FBI Launches Mortgage Fraud Investigation
The FBI has launched a criminal investigation into the business practices of 14 companies involved in the lending of "subprime" mortgage loans. Although the FBI has not identified the firms, the New York Times reports that the inquiry "involves companies across the financial industry, including mortgage lenders, loan brokers and Wall Street banks that packaged home loans into securities." Subprime mortgages -- typically given to borrowers with low income or poor credit -- usually carry high interest rates, and have come under increased scrutiny as nationwide foreclosure rates hit record highs. According to the N.Y. Times, the FBI is working with the Securities and Exchange Commission, which is conducting its own inquiry into the packaging and lending of subprime loans, and the valuation of securities backed by those loans.
- N.Y. Times: F.B.I. Opens Subprime Inquiry
- Washington Post: 2 Biggest Wall Street Firms Probed
- Foreclosures Up 75% in 2007 (FindLaw)
- Real Estate Center: Foreclosure (FindLaw)
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