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His star tarnished, Mozilo exits stage

He led Countrywide on a dizzying ride from industry supremacy to sub-prime calamity.

July 01, 2008|E. Scott Reckard | Times Staff Writer

But such personal favors were a sideshow compared with Countrywide's biggest blunder -- its full-on push this decade into sub-prime lending, taking on independent niche players like Ameriquest Mortgage Co. and New Century Financial Corp., and option ARMs, where the competition was thrifts such as World Savings of Oakland, Washington Mutual of Seattle and IndyMac Bank of Pasadena.

As the competition intensified for these risky loans in 2006, Countrywide joined the other lenders in relaxing its standards for borrowers, allowing lower credit scores and higher loan balances. In many cases, it lent without documenting borrowers' incomes.

As defaults mounted in late 2006 and early 2007, Mozilo swore he would ride out the industry's turmoil and emerge bigger than ever. But it was not to be.

"I've always told my colleagues at Countrywide not to fear change but instead to embrace it," Mozilo said Wednesday as shareholders voted to approve the sale of Countrywide to Bank of America.

"This has been a difficult time for all of us involved at Countrywide. But I have learned over the past year that it's not only change that must be embraced, but the inevitable."

The end of the Countrywide story was "a total disaster," Muolo said. "His ego sank him. . . . He had to be first in everything."

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scott.reckard@latimes.com

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