Washington Mutual, one of America's largest mortgage lenders and the biggest savings and loan in the nation, is under investigation by the Securities and Exchange Commission, reports the Wall Street Journal. Regulators suspect some WaMu mortgages were based on inflated appraisals. WaMu, bloodied by the subprime mortgage crisis, lost $348 million on home loans in the third quarter.
The investigation follows a lawsuit by New York Attorney General Andrew Cuomo alleging the bank pressured an appraisal company to inflate home valuations. "We are voluntarily and fully cooperating with the SEC inquiry," said a bank spokesman. "There has been no systematic effort by WaMu to inflate home appraisals."