The probe is focused on whether single-family rental homes used to back bonds have inflated assessments.
A whistle-blower alleged a former top trader at the bank had inflated the value of mortgage securities.
Investors have taken notice of mall defaults fueled by struggling retailers such as Macy’s.
The rising delinquencies come as Americans have loaded up on debt at the fastest pace in three years.
He believes that for securities like mortgage bonds, issuers should be required to ignore the most lenient grade it receives.
At issue are trades between hedge funds and United Capital Markets, a brokerage owned by John Devaney.
It's the latest sign that some startups that aimed to revolutionize the banking industry underestimated the risk they were taking.
Competition has spurred lenders to loosen standards for people with weak credit.