New York Attorney General Andrew Cuomo issued subpoenas to mortgage financiers Fannie Mae and Freddie Mac on Wednesday as he seeks information about allegations that Washington Mutual Inc pressured appraisers to inflate home values.
Wednesday's subpoena's are part of a nine-month loan industry investigation by the attorney general after a report by the Mortgage Bankers Association revealed rising numbers of home loan delinquencies among borrowers with poor credit, so-called 'subprime' mortgage loans.
Cuomo's office is looking for signs of collusion between lenders and real estate appraisers. Last week, the attorney general filed a suit against appraiser First American Corp's subsidiary eAppraiseIT, alleging that Washington Mutual colluded with the firm to inflate the appraisal values of homes.
Wednesday's subpoenas seek information on mortgage loans purchased by Fannie and Freddie from banks, including WaMu. The mortgage financiers are also being asked to elaborate on their due diligence practices and their valuations of appraisals.
Fannie and Freddie have agreed to hire an independent examiner to evaluate loans bought from WaMu, the Attorney General said in a statement.
Every company that buys loans from Washington Mutual must be sure that the loans they purchased are not corrupted by this systemic fraud, he said.