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Report details Countrywide's efforts to benefit VIPs

Congressional investigators say executives routinely violated internal company policies to provide below-market rates on home loans to the politically connected and powerful.

March 19, 2009|Zachary A. Goldfarb

WASHINGTON — Executives at Countrywide Financial Corp., one of the biggest names of the housing boom, routinely violated internal company policies to provide below-market rates on home loans to the politically connected and powerful, according to a congressional report to be released today.

Loan documents show how far Calabasas-based Countrywide went to give loans to VIPs through a special program known as "Friends of Angelo," named after former Chief Executive Angelo R. Mozilo, according to congressional investigators.

Executives manually overrode the company's computer software that routinely warned that certain additional fees would be necessary to accommodate below-market rates. That was in addition to lengthy discussions on the merits of giving a special deal to a particular borrower, missives from Mozilo to employees telling them to give VIPs breaks and other activities.

A report by House Republicans on the investigation was obtained by the Washington Post in advance of its release.

Recipients of special loans included Sen. Kent Conrad (D-N.D.), Sen. Christopher J. Dodd (D-Conn.), former U.N. Ambassador Richard C. Holbrooke, former Fannie Mae Chief Executive James A. Johnson and former Housing and Urban Development Secretary Alphonso Jackson.

Countrywide, which handed out many of the loans that turned out to be toxic waste on the books of banks, faltered in 2007 at the onset of the financial crisis and was sold to Bank of America Corp.

Bank of America said it would cooperate fully with any official inquiry into this Countrywide program.

Most recipients of VIP loans have said in news accounts that they had no idea they were receiving a special deal. But the report states that Countrywide clearly indicated to borrowers they were getting special deals, usually by including business cards indicating the loan came from a VIP unit.

Robert Feinberg, a 12-year Countrywide employee who processed VIP loans, told investigators that it was standard practice to tell borrowers, "Your loan was specially priced by Angelo."

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Goldfarb writes for the Washington Post.

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