Hilltop Holdings in Dallas has disclosed that its mortgage unit is under federal investigation in connection with underwriting practices for loans backed by the Federal Housing Administration.

The $9.1 billion-asset company disclosed in its quarterly filing with the Securities and Exchange Commission that PrimeLending, its mortgage subsidiary, received a subpoena from the inspector general's office at the Department of Housing and Urban Development. The subpoena was part of an industry-wide inquiry over origination practices for FHA-backed loans, the filing said.

Hilltop also disclosed that, on Aug. 20, PrimeLending received a "civil investigative demand inquiry" from the Department of Justice, related to the HUD subpoena. The DOJ is looking into potential violations of the False Claims Act, a law that governs fraud in government programs.

"PrimeLending is cooperating with the investigation and continues to respond to the Civil Investigative Demand," the filing said, adding that Hilltop expects the inquiry "will not have a material effect on the company's business."

Hilltop reported lower third-quarter profits, compared to a year earlier, mainly because of higher operating expenses. The comparison includes expenses tied to Hilltop's government-assisted acquisition of the $3 billion-asset First National Bank in Edinburg, Texas. That acquisition closed in September 2013.

The company's earnings fell 37% from a year earlier, to $25.1 million. Expenses rose 18%, to $254.7 million.

Net interest income rose 19%, to $85.8 million. Fee-based income fell 1%, to $212.1 million, because of lower loan origination fees.

Hilltop is the parent company of PlainsCapital Bank, which has more than 80 branches in Texas.

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