updated 9/29/2008 12:46:14 PM ET 2008-09-29T16:46:14

A federal grand jury is investigating accounting and disclosure issues at Fannie Mae and Freddie Mac, the mortgage finance companies said Monday.

Fannie and Freddie said they received subpoenas Friday from the U.S. Attorney’s office in Manhattan as well as requests from the Securities and Exchange Commission that they preserve documents. Fannie Mae and Freddie Mac were taken over by the government earlier this month as their mounting defaults and foreclosures threatened the entire mortgage market.

The investigation concerns accounting, disclosure and corporate governance matters, the companies said. Freddie Mac said in a statement the government investigation focuses on activities starting in 2007.

Both companies said they would cooperate fully in the investigations, but their spokesmen declined to comment Monday. Representatives of the SEC and Justice Department also declined to comment.

Three weeks ago, the government seized control Fannie Mae and Freddie Mac, the two biggest U.S. mortgage finance companies, with a rescue plan that could require the Treasury Department to inject as much as $100 billion into each to keep them afloat.

A spokeswoman for the Federal Housing Finance Agency, which controls the companies said the housing agency, “will work with the companies to assure a smooth and efficient process and will work with the government agencies as they undertake their inquiries.”

Law enforcement officials said last week the FBI is looking at potential fraud by Fannie, Freddie, and insurer American International Group Inc. Additionally, a senior law enforcement official told said failed investment bank Lehman Brothers Holdings Inc. also is under investigation.

The inquiries will focus on the financial institutions and the individuals that ran them, the senior law enforcement official told the Associated Press last week.

Officials said the new inquiries bring to 26 the number of companies connected to the mortgage crisis under investigation over the past year.

Over the past year as the housing market cratered, the FBI has opened a wide-ranging probe of companies across the financial services industry, from mortgage lenders to investment banks that bundle home loans into securities sold to investors. FBI Director Robert Mueller has said the FBI’s hunt for culprits in the U.S. mortgage crisis focused on accounting fraud, insider trading, and failure to disclose the value of mortgage-related securities and other investments.

Additionally, the FBI is investigating failed bank IndyMac Bancorp Inc. for possible fraud. Countrywide Financial Corp., formerly the largest U.S. mortgage lender and now owned by Bank of America Corp., is also under scrutiny.

Shares of Fannie Mae rose 8 cents to $1.91 in midday trading, while shares of Freddie Mac rose 23 cents to $2.23.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Discuss:

Discussion comments

,

Most active discussions

  1. votes comments
  2. votes comments
  3. votes comments
  4. votes comments

Data: Latest rates in the US

Home equity rates View rates in your area
Home equity type Today +/- Chart
$30K HELOC FICO 2.43%
$30K home equity loan FICO 5.80%
$75K home equity loan FICO 4.54%
Credit card rates View more rates
Card type Today +/- Last Week
Low Interest Cards 13.57%
13.57%
Cash Back Cards 17.91%
17.91%
Rewards Cards 17.15%
17.15%
Source: Bankrate.com