of New York Mellon Corp. “negligently failed to protect the trusts and certificate holders,” according to a copy of the complaint against the New York-based company. “BNYM and its responsible officers knew of pervasive, material breaches of originators’ and RMBS sponsors’ representations and warranties, and loan servicers’ material breaches, yet did nothing to protect the trusts,” according to the court filings.

Seventeen months after Congress authorized up to $16 billion to fix homes wrecked by superstorm Sandy, tens of thousands of people still are living in damaged houses or paying rent on top of a mortgage as they wait for rebuilding help, the Wall Street Journal reported today. About 15,000 New York City residents are seeking aid, but city officials say that only 352 have so far received a check or city-provided home construction. In New Jersey, 2,032 homes are being built or repaired, for more than 11,500 homeowners deemed eligible for rebuilding help, according to the state department of community affairs. The October 2012 storm damaged about 200,000 homes from New Jersey to eastern Long Island, N.Y., while killing 87 people in that region. Three months later, Congress approved the aid, to be distributed by New Jersey, New York state and New York City programs. But delivering it has been slowed by a combination of federal rules invoked to prevent fraud and misspending after Hurricane Katrina, local rules, and certain missteps by local officials and contractors.

Just as the federal government reached an agreement on Tuesday with SunTrust Banks over questionable mortgage practices, the government’s talks to resolve Citigroup’s mortgage issues grew increasingly tense and veered toward a lawsuit, the New York Times DealBook blog reported yesterday. The size of the $968 million settlement with SunTrust pales next to the multibillion-dollar pacts that the government has signed — or is seeking to sign — with the nation’s largest banks. The Justice Department is seeking a $10 billion penalty from Citigroup over its sale of defective mortgage investments, but Citi contends that the amount far exceeds the losses suffered by investors.

JPMorgan Chase & Co. engaged in a “pattern of discriminatory” lending that led to foreclosures, the city of Miami said in a lawsuit filed last week in federal court, the latest in a series of similar claims against the nation’s largest banks, Bloomberg News reported yesterday. Last month, Banco Santander SA’s U.S. unit was sued by the city of Providence, R.I., over claims that it stopped issuing mortgages in minority neighborhoods after the housing bubble burst. Santander Bank, previously named Sovereign Bank, pulled out of the neighborhoods and focused on white communities after being acquired by the Madrid-based lender in 2009, the city alleged. Miami and Los Angeles are among cities to have filed similar lawsuits against Bank of America Corp., Citigroup Inc. and Wells Fargo & Co. for allegedly “red-lining” black and Hispanic areas as no-loan zones, and then “reverse red-lining,” flooding the areas with predatory mortgages even when minorities qualified for better terms. Miami is seeking damages for reduced property taxes and higher expenses for municipal services associated with foreclosures, according to the lawsuit, filed on June 13.

Bank of America Corp. swayed a judge to rethink his tentative opinion that a U.S. Securities and Exchange Commission lawsuit over the issuance of $850 million in mortgage-backed securities should go forward, Bloomberg News reported yesterday. The SEC claims that the lender failed to file documents with the regulator that it gave potential investors in the securities, which later plummeted in value, obscuring the fact the buyers got false information. At a hearing yesterday in federal court in Asheville, North Carolina, lawyers for the bank argued that SEC rules governing such disclosures were unclear. The bank “certainly made some points,” said U.S. District Judge Max O. Cogburn Jr. Cogburn told the lawyers that before the hearing he’d “been leaning toward” adopting a magistrate judge’s recommendation that the SEC’s case go forward, but that now he’d take “a look back.” The SEC suit and a parallel case by the U.S. Justice Department over the same securities are part of a government bid to punish companies for actions the U.S. says helped trigger the financial collapse. The hearing comes as the Justice Department broke off negotiations with Bank of America earlier this week because it was dissatisfied with the lender’s offer to pay more than $12 billion to resolve separate government probes of the lender’s sale of mortgage-backed bonds before the crisis.