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FBI Probes Countrywide for Fraud

Feds seek evidence that subprime lender lied about quality of loans

By Harry Kimball,  Newser Staff

Posted Mar 9, 2008 5:00 AM CDT
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(Newser) – The FBI has launched a securities fraud investigation against subprime mortgage lender Countrywide Financial for allegedly lying to investors about its financial status and the quality of its mortgage loans, reports the Wall Street Journal. The probe could extend to Wall Street firms that helped package more than $100 billion in mortgage-backed securities for Countrywide over the past three years.

Countrywide joins 15 other subprime lenders already in federal crosshairs for questionable practices. The company issued $450 million in loans annually at its peak, but posted nearly as much in losses late last year, shocking industry experts. The ailing company agreed in January to be purchased by Bank of America for $4 billion.

Bank of America Chairman, CEO and President Kenneth D. Lewis answers questions before speaking at the Delaware State Chamber of Commerce 171st Annual Dinner in Wilmington, Del., Monday, Jan. 14, 2008. (AP Photo/Pat Crowe II)
Bank of America Chairman, CEO and President Kenneth D. Lewis answers questions before speaking at the Delaware State Chamber of Commerce 171st Annual Dinner in Wilmington, Del., Monday, Jan. 14, 2008....   (Associated Press)
A sign is displayed at the entrance to a Countrywide Financial branch, Friday, Jan. 11, 2008 in Framingham, Mass. (AP Photo/Lisa Poole)
A sign is displayed at the entrance to a Countrywide Financial branch, Friday, Jan. 11, 2008 in Framingham, Mass. (AP Photo/Lisa Poole)   (Associated Press)
The exterior view of a Countrywide banking and loan office in San Mateo, Calif. is seen in this Oct. 26, 2007 file photo. (AP Photo/Paul Salkuma, file)
The exterior view of a Countrywide banking and loan office in San Mateo, Calif. is seen in this Oct. 26, 2007 file photo. (AP Photo/Paul Salkuma, file)   (Associated Press)
A Countrywide Bank Home Loans branch is seen in La Canada, Calif. Monday, Jan. 28, 2008. (AP Photo/Damian Dovarganes)
A Countrywide Bank Home Loans branch is seen in La Canada, Calif. Monday, Jan. 28, 2008. (AP Photo/Damian Dovarganes)   (Associated Press)
Angelo Mozilo, founder and former CEO of Countrywide Financial Corporation, center, testifies before the House Oversight and Government Reform Committee hearing on Capitol Hill in Washington, March 7, 2008 in Washington. The committee is examining the compensation and retirement packages granted to the CEOs of corporations deeply involved in the...
Angelo Mozilo, founder and former CEO of Countrywide Financial Corporation, center, testifies before the House Oversight and Government Reform Committee hearing on Capitol Hill in Washington, March 7,...   (Associated Press)
Angelo Mozilo, founder and former CEO of Countrywide Financial Corporation, center, is sworn in at the House Oversight and Government Reform Committee hearing on Capitol Hill in Washington, March 7, 2008, in Washington. The committee is examining the compensation and retirement packages granted to the CEOs of corporations deeply involved...
Angelo Mozilo, founder and former CEO of Countrywide Financial Corporation, center, is sworn in at the House Oversight and Government Reform Committee hearing on Capitol Hill in Washington, March 7, 2008,...   (Associated Press)
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Analysis of Countrywide's history and the markets
Mortgage Bankers Association

 
FBI • Bank of America • federal investigation • home loans • Countrywide Financial • mortgage backed securities • subprime crisis • securities fraud

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