Freddie Mac, Fannie Mae probe expands

NEW YORK, Nov. 8 (UPI) -- New York's attorney general has subpoenaed Fannie Mae and Freddie Mac in a growing probe of "widespread" collusion between real estate appraisers and lenders.

Andrew Cuomo alleges the collusion may have led some loans to have been based on fraudulently inflated appraisals.

Cuomo said he has uncovered a pattern of collusion between lenders and appraisers.

"We believe it is widespread, it is prevalent," Cuomo said at a New York news conference. "In this case 'follow the money,' the old expression, is 'follow the mortgage.'"

He named Washington Mutual Inc., the country's largest savings and loan, but said his probe included other banks too.

Fannie Mae and Freddie Mac, the two biggest U.S. mortgage-financing providers, agreed to supply documents and hire an independent examiner to evaluate loans they had bought from Washington Mutual, Cuomo said.

WaMu has sold $24.7 billion in loans to Freddie Mac and $7.8 billion with Fannie Mae this year, The Washington Post reported.

Washington Mutual home-loan division President David Schneider said the bank took the accusations "very seriously."