David S. Loeb, the retired chairman and co-founder of mortgage banking firms Countrywide Financial Corp. and IndyMac BankCorp Inc., died Monday at his home in Sparks, Nev. He was 79.
Loeb, a New Yorker, co-founded Countrywide in 1969 with a top young mortgage broker from his first company, United Mortgage Servicing. Loeb had been forced to relinquish his original 50% stake in United because of pressure from corporate raiders. So he and a young colleague, Angelo Mozilo, set out to remake their business as Countrywide.
They opened their first office in Anaheim, where Mozilo served as the loan officer. Loeb performed underwriting duties from an outpost in New York. Eager to extend their firm's reach nationwide, they took the company public -- an unusual move in the mortgage banking industry at that time.
After raising a disappointing $800,000, Mozilo hit the streets of Los Angeles selling loans, and Loeb came west to help keep the company afloat.
Inflation and high interest rates in the early 1970s racked the mortgage industry. By 1974, Countrywide had eight branch offices, but it was nowhere close to becoming the national force that Loeb and Mozilo had envisioned.
That's when Loeb came up with a radical plan: He decided to fire his highly paid sales staff and convert the branch offices into uniform loan processors, with the central office taking care of sales.
The strategy worked. By keeping its overhead expenses down, Countrywide was able to offer interest rates lower than the competition's. The company also gained a reputation for being nimble; it was among the first in the industry to lock in interest rates for customers at the time loans were originated -- not later on when all the paperwork was tidied up.
The firm grew steadily through the 1980s and exploded later that decade and in the early '90s with the collapse of the rival savings and loan industry. Today, Countrywide has more than 500 branch offices.
In 1985, Loeb and Mozilo formed a real estate investment trust -- a vehicle for buying and selling large-scale properties -- that eventually became IndyMac. In 1993, IndyMac formed its own senior management team; Loeb served as chairman of the company until he retired earlier this year.
IndyMac split off from Countrywide in 1997. Calabasas-based Countrywide and Pasadena-based IndyMac are now competitors.
"Along with the entire Countrywide family, I am deeply saddened that my friend and business partner of 43 years, David Loeb, has passed away," Mozilo, the Countrywide chairman, said in a prepared statement Wednesday. "David was a leader of our industry."
Loeb served as a navigator in the U.S. merchant marine during World War II after his graduation from the Maine Marine Academy with a bachelor's degree in nautical science in 1943. He served as a trustee of the academy and was a benefactor of its Loeb-Sullivan School of International Business and Logistics.
After World War II, Loeb focused on what would become his life's work. In 1946, he became a sales representative for a mortgage banker, and first went out on his own with the founding of Lomas Realty Securities in 1950. At the same time, he was working on a second degree, earning his bachelor's in accounting from New York University in 1951. Loeb later served on the board of overseers of NYU's Stern School of Business.
Loeb was also active in real estate development through Wingfield Nevada Group/Loeb Enterprises, which develops master-planned communities.
Loeb is survived by his wife, Ingrid Heidi Loeb of Sparks; three daughters, Tracey Loeb, Heidi Loeb and Wendy Lumsden; a stepson, Nicholas Casini; and six grandchildren.
Memorial services will be held at 11:30 a.m. July 13 at the Events Center at Red Hawk, 6595 Wingfield Springs Road, Sparks, Nev. Donations may be made to the Neuropathy Assn., 60 E. 42nd St., Suite 942, New York, NY 10165.