PASADENA - The FBI has opened an investigation into now-defunct IndyMac Bancorp Inc. in connection with home loans made to risky borrowers.

According to The Associated Press, it was not clear when the inquiry of the bank began.

In an e-mail, a FBI spokesman said the agency was investigating 21 companies but declined to confirm whether IndyMac was one of them.

"Given the volatility of today's subprime market, we have seen an increase in subprime-related complaints," said spokesman Jason Pack. "To protect the integrity of our cases, we do not confirm or comment about specific companies that may or may not be a part of our investigations."

IndyMac spokesman Evan Wagner said he knew nothing of the investigation until he read about it Wednesday on a news Web site.

During the housing boom, IndyMac specialized in loaning to people with credit in the 660-to-720 range, which is just below the best credit rating.

Many of the loans were given without income documentation. Contrary to media reports, IndyMac lent only about 3 percent to 4 percent of loans to people in the "subprime" category.

A spokeswoman for a group that criticized IndyMac in a report last month for lax lending controls said she was not surprised by the investigation.

"If an institution fails and you are going to have to pay (depositors) out of the FDIC, you want to find out what happened," said Kathleen Day, a spokeswoman for the Washington, D.C.-based Center for Responsible Lending.

"We're not the regulators," Day said. "We're not inside there. But it is clear to us that IndyMac was a bad lender."

Last week, IndyMac's assets were seized by federal regulators and transferred to the Federal Deposit Insurance Corporation after the mortgage lender succumbed to the pressures of tighter credit, tumbling home prices and rising foreclosures.

The bank was the seventh largest home lender in 2007, and is the largest regulated thrift to fail and the second-largest financial institution to close in U.S. history.

FDIC spokesman David Barr could not be reached for comment Wednesday.

An examination of IndyMac's lending practices might focus on whether the bank took part in predatory lending, said Anthony Pratkanis, a professor at UC Santa Cruz, who has looked into the loan industry as part of his research.

Pratkanis said he was commenting on the industry in general, not specifically IndyMac.

An investigation into a lender would try to establish that IndyMac hid important information from borrowers, such as balloon payments, rate adjustments and prepayment penalties, Pratkanis said.

"In some loans, important things were kind of sandwiched in there where you couldn't find them," he said of the stacks of paper that people are supposed to read before borrowing money for a home.

A jury or judge, he said, would have to decide whether IndyMac was diligent in its duty to make sure people knew what they were getting into.

Pratkanis, who has published works about how people are influenced by society, said home buyers were caught in a lifestyle that treated credit as an asset to acquire wealth instead of something to pay back.

Starting when consumer credit rules loosened in the early 1990s, many Americans stopped saving money and started spending credit, he said.

"Everyone was speculating. It became normal," Pratkanis said. "But you should never speculate unless you have money to lose. And most people did not have enough money that they could afford to lose their homes."

As the real estate market heated up, some buyers, brokers and lenders threw out logic - and their ethics - as people around them began treating real estate like a bargaining chip to get more money, he said.

"You get this last-chance mentality," Pratkanis said. "People think, `I'll never get in. I have to buy a home before it gets too expensive. I'll never have that American dream.' And some companies took advantage of that. There was trickery used in marketing some loans."

The Associated Press contributed to this story

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