The New York Attorney General has expanded his investigation into mortgage fraud to include companies that buy loans from banks.

REPORTER: Andrew Cuomo has subpoenaed Fannie Mae and Freddie Mac - seeking information on how the companies have handled property appraisals.

CUOMO: The initial fraudulent process, in our opinion, gets sold to the secondary market - Freddie Mac, Fannie Mae and investment banks. It then goes on to bond holders, to funds. But the underlying fraudulent problem continues but in many ways gets worse.

REPORTER: Cuomo wants the companies to examine loans they bought from Washington Mutual. He says the loans may have been tainted by inflated property appraisals. The two companies are cooperating with the investigation. Last week, the Attorney General sued First American Corporation subsidiary for allegedly colluding with Washington Mutual to artificially inflate mortgage appraisals.