Woman: Countrywide Proposed Fibbing to Get Loan

May 6, 2008

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May 6, 2008

Countrywide, the nation's largest home lender, used to specialize in the kind of risky loans that have gone sour in huge numbers recently. Countrywide and other lenders say they have cleaned up their act. But one homeowner says she was recently given the hard sell by a Countrywide loan officer who appeared to be breaking rules.

STEVE INSKEEP, host:

It's MORNING EDITION from NPR News. Good morning. I'm Steve Inskeep.

We're going to check up now on mortgage lenders who say they're following the rules now. It's pretty clear the lending industry was out of control in recent years. That's how millions of people wound up in loans that they can't pay back. Now they say they've changed - the companies do. But one homeowner we found says that does not seem to be the case at Countrywide, the nation's largest home lender. NPR's Chris Arnold reports.

CHRIS ARNOLD: Julie Santoboni just had an experience with Countrywide that she couldn't believe, especially given what a mess we're in with the housing market and all the foreclosures.

Ms. JULIE SANTOBONI: That's why it made me so mad. This didn't happen four years ago. This happened now, when everybody is awake to the problems that can result from bad loans.

ARNOLD: When it comes to getting a mortgage, Santoboni didn't just fall off a potato truck. She's owned several homes. She's an economic analyst and her husband's a mathematician. Their house in Washington, D.C., is half paid off, but they have an adjustable rate loan and were looking to refinance.

Ms. SANTOBONI: Rates have come down a lot, so I wanted to just take advantage of the lower rates and get a fixed rate.

ARNOLD: On March 19th, Santoboni called Countrywide on an 800 number and told the loan officer her situation. She had taken the past two years off work to be with her kids, so the family's income was a little low. She says the Countrywide loan officer's answer to that was to have her lie about her income. Since her husband had the word manager in his job title…

Ms. SANTOBONI: He said that he could bump his income up. And I had asked how he could do it, and he was rather elusive about how, but he said he could change it. And if it was a manager, then the underwriters wouldn't be as questioning. And I said but our taxes don't reflect it, and his boss will not verify that that is indeed his income. And basically, he said don't worry about it. I'll deal with it.

ARNOLD: A lot of people think it was this kind of coaching from aggressive mortgage brokers that got so many people to lie about their incomes and get into loans that they couldn't afford. Santoboni says the Countrywide loan officer also wanted her to write a letter saying she made $60,000 over each of the past two years and get her accountant to sign it, even though that would've been a totally fraudulent document. She hasn't even been working.

Ms. SANTOBONI: And I told him that. I told him that I was extremely uncomfortable doing it, and I don't feel comfortable lying and I don't want to. And he said, well, the rate's really good, so you might want to lock it in, and then I said I don't want to. And he said, well, it's only $450.

ARNOLD: Santoboni also asked how much the closing costs were. And after persisting a bit, she says she got the Countrywide loan officer to tell her the fees would be $10,000. She says the loan officer told her those were standard fees in the industry, which she knew wasn't true. And she says he kept hard-selling her.

Ms. SANTOBONI: Very hard sell. You know, rates are going to go up. They keep fluctuating. You're lucky to have called today. I mean, it was really every sleazy move in the book.

ARNOLD: Santoboni got the loan officer's name and title. She thinks the call was recorded. Countrywide declined an interview, but it said it in a statement it is now looking into the incident, and that, quote, "The alleged conduct would not be in keeping with Countrywide's ethical standards, stated policies and approved practices."

Santoboni says, though, at one point another Countrywide sales person called her to follow up, and she told the woman about the guy trying to get her to lie on her loan application.

Ms. SANTOBONI: And her response was, uh-huh. And that was it. She hung up.

ARNOLD: Santoboni's hoping she gets a better response from Countrywide's regulators. She's filed a formal complaint with the Federal Office of Thrift Supervision, or OTS. Montrice Godard Yakimov oversees compliance and consumer complaints for OTS.

Ms. MONTRICE GODARD YAKIMOV (Office of Thrift Supervision): I can't comment on the specifics of this complaint because it's under active investigation.

ARNOLD: Yakimov says OTS takes such complaints very seriously. Ira Rheingold is the head of the National Association of Consumer Advocates. He thinks such investigations often don't amount to much. He wants tougher rules and better monitoring of lenders. And he's not surprised to hear about thiscomplaint against Countrywide.

Mr. IRA RHEINGOLD (National Association of Consumer Advocates): A leopard doesn't change its spots that quickly. Countrywide and companies like it had a pervasive culture of cheating, and they've been slapped on the wrist.

ARNOLD: Julie Santoboni, the homeowner, says as somebody who works in the financial world, she's not a fan of overregulation, but if lenders aren't cleaning up their own act after all we've been through with the subprime lending implosion…

Ms. SANTOBONI: They should regulate the hell out of them if this is what's going to happen because it's still going on.

ARNOLD: Meanwhile, Santoboni is waiting to hear whether her complaint will result in any real consequences for Countrywide.

Chris Arnold, NPR News.

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