NEW YORK - New York Attorney General Andrew Cuomo recently told two companies to prepare to become part of his investigation into Washington Mutual's business practices.

Letters from Cuomo were sent Wednesday to Fannie Mae and Freddie Mac, two of the country's largest financiers of home mortgages, notifying them that subpoenas are on the way. Cuomo is looking for information on the mortgage loans the companies purchased from banks, including Washington Mutual.

Cuomo says at least one real estate appraisal management companies, eAppraiseIt, has colluded with Washington Mutual to inflate the appraisal value of homes. Freddie Mae and Freddie Mac have agreed to retain an Independent Examiner to conduct a review of all their appraisals performed by Washington Mutual.

"In order to fulfill their duty to consumers and investors, Fannie Mae and Freddie Mac must ensure that Washington Mutual's mortgages have not been corrupted by inflated appraisals," Cuomo said. "Our expanding investigation into the mortgage industry has uncovered that Washington Mutual improperly pressured appraisers to provide inflated values that best served the lender's interest.

"Knowing this, Fannie Mae and Freddie Mac cannot afford to continue buying Washington Mutual mortgages unless they are sure these loans are based on reliable and independent appraisals."

Washington Mutual is the third-largest provider of loans to Freddie Mac, selling $24.7 billion this year. It's also sold $7.8 billion to Fannie Mae.

The letters were sent to Freddie Mac CEO Richard Syron and Fannie Mae CEO Daniel Mudd.

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