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. (Read more Countrywide Financial stories.)