Senators Reportedly Got Favors from Countrywide Sens. Kent Conrad and Chris Dodd may have benefited from VIP treatment when they refinanced mortgages with Countrywide Financial several years ago. Portfolio magazine cites corporate e-mails that listed both senators as "friends of Angelo." That is, friends of Angelo Mozilo, Countrywide's CEO. The senators say they didn't expect special treatment.
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Senators Reportedly Got Favors from Countrywide

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Senators Reportedly Got Favors from Countrywide

Senators Reportedly Got Favors from Countrywide

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


And I'm Renee Montagne. The housing crises has kicked up new ethics questions on Capitol Hill. The magazine Portfolio has reported that several prominent Washington figures, including two senators, got favorable treatment from mortgage giant Countrywide Financial. Similar questions last week caused former Fannie Mae Jim Johnson to step down as the leader of Barack Obama's search team for a running mate. NPR's Peter Overby has more.

PETER OVERBY: The two senators are Democrats. Christopher Dodd of Connecticut is chairman of the Senate Banking Committee, and he's about to bring major housing legislation to the floor. Kent Conrad of North Dakota chairs the Senate Budget Committee and serves on the Finance Committee. Portfolio magazine says that Dodd, Conrad and a few other influential Washingtonians were listed by Countrywide employees as FOAs, or friends of Angelo. That's Angelo Mozilo, Countrywide's CEO. Dodd refinanced two loans in 2003 for his homes in Connecticut and Washington, DC. Portfolio calculated that lower rates and waived fees would save more than $75,000 over the life of the loans. Dodd issued a statement, that he and his wife shopped around for competitive loans, 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 Senator Conrad says he found out.

Conrad got four refinancing loans, three for his beach house in Delaware, one for an apartment building, which includes his official residence in Bismarck, North Dakota. Last night, he said he finally saw the Countrywide email that raised the question marks. It's about a re-fi for the beach place. A loan officer wrote to Mozilo, the CEO, said Countrywide's standard loan rate would be 4.875 percent.

KENT CONRAD: ...with a one-point fee. What should I do? And the answer back from Mr. Mozilo is waive the one point.

OVERBY: And here's the twist.

CONRAD: Nobody ever told me they were waiving a point. 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.

OVERBY: Conrad says he paid the same rate that the loan officer proposed.

CONRAD: 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.

OVERBY: Paul Muolo is the co-author of new book on the mortgage meltdown, "Chain of Blame." He's also executive editor of National Mortgage News.

PAUL MUOLO: Here's the big secret of the mortgage industry, and it really isn't that big of secret. This has been going on for years.

OVERBY: He says plenty of mortgage companies have lists like friends of Angelo.

MUOLO: These kind of favors aren't, you know, exclusive to the mortgage industry. It's a way of doing business in America.

OVERBY: 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's an old friend of Jim Johnson, the Democratic establishment heavyweight who actually is a friend of Mozilo's. Conrad said that when he called Johnson for advice on mortgages, 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, and he sent Habitat for Humanity a check for more than $10,000, the calculated cost of that waived point. Conrad is talking 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.

JOAN CLAYBROOK: Other people don't get it. You get it because you're in a position of power. They want to influence you. That's a gift.

OVERBY: She says there need to be public hearings on these practices.

CLAYBROOK: So that the members of Congress are even more sensitized and so that companies that engage in this kind of behavior don't do it in the future.

OVERBY: Countrywide may not be doing it much longer. Its stock collapsed this winter, and it agreed to be bought by Bank of America.

Peter Overby, NPR News, Washington.

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