U.S. steps up mortgage industry probe

WASHINGTON, May 4 (UPI) -- Federal investigators are stepping up their probe of U.S. mortgage industry practices, The New York Times reported Sunday.

Citing a government official who had been briefed on the matter, the newspaper said investigators are focusing on whether lenders ignored exaggerated income figures provided by applicants for home loans.

The FBI and the criminal division of the Internal Revenue Service have established a task force to look into allegations that mortgages were approved with little or no proof that borrowers had income or assets they claimed when securing loans, the report said.

The task force, which was formed in January, includes U.S. prosecutors in several major cities -- including New York, Los Angeles, Philadelphia, Dallas and Atlanta, the official told the Times.

The group intensified its investigation recently after the financial industry interests announced they had written down billions more dollars bad mortgage investments.

The task force is also looking into the way in which mortgages were bundled into securities, the source said.

"This is a look at the mortgage industry across the board, and it has gotten a lot more momentum in recent weeks because of the banks' earnings shortfalls," the official told the newspaper.