A federal investigation related to the nation’s main program for developing affordable housing has expanded in Florida.

“We have continued to look at the full chain of the low-income housing tax credit (LIHTC) industry,” said Michael Sherwin, assistant U.S. attorney, who has been investigating fraud in the housing program for several years.

That means scrutinizing not only developers and contractors but lenders and syndicators to identify any “potential criminal weaknesses,” Sherwin confirmed to Affordable Housing Finance.

In a recent quarterly Securities and Exchange Commission filing, Wells Fargo, a leading LIHTC investor, acknowledged that government agencies were looking into its purchase and negotiation of LIHTCs. The bank also provided the following statement:

“Wells Fargo is committed to providing financial solutions to support the development and rehabilitation of affordable multifamily housing in areas where there are the biggest needs. Our investment in affordable housing has helped improve access to housing in cities across the country.”

According to a Bloomberg report, officials are looking into whether Wells Fargo colluded with developers to drive down the price of LIHTCs. In return, the bank would offer developers better loan terms or agree to fund less desirable deals, said the report.

A PNC spokesperson also confirmed that PNC has received an inquiry from the U.S. Attorney’s Office and is “fully cooperating” with the agency.

The LIHTC program is the nation’s primary tool for funding the construction and preservation of affordable housing. Each state receives an amount of LIHTCs from the federal government annually. State and local agencies then award the credits to developers, who sell the credits to banks and other investors to raise equity to build affordable housing. LIHTC investors use the credits to reduce their tax liability, and banks also receive Community Reinvestment Act consideration for their LIHTC projects.

The housing credit program, which helps finance approximately 100,000 affordable rental units each year, has built a strong reputation since its creation in 1986. Over the years, it has helped finance about 3 million affordable homes, and LIHTC developments have a foreclosure rate below 1%, far below other real estate sectors.

However, several years ago, an investigation led to a group of developers, including Matthew Greer and Lloyd Boggio of Miami-based Carlisle Development Group, and contractors pleading guilty to fraud charges. They were accused of participating in a scheme to defraud the government of $36 million. They allegedly conspired to inflate construction contracts to obtain more tax credits and grant money than needed for 14 affordable housing developments.

While that initial case ended with several prison sentences and the forfeiture of funds, Sherwin has continued to look at other developers and participants in the LIHTC program.

“I think the program is critical. I think it’s an important program,” he said. “We want to ensure that it stays viable. It’s a double-edged sword. Sometimes with these prosecutions some people will say this shows why this program needs to go away because there’s fraud and abuse. I’m hoping this will help strengthen and try to identify problems with the program so it continues to be viable.”