Far more than any trader's profane e-mails, due diligence reports from the securitization boom could worsen the financial industry's litigation headaches — and conceivably expose some firms and individuals to criminal charges.

Investment banks commissioned the reports from firms like Clayton Holdings and Hansen Quality to ensure that the mortgages the banks were buying met their underwriting standards. A substantial number of the loans did not, but the banks included them in the securities they sold to investors anyway, the reports indicate.

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