The New York attorney general, Andrew Cuomo, says that the nation's two biggest buyers of mortgages, Fannie Mae and Freddie Mac, have agreed to allow an independent examiner to review all of Washington Mutual's appraisals for mortgages bought by the two.

The development is a significant broadening of Cuomo's nine-month-old inquiry.  Last week, the attorney general sued First American, and its real estate appraisal unit, accusing the subsidiary of colluding with Washington Mutual to inflate the appraisal values of homes. (Washington Mutual, one of the biggest mortgage lenders in the nation, was not named as a defendant in that suit.)

The question of whether appraisals were inflated is at the heart of suspicions that the housing boom that peaked in 2005 was in part artificially stoked.

"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."

Cuomo's office has issued subpoenas to Fannie and Freddie requesting information about all the mortgages they bought; their due diligence practices, and policies and procedures related to valuing properties and appraisals.

The investigation will add to the burdens of Fannie Mae and Freddie Mac, which are still trying to put accounting scandals and leadership shake-ups of several years ago behind them.

Shares of Fannie Mae tumbled nearly 7 percent, while Freddie Mac shares fell 5 percent.  

But the investigation may hit Washington Mutual hard at a very vulnerable time. On Wednesday, the savings bank said it would need to set aside between $2.7 billion to $2.9 billion for credit losses this year, nearly double the amount announced in July.

Some analysts are worried that Washington Mutual may be forced to buy back billions of dollars of mortgages back if the investigation finds they had flawed appraisals.

Shares of Washington Mutual are down nearly 11 percent at midday.