As the whispers grow louder, Countrywide Financial Corp., the largest U.S. mortgage lender, is now officially under investigation by the Federal Bureau of Investigation for possible securities fraud.Along with San Francisco-based Wells Fargo & Co., both were recently subpoenaed as part of an Illinois probe into whether minority borrowers were steered into higher-cost loans. Countrywide pledged to cooperate in any probe and said it analyzes its data to ensure that borrowers are treated fairly. Wells Fargo said race isn't a factor in lending.
Corporate CEO's get taken to the woodshed
Lenders are facing increased scrutiny from regulators as record foreclosures displace homeowners and depress property values. U.S. mortgage foreclosures rose to an all-time high at the end of 2007 as borrowers with adjustable-rate loans walked away from properties before their payments increased, the Mortgage Bankers Association said this week.
Countrywide yesterday declined 13 cents, or 2.5 percent, to $5.07 a share, 20 percent lower than its closing price on Jan. 11 when Bank of America, the nation's second-biggest bank by assets, offered to buy the company for about $4 billion in stock. The stock has declined 86 percent in the past year in New York Stock Exchange trading.
Forty-two percent of new foreclosures in the fourth quarter were people with adjustable-rate subprime mortgages, given to borrowers with limited or tainted credit records, according to the report. Those types of loans accounted for about 7 percent of all mortgages.
Investigators are focusing on whether Countrywide officials misrepresented the company's financial position and the quality of its mortgage loans in securities filings. [CNN]