Here’s a story you won’t find on the Web site of ProPublica, the crusading new online news organization. Just before house prices began a nationwide decline in 2006, Herbert and Marion Sandler sold a mortgage lender, Golden West, to Wachovia for $25 billion. Since the acquisition, Wachovia’s market capitalization has plummeted by more than $60 billion, and it said this week it was setting aside more than $5.5 billion in case of losses from Golden West’s loan portfolio.

While it appears Mr. and Mrs. Sandler couldn’t have unloaded their company at a better time, Golden West’s souring reputation may raise questions about the couple’s most ambitious venture to date — the nonprofit, investigative news outlet ProPublica.

The mission of ProPublica, where Mr. Sandler serves as chairman of the governing board, is to produce journalism that exposes “exploitation of the weak by the strong,” according to the news organization’s Web site. This is precisely the way some borrowers’ advocates are characterizing the lending practices of Golden West, the company that spawned the fortune that made ProPublica possible.

In 1963, the Sandlers bought Golden West for just less than $4 million. They transformed it into the second-largest savings and loan bank in the country. Famously, the bank came out of the brutal downturn of California’s real estate values in the early 1990s without a scratch. The bank was also a pioneer in what are called adjustable-rate mortgages, or ARMs, whereby borrowers can start off with a low interest rate that rises over time. The loans, which were not subprime and were often provided to borrowers with good credit, are extremely profitable when house prices rise but can be disastrous when prices fall.

An adjustable-rate mortgage “is designed to increase at a very slow pace, in keeping with long-term housing price increases,” an analyst at Keefe, Bruyette & Woods, Jefferson Harralson, said. “But the decline in housing with the increase in loan values is creating much higher loan losses than were expected.”

Under an ARM, a mortgage broker charges a borrower a very low rate at the start of the life of the loan, which often does not cover the interest rate payment due on the loan. As the loan matures, the lender charges increasingly higher rates, which is okay during periods of strong housing prices because the borrower can continually refinance the loan using the value of the home as collateral. If housing prices drop, however, the borrower can be stuck owing more on their mortgage than the actual value of their home.

For Wachovia, the problem is compounded because about 70% of Golden West’s mortgage portfolio is concentrated in California and Florida, two of the hardest-hit real estate markets.

Mr. Sandler, who declined to comment, told the Wall Street Journal last month that he believed Golden West was being unfairly blamed for the problems at Wachovia. “We’re sitting here, and our name is being attacked,” Mr. Sandler said in the interview. “We’ve outperformed everybody.”

Some analysts disagree. Mr. Harralson estimated that Wachovia could lose close to $15 billion, or 12%, of the loan portfolio it acquired from Golden West. “It’s a very high loss rate,” Mr. Harralson said, adding it is the steepest decline in value he has seen for a portfolio with this high quality of mortgages.

In addition to plunging Wachovia’s earnings into the red and fueling the housing bubble, the ARMs originated by Golden West have also saddled many borrowers with loans they can’t repay, housing officials said. There is one class-action suit filed against Wachovia for the Golden West deal and possibly others brewing.

“If there is a flawed, or a misstatement, of income, borrows got loans they can’t afford. And we’ve definitely heard of that happening at Golden West,” the associate director of the California Reinvestment Coalition and a prominent critic of predatory lending practices, Kevin Stein, said.

A lawyer, Jeffrey Burns, recently filed a class-action lawsuit against Wachovia for the loans it acquired from Golden West. The bank “failed to disclose the true cost of the loan” to borrowers, he said, calling the loans a “scam.”

A CBS affiliate in San Francisco recently uncovered a training video for Golden West’s subsidiary company, World Savings, where instructors told the mortgage brokers to downplay the long-term cost of the ARM. When a hypothetical costumer asked whether his principal will grow under the low rate of the loan, the instructor in the video tells him “it’s optional.”

ProPublica’s editor-in-chief, Paul Steiger, former managing editor of the Wall Street Journal, denied that the Sandlers’ interests would influence ProPublica’s editorial content. “ProPublica, which is a news organization that doesn’t publish editorials, doesn’t have a ‘position’ on adjustable-rate mortgages,” Mr. Steiger wrote in an e-mail. “We certainly wouldn’t hesitate to cover the effect of ARMs, or Golden West, or Wachovia,” he said. So far, however, ProPublica, which lists “subprime mortgages and ratings agencies” as the top item in the “scandal watch” on the front page of its Web site, has focused its attention on Countrywide Financial.

“I think the problem is less in the journalism, in the work, than in the perception,” the executive director of the Center for Investigative Journalism, Robert Rosenthal, said of ProPublica. The controversy over Golden West’s role in the mortgage mess is “a problem, an issue, that you’d rather not have if you were Paul Steiger.”

The Sandlers have been the subject of adulatory profiles in the New York Times magazine and in the annual report of Human Rights Watch, to whom the Sandlers pledged $15 million, which the organization described at the time as the largest grant in its history.