Senators Reportedly Got Favors from Countrywide

The housing crisis has kicked up new ethics questions on Capitol Hill. The magazine Portfolio reports that several prominent Washington figures, including two senators, got favorable treatment from mortgage giant Countrywide Financial.

Similar questions last week caused former Fannie Mae chief Jim Johnson to step down as leader of the vice presidential search team for presumptive Democratic nominee Barack Obama.

Portfolio reports that Democratic Sens. Christopher Dodd of Connecticut and Kent Conrad of North Dakota, as well as a few other influential Washingtonians, were listed by Countrywide employees as FOAs, or "Friends of Angelo," a reference to Angelo Mozilo, Countrywide's CEO.

Dodd, who is chairman of the Senate Banking Committee, which is about to bring major housing legislation to the floor, refinanced two loans in 2003 for his homes in Connecticut and Washington, D.C. Portfolio calculated that lower rates and waived fees would save Dodd more than $75,000 over the life of the loans.

Dodd issued a statement saying that he and his wife shopped around for competitive loans. He says he never sought or expected special treatment, and he didn't know that he got any.

Which isn't to say it didn't happen, as Conrad says he found out.

Conrad, who chairs the Senate Budget Committee and serves on the Finance Committee, got four refinancing loans — three for his beach house in Delaware and one for an apartment building that includes his official residence in Bismarck, N.D.

Conrad said Monday night that he had finally seen the Countrywide e-mail that raised the questions. It concerned a refinance for the beach house. A loan officer wrote to Mozilo, the CEO, that Countrywide's standard loan rate would be 4.875 percent with a 1-point fee.

Conrad said the loan officer asked Mozilo what to do. "And the answer back from Mr. Mozilo is: Waive the 1 point," Conrad said.

"Nobody ever told me they were waiving a point," Conrad said. "I never sought a loan using points. I've had probably 12 mortgages in my life. None of them have I ever used points to reduce the interest rate."

Conrad said he paid the same rate that the loan officer proposed.

"I don't pretend to know what happened. I find it very, very curious that they would supposedly cut me a deal and never tell me," he said.

Paul Muolo, executive editor of National Mortgage News and co-author of a new book on the mortgage meltdown, Chain of Blame, explains: "Here's the big secret of the mortgage industry, and it really isn't that big of a secret: This has been going on for years."

He said plenty of mortgage companies have lists like Friends of Angelo. "These kind of favors aren't exclusive to the mortgage industry. It's a way of doing business in America," he said.

But that still leaves the question of how Dodd and Conrad got onto the Friends of Angelo list.

Dodd isn't commenting. Conrad said he is an old friend of Johnson, the Democratic establishment heavyweight who actually is a friend of Mozilo's.

Conrad said that when he called Johnson for mortgage advice, Johnson literally handed the phone to Mozilo, who then gave Conrad the name of a Countrywide mortgage officer.

Conrad said he was also consulting an independent mortgage broker. He said three of his four Countrywide loans were at market rates. One was above market.

This week, he paid off the loan on his apartment building, he said, and he sent Habitat for Humanity, the affordable housing nonprofit organization, a check for more than $10,000 — the calculated cost of that waived point.

Conrad is consulting with the Senate Ethics Committee because there are rules against senators taking gifts.

Joan Claybrook, president of the watchdog group Public Citizen, said it's all pretty simple.

"Other people don't get it. You get it because you're in a position of power," she said. "They want to influence you. That's a gift."

She said there need to be public hearings on these practices, "so that the members of Congress are even more sensitized, and so that the companies that engage in this kind of behavior don't do it in the future."

As for Countrywide, its stock collapsed this winter, and it agreed to be bought by Bank of America.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

Support comes from: