In the continuing fallout from the 2008 mortgage crisis, the FBI is investigating General Electric’s former subprime mortgage lender, WMC Mortgage Corp., over what former employees have described as “falsified paperwork, overstated borrowers’ income and other tactics to push through questionable loans,” iWatch reports.
“It’s mostly about: Did they knowingly sell mortgages into the secondary market that they knew were fraudulent?” said one source with knowledge of the investigation.
GE jumped into to the mortgage business in 2004 when it bought WMC for roughly a half-billion dollars. At the time, WMC was the sixth-largest U.S. subprime lender.
WMC issued $21.6 billion in loans in 2006; but by 2007, as the mortgage bubble neared its bursting point, it was failing — and dipping into GE’s earnings.
There is reason to suspect top officials at WMC knew they were issuing fraudulent loans, iWatch reports. Many former employees have revealed that GE failed to heed whistleblowers’ warnings about unsavory lending practices.
GE has recently come under increased scrutiny by newspaper editorial pages, with one Washington Examiner columnist even calling it “for-profit arm of the Obama administration.”
In 2010, GE collected 4.1 billion in tax subsidies.
Full Story: Feds investigate possible fraud and GE’s former subprime unit
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