Report: Countrywide Gave Discounted Home Loans to Capitol Hill Insiders
(WASHINGTON) — A House committee report on the now-defunct subprime lender Countrywide Financial Corporation shows the company tried to win and influence friends in Washington by arranging discounted home loans for some members of Congress, as well as congressional aides and government officials.
The House Oversight and Government Reform Committee reviewed more than 60,000 pages of documents and discovered Countrywide’s special VIP unit arranged discounted loans for a half-dozen current or former members of Congress, key aides and certain government officials.
Congressional investigators say there was no specific favor sought or granted in exchange for the discounted home loans, but Countywide did gain influence on Capitol Hill. The report shows many of the recipients of the special mortgages were linked to several financial reform proposals that, had they passed, would have prevented some of the issues that led to the collapse of the housing market.
Former Countywide chief executive Angelo Mozillo was never sent to prison for violating federal law, but he did agree to pay $67 million in penalties and never again be involved in running a publicly-traded company.
While Countrywide was giving politicians and other Washington insiders VIP treatment, it was providing just the opposite to average Americans. A government study in 2010 found that Countrywide improperly imposed fees on people who were late on mortgage payments and were in default.
In 2011, Bank of America, which had acquired Countrywide three years earlier, agreed to pay $335 million to settle charges that Countrywide discriminated against blacks and Hispanics seeking to buy homes between 2004 and 2008. The Justice Department said at the time that Countrywide regularly charged minorities higher fees and interest rates while steering borrowers into risky subprime mortgages, a major factor in the collapse of the housing market.
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