Countrywide used VIP program to sway Congress: report

Thu Jul 5, 2012 11:11pm EDT
 
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WASHINGTON (Reuters) - A VIP mortgage program run by now-defunct Countrywide Financial Corp was used to influence lawmakers with the aim of killing legislation that could hurt the company's profits, a congressional report released on Thursday said.

The report from the House of Representatives' Oversight and Government Reform Committee provided new details about the program, which offered discount loans to "VIPs," and it named dozens of congressional staffers that benefited.

The company, which was once the biggest U.S. mortgage lender, granted hundreds of loans between 1991 and 2008 through the VIP program, the report said.

Recipients included lawmakers, their staff, top government officials and executives of government-controlled mortgage company Fannie Mae, according to the report.

"The VIP loan program was a tool used by Countrywide to build good will with lawmakers and other individuals positioned to benefit the company," it stated. The loans often had reduced interest rates and eliminated certain fees, the report added.

In the years leading up to the 2007 housing market boom and bust, Countrywide VIPs were able to "affect dozens of pieces of legislation" being considered in Congress, including measures to reform giant mortgage companies Fannie Mae and Freddie Mac, it said.

The two companies, rescued by the government in 2008, have drawn nearly $190 billion in taxpayer funds to stay afloat.

Representative Darrell Issa, the Republican chairman of the panel, has waged a high-profile campaign for three years to obtain mortgage files of members of Congress who received special treatment from Countrywide.

Countrywide, acquired by Bank of America Corp in 2008, was a California-based lender that became a dominant player in the mortgage business during the housing boom. Both the company and its long-time chief executive, Angelo Mozilo, became synonymous with the risky lending practices that set the housing market up for its downfall.   Continued...

 
A Countrywide branch location is seen in Burlington, Massachusetts May 5, 2008. REUTERS/Brian Snyder