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Angelo Mozilo, ex-CEO of failed Countrywide Financial, praised at mortgage conference

By Jeff Lazerson

12/13/18

What’s up with mortgage rates? Jeff Lazerson of Mortgage Grader in Laguna Niguel gives us his take.

Rate news summary

From Freddie Mac’s weekly survey: The 30-year fixed rate slipped to 4.63 percent, down 12 basis points from last week. That’s the lowest rate in three months, according to Freddie Mac. The 15-year fixed also fell, down 14 basis points, averaging 4.07 percent.

The Mortgage Bankers Association reported a 1.6 percent increase in loan application volume from the previous week.

Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $484,350 loan, last year’s payment was $199 lower than this week’s payment of $2,492.

What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages for  zero cost: 15-year FHA at 4.0 percent, 30-year FHA at 4.125 percent, 15-year conventional 4.125 percent, 30-year at 4.5 percent, high balance FHA ($453,101 to $679,650) FHA 30-year at 4.375 percent, high balance conventional ($484,351 to $726,525) 15-year at 4.25 percent, 30-year high balance conventional at 4.75 percent and jumbo (over $726,525) 15-year jumbo at 4.5 percent and 30-year jumbo at 4.875 percent.

What I think: Last week I attended the National Association of Mortgage Brokers’ (NAMB) annual convention in Las Vegas. One general session I attended was headlined as “Mortgage Titans, Past, Present & Future.”

Front and center were the former CEO of Countrywide, Angelo Mozilo, and Freedom Mortgage’s President and CEO Stan Middleman. Mortgage industry blogger Rob Chrisman was the moderator.

Full disclosure: My company, Mortgage Grader, previously brokered loans to Countrywide and Freedom Mortgage. I also previously was a member of NAMB. I’ve previously paid Chrisman for employment ad space in his blog.

For me, the Mozilo interview at the conference was somewhere between fantasyland and a farce. Chrisman lobbed up softball questions about Mozilo’s background and the rise of Countrywide. Nowhere was it mentioned that the mortgage company was seen by many as the “epicenter” of the 2008 mortgage crisis, issuing millions in “liar loans” homeowners couldn’t afford.

Mozilo, instead, was big on homeownership. “I loved the changes you make in people’s lives. I approved 80 percent of the loans my underwriters rejected,” he said. “Countrywide had a wonderful reputation of lending to minorities ahead of everyone else.”

Countrywide’s loan servicing portfolio peaked at $1.5 trillion with 250,000 employees, according to Mozilo. “I would vouch for every single one of them (employees).”

The session ended with most of the attendees in the room giving Mozilo a standing ovation.

As the Great Recession descended on the U.S., Countrywide, which was bought by Bank of America for $4.1 billion in 2008, would become known for its reckless lending and abusive foreclosure practices leading up to the financial crisis, according to the New York Times. A judge in 2014 ordered BofA pay nearly $1.3 billion for fraudulent loans made by the lender. The penalty was overturned on appeal.

So, one has to wonder how many Countrywide customers lost their homes to foreclosure? What happened to the livelihoods of those 250,000 Countrywide employees? How did Mozilo handle his legal woes?

I was disappointed the moderator made no effort to create a balanced learning opportunity for the audience about what Mozilo thought went wrong or his takeaways. There were some 1,750 convention attendees, according to NAMB President Richard Bettencourt.

Why didn’t Chrisman ask the tough questions?

“The focus was on the origins of the industry, the importance of corporate culture, and their thoughts on the future,” Chrisman said. “I don’t believe Angelo Mozilo or Countrywide single-handedly caused the worldwide credit crisis.”

A quick Google search provides a snapshot of another dimension to Countrywide’s corporate culture:

In 2011, the Justice Department said BofA had agreed to pay $335 million for the largest fair lending settlement in history (at the time), claiming Countrywide overcharged 200,000 minority borrowers.

In 2010, the Federal Trade Commission said Countrywide’s loan servicing companies were fined $108 million for overcharging struggling homeowners.

Another 2010 SEC press release announced a $67.5 million fine for Mozilo, who also was permanently barred from future positions as an officer or director in the industry.

When asked why Mozilo was provided this forum, NAMB President Richard Bettencourt referred me to Freedom Mortgage, the session’s sponsor, as NAMB leaves it up to them to decide.

No one at Freedom Mortgage responded to several requests for comment. Freedom Mortgage, ironically, was sued in November with a proposed class action that accuses the company of making illegal profits on force-placed insurance, coverage that homeowners must pay for if their own policy lapses, Reuters reported.

And what are the implications in having Mozilo speaking at the convention?

In some way, there is an implied endorsement by having him there, said Michael Josephson, president and founder of the Josephson Institute of Ethics. “We need to be sensitive to the message you provide. A titan is heroic. If we put him up as a titan, did we learn any lesson?” Josephson asked. 

“The arrogance of it all is striking,” said Michael Connor, editor of Business Ethics Magazine.

Next week I’ll share some new loan programs I learned about, the value of arranging your mortgage through a broker, and the increasing mortgage broker market share.