Countrywide faces two federal probes

Calabasas, Calif. -- U.S. market regulators and the FBI are investigating California mortgage giant Countrywide Financial Corp., various officials said.

Bank of America, which bought Countrywide for $2.5 billion in July, said the Securities and Exchange Commission was investigating the mortgage company and had issued subpoenas, indicating an informal inquiry had become more serious, the Los Angeles Times reported Friday.

Former Countrywide Chief Executive Officer Angelo Mozilo and two of the company's attorneys declined to comment but the investigation includes questions on financial disclosures that allegedly may have misled investors and possible insider trading violations, sources said.

Using automatic trading plans arranged in advance, Mozilo sold $145 million in Countrywide stock in 2006 and 2007, the Times reported. But, he modified the plan in late 2006 as problems began to emerge in the subprime mortgage market, a signal to regulators he may have taken advantage of privileged information, the Times reported.

Last fall, the company denied the transaction involved inside information.

The FBI is investigating Countrywide in several states, looking for at the possibility it sold loans to people who couldn't afford them, the Times reported.

Copyright 2008 by United Press International.