Government Subprime Probe Intensifies

By:: MortgageLoan.com | May 05, 2008

The FBI along with federal, state and local agencies is looking into potential crimes ranging from mortgage fraud by brokers to securities fraud, inside trading and accounting fraud, according to reports from the Wall Street Journal.

The investigation is focusing on whether some lenders turned a blind eye to inflated income figures provided by borrowers and is predominantly centered on the states of New York, Los Angeles, Philadelphia, Dallas and Atlanta.

An unnamed government official said, "This is a look at the mortgage industry across the board, and it has gotten a lot more momentum in recent weeks because of the banks' earnings shortfalls.

In January, the FBI began an investigation of 14 mortgage companies over their lending and business practices. This figure grew to 19 in April and has now expanded to include several more firms.

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