Countrywide Exits the Stage

Angelo Mozilo - co-founder, chairman and CEO of Countrywide Home Loans, once a powerhouse in mortgage banking and the world's largest mortgage servicer - is leaving the playing field.

Last month, ending an era, Mr. Mozilo stepped down in the wake of Bank of America's $2.5 billion purchase of Countrywide Financial Corp., a company that at one time was worth $25 billion on paper. Countrywide isn't the first big servicer to disappear from the stage - names like Lomas and GE Mortgage ring a bell - but it's fall from grace was dramatic.

He launched CFC as a non-bank 39 years ago at the kitchen table of a Manhattan apartment owned by his late friend and former boss, David Loeb. Mr. Mozilo started in the mortgage business when he was 14 years old, serving as a "runner" for a loan company in Midtown Manhattan.

For most of those 39 years this Bronx native was an admired and feared competitor and served, in some respects, as a spokesman for the industry, appearing frequently on CNBC to talk about the mortgage business and then, as CFC's fortunes crumbled, his own company.

Over the past year his reputation has been hammered in columns and blogs for selling $400 million worth of stock as CFC's share price crumbled from $40 to $4.

Even though the company is now the property of Bank of America, it is still the subject of multiple state probes for both its lending and foreclosure practices. CFC has been vilified by consumer activists for being a "predatory" subprime lender, a business it avoided for most of its history.

I first met Mr. Mozilo 20 years ago. It's hard to put an exact date on it, though I do remember the first time he came to my Washington office on G Street, three blocks from the White House.

He was dressed in a dark gray suit, and was wearing a white shirt with a blue collar and a red tie. It was the kind of shirt that investment bankers wore when they appeared on CNBC to discuss the vicissitudes of the stock market.

Later on I learned that Angelo was none too fond of investment bankers, though he did like the shirts they wore. We got to know each other a bit because of a book I co-wrote about the savings and loan crisis of the late 1980s and early 1990s, "Inside Job: The Looting of America's Savings and Loans."

(He is now a central character in a new book I have coming out called "Chain of Blame, How Wall Street Caused the Mortgage and Credit Crisis.") He had read "Inside Job," admiring its detail and its financial morality tale - a story about so-called honest businesspeople who took advantage of newly passed laws that allowed them to loot federally chartered S&Ls (thrifts).

He was genuinely appalled by the audacity of both legitimate businessmen (real estate developers mostly) and con artists who were allowed to own S&Ls and treat them like their own personal piggybanks.

The S&L crisis led to the indictment of hundreds of men (and a handful of women). Dozens went to prison. Others walked. In the wake of the S&L mess CFC flourished.

With all those S&Ls going bust, Countrywide cleaned up by using loan brokers to produce loans for it. It became the biggest lender in the land, bar none. And now it is no more, swallowed up by BoA.

Mr. Mozilo has retired.

It's the end of an epoch. Whatever comes next, he will not be part of it. He is 69 years old. (For more of Paul's take on the blockbuster Bank of America/Countrywide merger, see page 5). (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/