As the sub-prime mortgage situation continues to worsen, the FBI confirms that they're investigating lenders for possible fraud. According to articles in The Wall Street Journal and CNN Money, Countrywide Financial Corporation could be involved in the suspected fraud within the industry.The company’s practices of representing their losses and underwriting loans are said to be under examination. In addition, the company has also come under scrutiny after sending out letters to customers this week informing them that some personal data may have been compromised.
A former employee is cited as the cause of the leak and Countrywide is providing two years of credit monitoring services for free to customers believed to be impacted. This comes at a difficult time for Countrywide, the country’s biggest home-loan lender.
Though Countrywide is the biggest lending company involved, it's not the only company under investigation. CNN Money reports that the FBI is looking into the lending practices of a total of 16 mortgage companies.
As other major financial institutions continue to experience the negative effects of the subprime mortgage market, the FBI would not release the names of the lenders under investigation.
"The FBI has been investigating potential fraud in the mortgage/sub-prime lending industry, however, we can not confirm or deny which companies are under investigation," FBI spokesman Richard Kolko told CNN.
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--Bridget O'Sullivan
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