Countrywide Loan Probe Ended by House Panel with No Action Taken
A House panel ended a probe of alleged preferential lending by Countrywide Financial Corp. to lawmakers and aides without taking action, saying the “serious matters” submitted for review fall outside its jurisdiction.
Allegations surrounding mortgage loans to House members and staffers through Countrywide CEO Angelo Mozilo’s “Friends of Angelo” initiative or other so-called VIP programs are either too old or involve people no longer employed in the House, the Ethics Committee’s Republican chairman and ranking Democrat said in a statement yesterday.
“While these allegations concern serious matters, almost all of the allegations concerned actions taken outside, or well outside, the jurisdiction of this committee,” Ethics Committee chairman Jo Bonner of Alabama and Rep. Linda Sanchez of California said in their statement. House rules preclude sanctions for violations that occur more than three Congresses—or six years—before the current one, they said.
The investigation was sought by Rep. Darrell Issa, the California Republican who leads the House Oversight and Government Reform Committee. Issa said in a July report that Countrywide gave discount loans to lawmakers and Fannie Mae executives from 1996 to 2008 as the government-sponsored mortgage-finance company lobbied to block legislation that would’ve diminished its sale of subprime loans.
Bonner and Sanchez said the Ethics Committee conducted its own review of the role of Countrywide’s VIP unit, finding that while it offered quicker, more efficient processing and some discounts, the loans met basic underwriting standards and didn’t offer the best deals available in the marketplace.
“Participation in the VIP or FOA programs did not necessarily mean that borrowers received the best financial deal available either from Countrywide or other lenders,” they said in the statement. “Therefore, mere inclusion in one of these programs is not, in and of itself, a violation of any rules, laws, or standards of conduct governing members, officers, or employees of the House of Representatives.”
The Senate Ethics Committee completed an investigation in 2009 saying lawmakers including former Banking Committee chairman Christopher Dodd and Sen. Kent Conrad didn’t violate rules when they refinanced loans with Countrywide.
Fannie Mae, which bought billions of dollars in mortgages from Countrywide under an exclusive agreement, has been under U.S. conservatorship since September 2008, when it was seized along with Freddie Mac amid losses that pushed them to the brink of bankruptcy. Countrywide had been acquired two months earlier by Bank of America Corp., which has spent more than $40 billion to clean up mortgages inherited in the deal.
Mozilo, 74, agreed to a record $67.5 million regulatory settlement in 2010 to resolve claims that he reaped about $140 million by selling Countrywide stock while misleading investors about the quality of the company’s loans.