3 ex-CEO's at Fannie Mae were among 42 employees at Fannie and Freddie Mac who got sweetheart loans from Countrywide

Under the guise of providing sweetheart loans to Fannie and Freddie executives, Countrywide was able to game the system at the expense of the American people and our nation’s fiscal solvency. Countrywide was very cognizant, calculating and ultimately effective at furthering their bottom line by co-opting the very people who should have been acting as stewards of the mortgage market and instead swapped their responsibilities for VIP loans.”

This most recent news exposing the true size, scope and intent of Countrywide’s VIP program comes as the Obama Administration and Congress legislate the aftermath of the financial crisis.

“It is disturbing that the very people charged with managing the stability of our housing and mortgage markets were apparently co-opted by one of the largest sub-prime lenders,” said Issa. “The decision not to include reform of Fannie Mae and Freddie Mac in financial reform legislation underscores the importance of investigating these influence buying efforts and presenting information explaining Congress' clear obligation to act. I am committed to exposing the full scope of how actions taken by Countrywide through its VIP program and other lobbying efforts compromised federal government officials who should have been more vigilant and skeptical about risky lending practices.”

Yesterday, Issa sent a letter to Federal Housing Finance Agency (FHFA) General Counsel Alfred M. Pollard raised concern that 173 Countrywide VIP loans given to 42 Fannie Mae and Freddie Mac employees, including three former Fannie Mae CEOs, violated ethics rules and created a conflict of interest.

“As our nation marched down the path leading to a crippling financial crisis, Fannie Mae should have been trying to cool off risky sub-prime lending and protect the economy from a volatile housing bubble,” said Rep. Issa. “The sweetheart deals to officials at Fannie Mae and Freddie Mac, however raise serious doubt that they could have said no to the risky business practices of Countrywide.”

The letter notes that spikes in Countrywide’s VIP lending to Fannie Mae officials occurred in 1998 as Countrywide was negotiating a volume discount with Fannie Mae and in 2001-2003, on the leading edge of a mortgage boom. In 1999, Countrywide reached an exclusive agreement to sell Fannie Mae billions of dollars in mortgages at a discounted rate. The deal was designed by Fannie Mae to lock competitor Freddie Mac out of the market for Countrywide’s loans.

Senate recipients of cut-rate Countrywide loans now up to 30

U.S. senators or Senate employees received 30 loans—far more than had previously been known—under a controversial lending program at Countrywide Financial Corp. that provided cut-rate terms to favored borrowers.

The information is contained in a letter sent to the Senate Select Committee on Ethics by Rep. Darrell Issa (R., Calif.), who has been spearheading the House Oversight and Government Reform Committee's investigation into Countrywide's so-called VIP mortgage program.

No specific loan recipients were named in the letter. But Mr. Issa's letter said borrowers on a dozen loans listed their place of employment as the office of "Senator Robert Bennett." Available public records don't indicate that Sen. Bennett, a Utah Republican and member of the Senate Banking Committee, received a Countrywide home loan.

Sens. Christopher Dodd (D., Conn.) and Kent Conrad (D., N.D.), have previously been identified among the high-profile individuals who received such loans. Both senators have denied wrongdoing. Until the Issa letter, no other senators or their staff members had been linked to the VIP loan program.

A spokeswoman for Sen. Bennett didn't respond to questions. Sen. Bennett recently lost his primary election battle and will be leaving the Senate in January after 18 years.

A spokesman for the Senate Ethics panel declined to comment. A spokesman for Bank of America Corp., which in 2008 acquired Countrywide, said the company had cooperated with the investigation by the House committee.

The VIP program operated during the housing boom earlier this decade, often writing mortgages with terms more favorable than those available to the general public. An estimated 28,000 loans were made, mostly to private parties such as Countrywide employees or their friends and relatives.

The House Oversight panel, where Mr. Issa is the ranking Republican member, is probing whether such loans were issued to public officials in an attempt to influence them. Last year, the committee subpoenaed VIP loan records from Bank of America.

Countrywide bent own rules to favor Chris Dodd

"An executive at mortgage giant Countrywide Financial overrode the company's loan-writing policies to give a discount to Sen. Christopher Dodd, the powerful chairman of the Senate banking committee, according to an internal Countrywide document turned over to congressional investigators and obtained by The Courant.

But paperwork, e-mails and other loan documents reviewed as part of the congressional probe include no direct evidence that Dodd was aware at the time that he was getting a discount, according to a source familiar with the investigation.

And a Dodd spokesman Thursday repeated the senator's contention that there was nothing in the negotiation or loan process that was unusual or out of the ordinary.

Dodd, who refinanced two mortgages with Countrywide in 2003, has said that he did not know that he had been placed in a special group of customers known as "Friends of Angelo" — a reference to Countrywide CEO Angelo Mozilo — or that he might have received preferential loan terms. Internal Countrywide documents do not contradict that assertion, a congressional source said."

http://www.courant.com/news/politics/hc-dodd-countrywide-0320.artmar20,0,5251192.story