Countrywide Financial ( CFC) shares tumbled after the head of a state pension fund demanded that regulators investigate CEO Angelo Mozilo's insider selling spree.

Richard Moore, North Carolina's state treasurer and the head of the state's pension fund, asked the Securities and Exchange Commission to investigate the timing of changes Mozilo made to his prearranged stock-selling plan.

Moore writes in a letter sent Monday that the longtime Countrywide exec repeatedly made changes to his 10b5-1 stock-selling plan that allowed him to "increase significantly" his stock sales ahead of bad news that sent shares of Countrywide tumbling. Countrywide shares have lost 60% of their value since February, when investors learned that subprime mortgages were going bad at record rates.

"There is a tremendous amount of smoke," Moore said in an interview on CNBC Thursday morning. "They changed those selling plans when the market started to smell a change" in industry fundamentals.

The SEC didn't comment, citing policy. A spokesman says the agency's enforcement division is focusing generally on CEO stock sale plans, however. Countrywide didn't immediately return a call seeking comment.

Mozilo has reaped more than $90 million in stock-sale profits this year alone, after he cashed out to the tune of $72 million last year. Last Friday, Countrywide issued an unusual press release that acknowledged that Mozilo would accelerate his selling of Countrywide stock this week after the stock fell below levels at which the sales usually took place.

"I recognize that the company's stock is currently under pressure," Mozilo said in the release. "However, the terms of the 10b5-1 Plan that I established in October 2006 require that these sales be executed."

The news of a possible probe into Mozilo came on the same day that Countrywide said mortgage originations dropped by almost half last month.

Mortgage loan fundings during the month of September dropped 44% from a year ago to $21 billion. Average daily mortgage loan application activity in September dropped 39% to $1.7 billion. Mortgage loans in the pipeline tumbled to $42 billion from $65 billion a year ago.

"September's production volume is reflective of current market conditions and more restrictive underwriting," said president David Sambol.

Rising loan defaults have chased investors out of the secondary market for mortgage-backed securities. A number of lenders, including Countrywide and Thornburg Mortgage ( TMA), have had to scramble to raise cash to keep funding loans.

Borrower delinquencies on mortgage loans serviced rose in September, Countrywide said.

"The company is continuing to take the necessary steps to assist borrowers with foreclosure avoidance and investors with loss mitigation," Sambol said.

Shares fell 43 cents to $18.37.

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