Thursday, February 17, 2011

New subpoena seeks records on sweetheart loans

A House committee chairman renewed efforts Wednesday to obtain names of current and former federal, state and local policymakers – including congressional colleagues – who received sweetheart mortgage deals from the former Countrywide Financial Corp.

The subpoena by Rep. Darrell Issa of the Oversight and Government Reform Committee makes it more likely that the records could be made public.

A subpoena in 2009, when Democrats controlled the committee, specified that information on discounted loans to members of Congress and their spouses go only to the House Ethics Committee – with all names deleted. The ethics committee has never revealed the information it obtained.

Issa did not favor the restrictions but agreed to them as a compromise so that the committee’s former chairman, Rep. Edolphus Towns, D-N.Y., would issue the subpoena.

“Countrywide orchestrated a deliberate and calculated effort to use relationships with people in high places in order to manipulate public policy and further their bottom line to the detriment of the American taxpayers even at the expense of its own lending standards,” said Issa.

“This subpoena will allow us to obtain the information needed to answer the outstanding public interest questions regarding the full size and scope of the VIP program,” he said. “The American people have a right to know the totality of who participated in Countrywide’s VIP program and what they did in return for access to it.”

Countrywide had been the nation’s largest home loan originator before the housing market collapse. Many of its borrowers were left unable to repay mortgages that, in many cases, required no proof of income or a downpayment. The company was purchased in 2008 by Bank of America, which has the records and received the subpoena.

Government employees and influential private citizens received better deals than most of the company’s borrowers. Those perceived as having the most influence were designated “Friends of Angelo” – those favored by Countrywide chief executive Angelo Mozilo.
The Securities and Exchange Commission last October settled a lawsuit against Mozilo. He agreed to pay a $22.5 million penalty to settle charges that he and two other former Countrywide executives misled investors as the subprime mortgage crisis emerged.

Among those who received discounted Countrywide mortgages were former Sen. Christopher Dodd, D-Conn., and Sen. Kent Conrad, D-N.D. Both senators have said they didn’t know they were getting unique deals.

Issa’s subpoena had a broad scope, asking for records of borrowers who were – or still are – federal officials, including members of Congress and their staffs, as well as state and local government officials and employees of mortgage giants Fannie Mae and Freddie Mac. Loans to spouses also must be turned over, the subpoena said.

However, Issa said he’s mainly interested in loans to those who could influence policies – or people who Countrywide officials sought to influence.
Source: The Associated Press, Larry Margasak. All rights reserved.

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