FBI probes Countrywide's financial practices

10 March 2008

The Federal Bureau of Investigation (FBI), on Saturday, launched a probe into the lending practices of the largest US mortgage lender, Countrywide Financial Corp, currently in the process of being acquired by Bank of America.

According to a US government official, the mortgage company is suspected of fraudulent practices and financial reporting, which may have led to the sub-prime crisis in the US.

This story was first reported in The Wall Street Journal on Saturday.

According to the report, the FBI will scrutinise the mortgage origination and the underwriting practices of the company. It will also investigate into the possibilities of whether the company "window dressed" the losses relating to the sub-prime meltdown.

The investigation will also entail looking for insider trading and other infractions of loans made to weaker credit borrowers.

FBI spokesperson Richard Kolko, refrained from making any comment on which other companies were under investigation, though he mentioned that the FBI has been investigating potential fraud in the mortgage / sub-prime lending market. It was also uncertain if anyone would be indicted with a crime.