The latest mortgage-related mergers, acquisitions and other corporate activity were overshadowed by the near collapse of two hedge funds invested heavily in subprime mortgage derivatives.

As part of an across-the-board boost to its mortgage business, Chase will soon expand its correspondent operations by adding a subprime flow process. The move comes as other subprime correspondent players have jumped ship.

Mortgage-related litigation continued to move through the courts, with one subprime lender seeing much of the action. A California mortgage broker who was blacklisted because he was giving yield spread premiums to his borrowers lost his lawsuit.

Prime Wholesale Programs Tighten

Having an underwriter to talk to is the single most important wholesale lender attribute, according to a recent survey of mortgage brokers. The report noted this year's subprime fiasco has resulted in the tightening of prime guidelines.

The Federal Deposit Insurance Corp. has some suggestions about how mortgage lenders can avoid the fallout from a host of Mortgage fraud schemes.

A Virginia bank that lost 79 of its mortgage division employees to a competing bank -- including an executive vice president and the chief executive, failed to obtain a temporary injunction against that bank. But it is vowing to pursue a multi-count complaint against the competitor anyway.

An elderly couple has sued an Arizona mortgage broker, alleging he reneged on a promise to make their first four mortgage payments. They allege they didn't read their disclosures because they relied on verbal statements by the broker -- who claims he told the couple they did not qualify for the loan.

Commercial mortgage activity was heavy with multifamily deals during the most recent week, though a hotel, several offices and two retail complexes also found financing. Transactions were dominated by East Coast properties.