Business news in brief

30-year mortgage rate steady at 4.13%

WASHINGTON -- Average U.S. long-term mortgage rates were stable to slightly higher this week, remaining near their lows for the year.

Mortgage company Freddie Mac said Thursday that the nationwide average for a 30-year loan was 4.13 percent, unchanged from last week. The average for the 15-year mortgage, a popular choice for people who are refinancing, edged up to 3.26 percent from 3.23 percent last week.

Mortgage rates are below the levels of a year ago, having fallen in recent weeks after climbing last summer when the Federal Reserve began talking about reducing the monthly bond purchases it was making to keep long-term rates low.

To calculate average mortgage rates, Freddie Mac, the Federal Home Loan Mortgage Corp., surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was 0.6 point, unchanged from last week. The fee for a 15-year mortgage rose to 0.6 point from 0.5 point last week.

-- The Associated Press

Morgan Stanley to pay to end SEC case

Morgan Stanley agreed to pay $275 million to resolve a U.S. regulator's claim that the company misled investors in the sale of more than $2.5 billion of bonds backed by home loans.

The firm, based in New York, misrepresented the delinquency status of subprime loans backing the securities, which were sold in 2007, the Securities and Exchange Commission said Thursday in a statement. The company disclosed the amount of the settlement in February.

The delinquency status "is vital information to investors because those loans are the primary source of funds by which they potentially can recover and profit from their investments," said Michael Osnato, who heads the SEC enforcement division's structured products group.

Morgan Stanley earlier this year agreed to pay $1.25 billion to settle separate claims it sold faulty securities to mortgage-finance companies Fannie Mae, the Federal National Mortgage Association, and Freddie Mac, the Federal Home Loan Mortgage Corp.

"We are pleased to settle the matter," Mark Lake, a Morgan Stanley spokesman, said Thursday.

The SEC said offering documents for the subprime bonds stated that less than 1 percent of the principal balance of loans backing each deal was more than 30 days but less than 60 days delinquent. In fact, about 17 percent of the loans in one bond had been delinquent at some point since their origination, the agency said.

-- Bloomberg News

McDonald's sticks with China supplier

McDonald's Corp. is sticking by meat supplier OSI Group LLC after a health scare in China, even as fast-food rival Yum Brands Inc. terminates its relationship with the producer of chicken, pork and beef.

After Chinese authorities shut down OSI's Shanghai Husi Food plant this week for purportedly selling expired products, McDonald's said it will continue using the Husi division's other operations in the country. While McDonald's transitions to a "state-of-the-art facility" in Henan, it plans to rely on Husi's Hebei plant.

"We and our suppliers have a decades-long proven track record of providing safe, quality food to our customers worldwide," the Oak Brook, Ill.-based chain said in a statement. "Husi is taking swift action by investigating what happened and overhauling its safety procedures. We have been in direct contact with OSI's global leaders; as an added assurance of uncompromised safety, they are sending their top food safety experts to China to provide expertise on operations."

The move contrasts with the reaction of Yum, the largest fast-food business in China. That company, which owns Pizza Hut, KFC and Taco Bell, terminated its relationship with OSI after a government investigation into the altering of expiration dates. Shanghai police have detained five people in connection with an investigation of the meat supplier, the official Xinhua News Agency reported this week.

-- Bloomberg News

Hamptons home sales climb for quarter

Home sales in New York's Hamptons, the Long Island vacation locale popular among financiers and celebrities, climbed in the second quarter as more inventory became available for buyers.

Purchases increased 3.7 percent from a year earlier to 700 homes, according to a report today by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The median price fell 1.3 percent to $908,500, reflecting a shift toward deals done at the lower end of the market.

Sales were boosted by a 4.7 percent increase in inventory from a year earlier and harsh winter weather that pushed several transactions into the second quarter, said Jonathan Miller, president of New York-based Miller Samuel. The median Hamptons home price is up almost 35 percent from a 2009 bottom, helping to increase supply as owners take advantage of gains.

"We're seeing stability and modest activity in pricing and sales," Miller said. "It all points toward a longer-term trend of improving, rather than a quick spike or drop."

-- Bloomberg News

Ex-Merrill chief cleared in Madoff loss

Former Merrill Lynch & Co. brokerage chief John "Launny" Steffens and his investment firm Spring Mountain Capital LP were cleared by a jury in a trial over customer losses in Bernard Madoff's $17.5 billion fraud.

Following a nine-day trial, a federal jury in Portland, Maine, Wednesday found Steffens and Spring Mountain not liable on all claims made by former investors Daniel and Suzanne Goldenson, according to a clerk for U.S. District Judge John Woodcock Jr., who oversaw the case.

The Goldensons claimed New York-based Spring Mountain invested money in a Madoff feeder fund without their knowledge, resulting in losses. The couple sought the return of $4.8 million plus damages for mental anguish.

The couple sued in 2010, claiming Spring Mountain invested without their knowledge in the Ascot Fund, a Madoff feeder fund controlled by Spring Mountain co-founder J. Ezra Merkin. Merkin funneled billions of dollars to Madoff's investment advisory business and faced his own lawsuits over the losses.

Madoff, 76, was arrested in December 2008 and pleaded guilty to running the biggest Ponzi scheme in U.S. history. He is serving a 150-year sentence.

-- Bloomberg News

Business on 07/25/2014

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