Homebuilders could soon be under microscope of the FBI

More details are starting to emerge from the FBI's launch of 14 probes into lenders that produced and sold questionable mortgages. Now it seems that these investigations could be expanded to certain homebuilders, such as KBHome due to its close alliance with Countrywide, and could also include those builders which started in-house mortgage operations over the last 10 to 15 years. From a story in the L.A. Times:

The FBI is conducting 14 criminal investigations of mortgage lenders and the firms that turned their high-risk loans into complex securities that have left investors worldwide with huge losses, a top official at the federal agency said Tuesday.

"We're looking at the whole range of those involved -- including the investment banks and other entities that bundled the loans up for sale and the institutions that held them and reported [to investors] on their value," Neil Power, head of the FBI's economic crimes unit, said in an interview from Washington.

The sub-prime lending investigations also extend to home builders, he said...

In another development that came to light Tuesday, a fired loan officer alleged that a joint venture between No. 1 mortgage lender Countrywide Financial Corp. and Los Angeles-based builder KB Home improperly inflated home appraisals and falsified incomes to put borrowers into homes they couldn't afford.

Countrywide, which is being acquired by Bank of America after reporting a $1.6-billion net loss for the second half of 2007, said it had investigated the claims in a wrongful termination lawsuit filed by Mark Zachary, a former regional vice president for the joint venture in Texas. In a statement, the company said it "found no merit to his accusations" contained in a complaint filed in U.S. District Court in Houston.

Stay tuned...