UPDATE 2-FBI home mortgage probe now targets 19 firms

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By Randall Mikkelsen

WASHINGTON, April 16 (Reuters) - The FBI's probe of potential fraud in the U.S. home mortgage industry now encompasses 19 companies, up from 17 a month ago, agency director Robert Mueller told Congress on Wednesday.

He said there was no end in sight to the growth of individual and corporate fraud cases, and the Federal Bureau of Investigation was reassigning agents from other areas such as financial fraud and health care to cope.

"We've had a tremendous surge in cases related to the subprime mortgage debacle. We currently have almost 1,300 cases that have grown exponentially over the last several years and we expect them to grow even further," he said.

"We have also 19 cases involving institutions themselves where mortgage fraud may have contributed to misstatements and the like," Mueller said in testimony before a Senate appropriations subcommittee.

Bureau officials declined to name any additional companies targeted in the probe. "We've always said it was a fluid number," FBI spokesman Stephen Kodak said. "It could change at any time." He said the bureau has publicly acknowledged only one company as involved -- Doral Financial Corp (DRL.N: Quote, Profile, Research, Stock Buzz).

A former Doral treasurer was indicted for investment fraud last month. He denied the allegations and the company declined to comment.

The largest U.S. mortgage lender, Countrywide CFC.N, also is under FBI investigation, authorities have said, although the FBI has declined to comment and Countrywide said it was unaware of any investigation.