A civil investigation has been launched by federal prosecutors after concerns were raised over negligence by some regulators that keep a check on packaging and selling of questionable loans to investors. The subprime auto loan market is surging, but there have also emerged signs of false information given in loan applications by borrowers about their income and employment.

It was revealed by General Motors' finance subsidiary on Monday that a Justice Department subpoena for document has been received by it to prove the authenticity of the origination and the securitization of subprime loan contracts since 2007. As a result, the finance subsidiary is required to show what the underwriting criteria has been and how loans were presented to those who were getting them.

The office of Preet Bharara, the United States attorney for the Southern District of New York, is now trying to increase the range of other companies.

Mr. Bharara is currently looking into whether the G.M.'s finance subsidiary sold questionable auto-loan investments to investors. General Motors Financial has revealed that the inquiry was conducted to look deeply into the subprime auto finance industry.

"Our understanding is that the request is focused on the subprime finance space in general", said Susan Sheffield, executive vice-president at G.M. Financial. Susan added that the company has provided full cooperation to withstand the prosecutors' document request.

Federal prosecutors wanted to ascertain if potential violations of Financial Institutions Reform, Recovery, and Enforcement Act have taken place.

Federal prosecutors and regulators have completed many of their largest mortgage cases and they are now turning their focus onto another market in subprime debt.