Senators deny deals from Countrywide
In 2004, Sen. Kent Conrad, D-N. D., was hunting for a lender for a $1.07 million mortgage on his Bethany Beach, Del., vacation home when a...
The Washington Post
WASHINGTON — In 2004, Sen. Kent Conrad, D-N.D., was hunting for a lender for a $1.07 million mortgage on his Bethany Beach, Del., vacation home when a friend handed him the phone number of Angelo Mozilo.
Conrad said Friday that he sees nothing wrong with calling Mozilo, chief executive of the nation's largest mortgage lender, Countrywide Financial. And the Senate Budget Committee chairman is adamant that he received no special deals.
But by reaching out to Mozilo, Conrad became another VIP enrolled in the "FOA" — Friends of Angelo — loan program.
"[T]ake off 1 point," Mozilo instructed in a March 17, 2004, e-mail obtained by Condé Nast Portfolio magazine. In an April e-mail about a Conrad loan, Mozilo wrote, "make an exception due to the fact that the borrower is a senator."
Savings offered under the FOA program do not appear to amount to more than a few hundred or thousand dollars.
But as Countrywide this year emerged as a leading player in the subprime-mortgage crisis, Mozilo turned politically radioactive, held up by politicians as the personification of a housing meltdown that has shaken financial markets around the world.
Last month, a federal judge in Los Angeles gave the go-ahead to a lawsuit filed by Countrywide shareholders, who claim the company made bad loans and misled investors. Mozilo in March was called before a congressional committee to defend his compensation package, which dropped 79 percent last year to $10.8 million but was supplemented by $121.5 million in exercised stock options.
The "FOA" program has surfaced only recently. Conrad received Mozilo's phone number from former Fannie Mae Chief Executive James Johnson, who was chased from his job vetting running mates for Democratic presidential candidate Barack Obama four days after The Wall Street Journal reported that he may have received preferable treatment on his own Countrywide loans.
Some familiar with Mozilo's practices said he made no secret of the incentives.
"It was something he handed out like party favors," said Guy Cecala, publisher of Inside Mortgage Finance Publications. "As long as I can remember, he was offering that."
The Portfolio investigation alleges that favorable loans also were extended to Senate Banking Committee Chairman Chris Dodd, D-Conn.; President Bush's former housing secretary, Alphonso Jackson; former United Nations Ambassador Richard Holbrooke; and former Clinton administration Health and Human Services Secretary Donna Shalala.
Holbrooke, Shalala and Jackson did not return phone calls. But Conrad and Dodd, both of whom have committee jurisdictions that impact Countrywide, on Friday dismissed the notion that they received favorable deals, and they said they did not know the FOA loan category existed.
"I was never told I was given preferential treatment. I didn't ask for it, didn't seek it, and, as far as I know, I didn't get it," Conrad said.
Said Dodd: "As a United States senator, I would never ask or expect to be treated differently than anyone else refinancing their home."
Bryan DeAngelis, a spokesman for Dodd, said neither the senator nor his wife spoke to Mozilo about their loans.
The senators' mortgage rates appear to be at or even above the prevailing rate at the time. Conrad received a 4.875 percent rate on a 15-year mortgage in April 2004 for his beach house and a 5.75 percent rate on a $96,000 mortgage in July 2004 on an eight-unit apartment building in Bismarck, N.D.
His former loan officer has acknowledged to Conrad that Countrywide dropped his rate a full percentage point on the beach house, a savings of about $10,000 a year.
"If they did me a favor, they did it without my knowledge and without my requesting it," Conrad said. "I have not done one single thing wrong here."
Countrywide also made an exception in lending Conrad $96,000 for the apartment building. The company had a policy of only providing loans for buildings with four or fewer units.
Dodd borrowed $506,000 at 4.25 percent to refinance his Washington town house and $275,042 at 4.5 percent to refinance a home in East Haddam, Conn., according to Portfolio. Quoting internal documents, the magazine said Countrywide waived three-eighths of a point, or about $2,000, on the first loan and a quarter of a point, or $700, on the second.
"When my wife and I refinanced our loans in 2003, we did not seek or expect any favorable treatment," said Dodd, who is negotiating a bill to crack down on some types of subprime lending. "Just like millions of other Americans, we shopped around and received competitive rates."
Countrywide officials Friday did not address questions about the VIP program: "Protecting customer privacy is of utmost importance."
Material from The Associated Press is included in this report.
Copyright © 2008 The Seattle Times Company
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