Menu

Crime & Courts

Investigators say 4 Reps got discounted loans

Four House lawmakers received VIP discounted loans from the former Countrywide Financial Corp., the lender whose subprime mortgages was largely responsible for the nation's foreclosure crisis, according to congressional investigators.

Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, declined to name the four but has told the House Ethics Committee that it should investigate the lawmakers.

Congressional sources said three of the four are Republicans. The sources spoke on condition of anonymity, because they were not authorized to publicly discuss the investigation.

In 2009, Democratic Rep. Edolphus Towns of New York was identified in the media as having two loans that went through the Countrywide VIP program. On Monday, Towns insisted he was not involved in a VIP program of the lender and did not receive benefits that weren't available to every customer of the lender.

Issa, in a letter dated Friday and released Monday, said there could be additional lawmakers who received discounted loans.

The most favored customers of Countrywide were known as "Friends of Angelo," who were given discounts in a VIP section under control of the company's CEO Angelo Mozilo. However, Issa said his investigators discovered that other sections of Countrywide also processed VIP loans to public officials and others in position to help the company.

Countrywide was taken over by Bank of America, which has given Issa's committee 100,000 documents in response to subpoenas.

Issa's letter to ethics Chairman Jo Bonner of Alabama and ranking Democrat Linda Sanchez of California said: "Testimony and documents show that Countrywide used the VIP program to build relationships with government officials and others positioned to advance Countrywide's business interests.

"Between January 1996 and June 2008, Countrywide's VIP unit gave discounted loans to employees of the federal government, including the U.S. Congress."

He added, "My staff is also aware of the possibility that loans with VIP benefits were conferred to other members and serviced by a separate loan processing branch."

The ethics committee determines whether House members violated standards of conduct, including a virtual ban on gifts. The committee also can refer cases to the Justice Department for a criminal investigation.

It was previously revealed that Sen. Kent Conrad, D-N.D. and Chris Dodd, D-Conn., while still a senator, had received VIP loans from Countrywide. Both said they did not know they were getting unique deals and Dodd maintained he received no preferential treatment.

Others named as recipients of the VIP program were James Johnson, former head of Fannie Mae who later stepped down as an adviser to Barack Obama's first presidential campaign, and Franklin Raines, who also headed Fannie Mae. Still other "friends" included retired athletes, a judge, a congressional aide and a newspaper executive.

The Senate's ethics committee looked at the Dodd and Conrad cases and cleared them of wrongdoing, but warned that they should have exercised better judgment.

The committee said the senators should have questioned why they were in the VIP program, because it should have raised red flags.

The Securities and Exchange Commission in October 2010 said that Mozilo would pay a $22.5 million penalty to settle charges that he and two other former Countrywide executives misled investors as the subprime mortgage crisis began. Mozilo also was banned from ever again serving as an officer or director of a publicly traded company.

He also agreed to pay another $45 million to settle other violations for a total settlement of $67.5 million that was to be returned to investors who were harmed.

Bank Rates

Loan Type Graph Rate +/- Last Week
30 Y Fixed Graph 4.32% up 4.27%  
15 Y Fixed Graph 3.29% up 3.27%  
30 Y Fixed Jumbo Graph 4.61% up 4.57%  
5/1 ARM Graph 3.34% dw 3.47%  
5/1 Jumbo ARM Graph 3.60% up 3.51%  
Loan Type Graph Rate +/- Last Week
$30K HELOC Graph 4.38% dw 4.47%  
$50K HELOC Graph 4.11% dw 4.17%  
$30K Loan Graph 4.98% dw 5.11%  
$50K Loan Graph 4.40% dw 4.55%  
$75K Loan Graph 4.40% dw 4.51%  
Loan Type Graph Rate +/- Last Week
36 M New Graph 2.91% -- 2.91%  
36 M Used Graph 3.40% dw 3.44%  
48 M New Graph 3.16% dw 3.19%  
48 M Used Graph 2.90% dw 2.97%  
60 M New Graph 3.18% dw 3.22%  
Loan Type Graph Yield +/- Last Week
6 month Graph 0.35% up 0.34%  
1 yr Graph 0.67% dw 0.67%  
5 yr Graph 1.38% -- 1.38%