Beyond Real Estate

Countrywide under investigation by the FBI for securities fraud.

In a report on CNNmoney.com this morning, a government official confirms that Countrywide Financial Corporation, acquired by Bank of America in January, is under investigation for fraud.

According to CNN,

“The probe will examine underwriting and mortgage origination practices, and whether the company misrepresented losses related to subprime loans, the paper said.

Subprime mortgages, or home loans given to borrowers with weak credit, have been at the root of a crisis that has rocked the U.S. economy.

Though the Federal Bureau of Investigation has acknowledged ongoing investigations related to the subprime debacle, neither the FBI nor the Justice Department would comment on the specific targets.

“The FBI has been investigating potential fraud in the mortgage/sub-prime lending industry, however, we can not confirm or deny which companies are under investigation,” said FBI spokesman Richard Kolko.

A law enforcement official told CNN that there are currently 16 companies being investigated.”

The New York Times reports that unnamed government officials with knowledge of the case, say that Countrywide is being investigated to determine whether or not the company misrepresented it’s financial position and the soundness of it’s loans in securities filings. The investigation is still in the early stages and it’s not clear yet if any charges will be filed.

The investigation of Countrywide comes after probes into the subprime mortgage fallout crisis. 14 other companies are a part of the broader investigation by the FBI.

“Countrywide already faces federal and state investigations of it’s lending practices, as well as several lawsuits by investors and mortgage holders.” - Reuters

CNN reported in February that Countrywide has broadened it’s mortgage workout scope where borrowers with fixed rate loans will be eligible for restructured loans. You can find more on that story at this link on CNN Money.