Regulators are investigating the mortgage securitization business of Bayview Financial, one of Florida's largest mortgage finance companies, over allegations that a key employee doctored loan documents. Bayview, an eight-year-old private company that's partly owned by Allstate ( ALL), disclosed the inquiry by the Securities and Exchange Commission in a regulatory filing on Friday. The company says it received a letter from regulators on July 14 "requesting documents and information relating to our securitization business.'' In March, the Miami-based firm says it discovered that a senior executive had altered "credit data'' for home loans that Bayview had securitized and sold to institutional investors in a series of bond offerings. The unidentified executive allegedly changed the data on loans he had negotiated in order to increase his commissions. "While we believe that the impact of these actions did not have a material effect on any of our securities, and that the problem has been rectified, it nevertheless represented a lapse in our own control procedures,'' Bayview says. A mortgage-backed security is a type of an asset-backed bond. In this case, the bond is backed by the cash flow thrown off by a pool of home loans. Standard & Poor's said Friday that it is reviewing its credit ratings on Bayview's mortgage-backed securities in light of the disclosure. Moody's Investors Service declined to comment. Bayview's most recent mortgage-backed deal, a $768 bond offering, was underwritten by Lehman Brothers ( LEH). The main bank that services the pool of mortgages that back the bonds is Wells Fargo ( WFC). Bayview outlined the allegations involving the senior executive, who the company has since fired, in the same filing in which it disclosed the SEC investigation. This is the first time Bayview has disclosed the apparent irregularities in its securitization operation. The company, which has sold $17 billion in asset-backed securities since 1988, says "approximately 3% of the loans included in our outstanding securitizations of residential mortgage loans showed evidence of altered data.'' Bayview President David Quint declined to answer any questions beyond what's contained in the filing. He would not say how the SEC had learned of the alleged alterations to the loan documents. The company declined to identify the former executive. But it described him as a managing director and senior salesman.