Thread: Countrywide's 'VIP' loans to Washington insiders raise quest

Countrywide's 'VIP' loans to Washington insiders raise questions
The lender had generous mortgage terms for 'Friends of Angelo.'

Lawmakers deny they received special treatment.

By Tom Hamburger, Chuck Neubauer and Kathy M. Kristof, Los Angeles Times Staff Writers
June 14, 2008

WASHINGTON -- One day in 2002, at a time when the sub-prime loan debacle and the collapse of the housing market were not even clouds on the economic horizon, Angelo Mozilo, head of Countrywide Financial Corp., unexpectedly ended up on the telephone with a member of the Senate Finance Committee, Kent Conrad of North Dakota.

The senator had called a friend for advice on lining up $1.16 million to buy a place on the Atlantic coast. Mozilo happened at the time to be with Conrad's friend, who put the senator on the phone with Mozilo, Conrad recalled.

The Finance Committee deals with tax policy and other matters affecting the financial services industry. And Mozilo was in a perfect position to help the senator: Countrywide, the nation's largest mortgage company, whose lending practices are the subject of a government investigation, had a VIP program whose beneficiaries included politicians whose goodwill the firm wanted to court.

Conrad, now chairman of the Senate Budget Committee, says he knew nothing about the program, which reportedly was known inside the Calabasas-based company as "Friends of Angelo."

But campaign finance reports, lobbying records and other evidence show that Countrywide avidly played the Washington-insider game. The company employed a small army of lobbyists to represent its interests in Congress and elsewhere in the government at a cost of nearly $4 million over the last three years. It also contributed tens of thousands of dollars to the campaigns of senators and representatives.

And it wrote mortgages for "VIPs," sometimes shaving a loan's interest rate or reducing fees, a former high-ranking Countrywide executive said.

Conrad got a Countrywide loan on his beach house after talking to Mozilo. Sen. Chris Dodd of Connecticut got two loans. California Sen. Barbara Boxer also borrowed from Countrywide on two occasions. All said they believed they received no special treatment. But business magazine Conde Nast Portfolio, which reported the Dodd and Conrad transactions this week, said both senators benefited from special terms. The magazine cited company documents.

Congressional financial disclosure records, which do not require disclosure of all loans, show at least 10 other members of the House and Senate reported getting mortgages from Countrywide over the years.

Conrad, providing detailed information on the beach house transaction and a loan he received from Countrywide on an apartment building, said, "I never asked for, expected or was aware of any special treatment. . . . And in my role as a United States senator, I have never done anything for Countrywide."

"They classify me as a friend of Angelo Mozilo, but I never met him," Conrad said, adding that bankers assured him that the rates were competitive.

The Portfolio article, citing company documents, said Mozilo authorized Countrywide to reduce Conrad's fees when he refinanced in 2004, saving him $10,700.

In 2004, Countrywide also lent Conrad $96,000 to buy out his two brothers on a Bismarck, N.D., apartment building. At the time, Countrywide normally did not make loans on apartment buildings as large as Conrad's.

The senator said he thought he got the exception because he was a good customer, the building was more than half paid for and he had an exceptional credit rating. Also, he said, the junior loan officers he dealt with told him the company's policy on such buildings was changing.

Dodd, likewise, said there was nothing untoward about his dealings with Countrywide.

"When my wife and I refinanced our loans in 2003, we did not seek or expect any favorable treatment. Just like millions of other Americans, we shopped around and received competitive rates," he said in a statement released Friday.

A Countrywide spokeswoman declined to comment about VIP loans. In a statement, the company said it was "very concerned about the improper disclosure of confidential customer information. . . . We regret any impact this may have had on our customers."

Other lenders contacted Friday, including Bank of America Corp., which has agreed to acquire Countrywide, said they didn't have programs for VIPs.

Boxer acknowledged receiving two loans from Countrywide that have since been paid off. One was to refinance a $200,000 mortgage on her Washington home in 2003. The other was for her house in Greenbrae, Calif., which was paid off in July 2006. A member of her staff, Natalie Ravitz, cited national lending figures to show the loans were at market rates.

Ravitz said the senator did not know Mozilo and has a policy of asking that she not receive special treatment.

The son of House Speaker Nancy Pelosi, Paul Pelosi Jr., has worked as a sales manager and loan officer for Countrywide in the San Francisco Bay Area and received about $1 million in loans from Countrywide on a condo. The younger Pelosi, 39, who holds a law degree and an MBA from Georgetown University, obtained a $916,000 mortgage from Countrywide in 2004 and a $114,500 line of credit the same year.

He has since paid off the loans, which he said were made at market rates. His mother said through a spokesman that she had no knowledge of her son's mortgages.

Although Dodd and Conrad said they received no special favors, disclosure of the loans was proving awkward for them. In part that's because of a federal investigation of Countrywide. Also, Dodd, one of four Senate Democrats who pursued his party's 2008 presidential nomination, has been preparing for a Senate vote on legislation he authored that would create a $300-billion mortgage insurance fund to save an estimated 500,000 borrowers from foreclosure. The measure could reduce losses incurred by Countrywide and other lenders on bad loans.

Lobbying records show that Countrywide's representatives have actively lobbied on bills that have gone through Dodd's committee.

But Dodd's office said he had been tough on Countrywide. The lender and various banking interests sent a letter to Senate leaders this year objecting to aspects of a bill Dodd co-sponsored.

News of the loans to Dodd and Conrad followed the departure of Washington insider Jim Johnson as an advisor to presidential candidate Barack Obama. Johnson, a former CEO of Fannie Mae who also received VIP loans from Countrywide, denied wrongdoing.

Conrad said Johnson was the friend who put him together with Mozilo.

"My memory is that I called Jim" to ask for advice on obtaining a mortgage for the summer house property in Bethany Beach, Del. "And he said, 'Here's a guy that you should talk to right now.' And he handed the phone over to Angelo Mozilo. That conversation lasted about 30 seconds. I told him what I was looking for and he said, 'We'd be happy to take a look at it,' or something like that."

The former high-ranking Countrywide executive said there was a group set up to handle employee and VIP loans. "The idea was to provide quality service and the best-priced deal available," this ex-insider said.

The company monitored all VIP loans and kept a schedule of who got them, what concessions were made and how the loan was performing, he said, adding that VIP mortgages rarely became problem loans.

A VIP borrower might ask for special treatment or get it because a loan officer recognized the name, he said, adding that in some cases, the borrower might not know he or she was getting special treatment.

tom.hamburger@latimes.com

chuck.neubauer@latimes.com

kathy.kristof@latimes.com

Hamburger and Neubauer reported from Washington, Kristof from Los Angeles. Times staff writers Peter Nicholas and Richard Simon in Washington contributed to this report.

http://www.latimes.com/business/la-fi-c ... 7897.story

What BS out of these people. OF course they got VIP loans and they new it.