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Illicit home loan is alleged

March 05, 2009|Zachary A. Goldfarb

WASHINGTON — Franklin Raines, the former chief executive of Fannie Mae, used a special program at mortgage lender Countrywide Financial to receive a below-market rate on a home loan, contrary to sworn testimony he made to Congress in December, according to the top Republican on the House Committee on Oversight and Government.

Raines' lawyer, however, disputed Rep. Darrell Issa's characterization of events.

Issa (R-Vista) released documents Wednesday that he said showed Raines received discounts and waivers of fees on a June 2003 home loan through the "Friends of Angelo" program, named after Countrywide's then-chief executive, Angelo R. Mozilo.

In response to questioning at a December hearing, Raines said he was not given a home loan through the program that allegedly extended lower rates to prominent executives and politicians nor did he receive preferential treatment on his mortgage.

Once the nation's largest mortgage lender, Countrywide was acquired by Bank of America last year after suffering heavy losses on bad mortgage loans.

Raines' lawyer, Kevin Downey, said Wednesday that none of the information cited by Issa contradicted that earlier testimony.

But Issa said the documents showed otherwise.

On June 9, 2003, according to the documents, Raines' assistant was in contact with Countrywide about a new mortgage.

An executive in Countrywide's "VIP loan unit," Issa said in a letter to Downey, "arranged a one-point discount and waiver of 'junk' fees on Mr. Raines's June 2003 refinance."

The letter says that Raines received a 4.125% rate on his mortgage, when the prevailing rate for comparable loans was 5.1%. Also, Raines didn't pay the variety of fees -- application, warehouse and processing -- that borrowers would ordinarily pay.

Issa asked Downey whether Raines wished to revise his testimony before the committee investigated further.

Downey, in a letter responding to Issa, wrote: "[N]one of what is set forth in your letter suggests anything new or anything inaccurate about Mr. Raines's testimony before the committee."

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Goldfarb writes for the Washington Post.

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