The Worst? Yes, but Before That, the Best

DEC 20, 2012 2:16pm ET
Comments (3)

WE’RE HEARING about Angelo Mozilo, who is back in the news, courtesy of a just-released court transcription that shows him to be a couple of light years off the beam, describing his failed Countrywide Financial Corp. as a “world-class” lender.

I’ve spoken to a dozen mortgage lenders and vendors about Mozilo over the course of a few recent trade shows, and you know what? Every one of them agreed with me when I put forth my formulation on him: “Before Angelo Mozilo was the worst mortgage banker in the country, he was the best mortgage banker in the country.”

The word “tragedy” gets thrown around a lot, but I think it’s true in Mozilo’s case. A tragedy involves the fall of a formerly great man or woman. And that’s what happened in his case. You have to be great. Mozilo was. (The fall of a Stalin or a Hitler isn’t a tragedy because they weren’t great men.) And you have to fall from a great height. Mozilo did.

What did Mozilo do to become a great mortgage banker? For one thing, he thought big. He strove for a “countrywide” presence like a Bank of America had, or a Nationsbank. And he got there. He had a sensible view of expansion, preferring to grow his servicing portfolio through originations rather than buying portfolios or whole companies. That was smart.

He was the first mortgage banker to take his company public, and for a long time the only one. His hedging strategy was legendary, and urban legend made it into something like a mortgage Coca-Cola formula. (Actually, he was good, but not perfect on judging market swings.) He was also a champion for mortgage technology, at one time calling Countrywide a technology company that also made mortgages.

He targeted Hispanics for mortgages through the Federal Housing Administration’s programs. Nowadays, targeting populations has a bad connotation, but it is not always predatory lending. Mozilo targeted Hispanics as an underserved market that he reached out to provide reasonable loans that had a reasonable assumption they’d be paid back. This is the very model of a great mortgage banker. At one time, yes, Countrywide was a world-class lender.

What did Mozilo do to be the worst mortgage banker in the country? He stayed at the dance too long (he tried to retire at one point and couldn’t) and his competitive juices got stirred by the legions of subprime mortgage lenders all around him in the OC. And he bested them in all the worst ways.

Mozilo’s tragic fall should not hold him blameless for the many homeowners who suffered from Countrywide’s bad lending practices. They deserve redress. But let’s take just a minute to remember his former greatness.

My last memory of Mozilo comes from an MBA trade show, can’t remember which year now. I was walking by Countrywide’s booth and it was being manned by one lonely company rep. And that rep was the CEO, Angelo Mozilo. That was Angelo Mozilo doing what came naturally to him, always minding the store.

STARTING TOMORROWBrian Collins and I are combining forces to bring you a weekly report which will draw on our total of more than 50 years covering the mortgage business, me as the editor of National Mortgage News, and he as senior editor and DC bureau chief. Look for a lively mix of Beltway and national news culled from the most knowledgeable sources we know!

Comments (3)
A very balanced and well written article that I believe that Angelo Mozillo would agree on most of the points. Great Job.
Posted by | Friday, December 21 2012 at 2:57PM ET
It would have been great if it hadn't been so bad. Let's hope we are the winners this time and we don't go down a path that leads to the destruction of the worlds economy. This happened in the Great Depression, 2008, will probably happen in another 90 years.
Posted by | Friday, December 21 2012 at 5:00PM ET
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