Sen. Christopher J. Dodd VIP Loan

[X5rolls]

He obviously isn't the only one and this cuts across party lines but it's amazing that the left won't own up to Freddie/Fannie and Congress being part of the current economic failure.

It's important to get the facts straight and for the public to understand how this stuff works.

We all know about the mortgage meltdown, bad lending, bad borrowing, overextending etc.

The attached story (from the liberal newspaper, the Washington Post) is important because arguably the architects of the mortgage meltdown include President Clinton, Barney Frank and Senator Dodd. These guys and others were responsible for the framework to promote an expansion of sub prime lending. Their original cause is noble - home ownership for lower income, minority citizens. However, in the execution, reasonable business acumen was kicked to the curb. Executives at Freddy/Fannie were encouraged by Dodd and Barney with full support from the White House to build an internal measurement system where loan payback metrics were secondary to making loans.

Countrywide was a great example of taking advantage of the system by focusing on sub prime loans and skirting any reasonable measures to ensure validity of borrowers information including proof of income. Meanwhile Countrywide's CEO, Angelo Mozilo was courting policy makers with special loans via his VIP or friends of Angelo lending programs. Fortune Magazine did a great series on the program and him.

Now Congress is blocking the truth coming out by declining to subpoena Bank of America (acquired Countrywide) records to get the full story of lending to congressional members (and others) on the record.

Honest government?


washingtonpost.com

House GOP Report Details Countrywide's Efforts to Benefit VIPs


By Zachary A. Goldfarb
Washington Post Staff Writer
Thursday, March 19, 2009; D03

Executives at Countrywide Financial, 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 Countrywide went to give loans to VIPs through a program known as "Friends of Angelo," named after the company's chief executive Angelo 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 senators and other officials, prominent businessmen, congressional aides, celebrities and journalists, including 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 Johnson, former Department of Housing and Urban Development secretary Alphonso Jackson, Jackson's daughter and others.

Beneficiaries of the VIP program were featured in accounts in Portfolio magazine and other publications last year that exposed the Countrywide initiative.

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.

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

The report details an incident in 2002 in which Chuck Tooley, the mayor of Billings, Mont., sought to cancel mortgage insurance he didn't think he needed. He talked to Countrywide's Washington lobbyist about the possibility of eliminating the insurance.

According to the report, a Countrywide attorney told the lobbyist that the insurance was appropriate and asked, "are our non-legal reasons why we would not want to enforce it strong enough for [Countrywide] to pay for the MI for the remainder of the loan?"

A Countrywide managing director responded, "I'm usually in favor of settling on the side of the borrower with political influence. However, in this case, I think the MI payment for the life of the loan has the potential of being a greater number than the Mayor of Billings Montana influence. Jimmie, since you work with the mayors, what's your opinion?"
The lobbyist responded that Billings "sits on the Advisory Board of the U.S. Conference of Mayors" and "is also very likely to hit the speaking circuit as Mayor."

Another top executive weighed in: "Due to the Mayor's (and his wife's) potential influence and accessibility to media outlets and publications, [Countrywide should] offer him a refi and either give him a .25 credit toward the discount or a $500.00 credit toward closing costs. Either way, we're showing our good faith."

The lobbyist agreed, writing "for political and public relations reasons, I think this is a better option," and the offer was passed along to Tooley.
In an interview, Tooley said: "We determined the value of the home had grown to a point where I was not required to have the mortgage insurance. But they wouldn't cancel it, and I just happened to run into this guy from Countrywide and he helped me out."

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."

"It was reinforced every time I talked to them," Feinberg said in an interview. "You're in the VIP loan department and you're going to get a special discount."

In preparing a 64-page report on the Countrywide program, House Republicans relied largely on documents gathered by Feinberg.

Rep. Darrell Issa (Calif.), the top Republican on the House Committee on Oversight and Government Reform, said the Democrats in the majority have declined to subpoena Bank of America for comprehensive records on the VIP program."

"The full story of Countrywide's efforts to buy influence hasn't been told and shouldn't be swept under the rug because no chairman is prepared to issue a subpoena," Issa said.

A spokeswoman for committee chairman Edolphus Towns (D-N.Y.) said Towns is striving to work with Issa on as many issues as possible, including Countrywide.

Examining the ties between Countrywide and Fannie Mae has been a major focus of House Republicans. Many Republicans put a large share of the blame on Fannie Mae and its counterpart, Freddie Mac, for the financial crisis.