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Report: Countrywide gave lawmakers ‘sweetheart’ loans
Jul 9, 2012, 8:22 AM | Updated: Mar 4, 2016, 5:55 am
A new report issued by the House of Representatives accuses Countrywide Financial of issuing “sweetheart loans” to members of Congress, their staffs, and government employees through a secret “VIP program.”
The report alleges that the nation’s once-largest mortgage lender would issue the lawmakers and other key government employees lower mortgage rates (on average, a discount of between 0.5 to 1 percent on origination points), expedited loan processing, and less stringent underwriting standards.
Additionally, the company purportedly waived hundreds of dollars worth of loan fees in order to win favor for their business interests on Capitol Hill.
In a three-year investigation, the House Oversight and Government Reform Committee said it uncovered that thousands of lawmakers and government employees took part in the program.
The report also alleges that Countrywide relaxed its underwriting standards for these VIP borrowers and that Countrywide employees would even fill in blanks on applications when borrowers would decline to state their income or employment.
The report says influential lawmakers such as Christopher Dodd, D-Conn., the Senate Banking Committee chairman, and Kent Conrad, D-N.D., the current Senate Budget Committee chairman, were among those who received the mortgage perks from Countrywide’s program. Conrad and Dodd had previously been investigated by the Senate Ethics Committee for their VIP Loans. The committee concluded unanimously that they had received no “preferential treatment” nor “acted unethically.”
Bank of America, which purchased Countrywide in 2008, released no public statement about the allegations in the report. However, a Bank of America spokesman said that the company ended Countrywide’s VIP Program when the bank acquired it in 2008.
Angelo Mozilo, the former Countrywide CEO, says the VIP Program was not offered to lawmakers in return for trying to buy more influence on Capitol Hill by the bank.
“In my mind, [the VIP program] was another channel through which we competed to originate loans that we thought would be profitable for the company,” Mozilo told the investigating committee.
