By JOHN R. EMSHWILLER
Countrywide Financial Corp.’s controversial “VIP” mortgage program made 153 loans to employees of Fannie Mae, the giant federally backed financial institution that helped fuel Countrywide’s growth, according to a letter released Tuesday by Rep. Darrell Issa.
Another 20 such VIP loans, which often provided mortgages on terms more favorable than those available to the general public, went to employees of Freddie Mac, another big government-backed buyer of mortgage loans, the Issa letter said.
While it has been reported that VIP loans went to some top Fannie Mae officials, the latest information indicates that the activity was more widespread.
In an interview Tuesday, Mr. Issa, of California, said the new information provides further evidence that Countrywide Financial was improperly trying to “curry favor and get an edge” by passing out financial favors. He says the dealings between Countrywide and Fannie Mae in particular contributed to the downfall of those firms and to the broader problems in the mortgage industry.
In 2008, Fannie Mae and Freddie Mac were taken over by the federal government, which has spent about $145 billion to keep them afloat. Also in 2008, Countrywide was purchased by Bank of America Corp. The House Oversight and Government Reform committee, on which Mr. Issa is the ranking Republican, last fall subpoenaed the records of the now-defunct VIP program.
Mr. Issa’s letter went to the Federal Housing Finance Agency, or FHFA, which oversees Fannie Mae and Freddie Mac. It is the latest salvo in a two-year-old investigation of the VIP program spearheaded by Mr. Issa. Last week he released a letter saying that 30 VIP loans had gone to U.S. Senators or Senate employees. He says the investigation is ongoing and is also turning up information on loans to others in government.
A Fannie Mae spokesman declined to comment on the Issa letter. A Freddie Mac spokeswoman deferred comment to the FHFA. An FHFA spokesperson said the agency had received Mr. Issa’s letter and “will respond to him promptly.”
House investigators Tuesday also released an internal 2001 Countrywide email regarding a loan made to Daniel Mudd, who served as Fannie Mae’s chief operating officer and later as its chief executive. The email spoke of the need to “understand the sensitivity of this deal. We already are taking a loss, it would be horrible to add a service complaint on top and lose any benefit we generate.” While Mr. Mudd’s refinancing of a home loan with Countrywide had been previously reported, the internal details from the company about it hadn’t.
Mr. Mudd, now chief executive of Fortress Investment Group, New York, said Tuesday in a statement that he “did not seek any preferential treatment.” He said that he had a financial adviser obtain loan quotes from several lenders and that Countrywide was offering “competitive” terms. Mr. Mudd said the loan was obtained through a local Countrywide retail branch.
Mr. Issa’s letter to the FHFA said the subpoenaed Countrywide records show that the Mudd loan went through the VIP program. It didn’t say whether Mr. Mudd knew which Countrywide unit was handling the matter.
The Issa letter said that a cluster of VIP loans to Fannie Mae employees came in 1998, a year before Fannie Mae agreed to buy billions of dollars of Countrywide loans. If Fannie Mae or Freddie Mac employees accepted discounted loans or other preferential treatment, they might have violated the enterprises’ conflict-of-interest policies, Mr. Issa wrote.
The Issa letter listed loans to 42 individuals, but in most cases provided only job titles, including several directors and vice presidents as well as lower-level positions. The only names provided were those of a few former senior officials, such as Mr. Mudd, who had previously been identified publicly as Countrywide borrowers.
The number of individuals receiving VIP loans was less than the number of loans given, sinceSome people received more than one loan. For instance, if a person took out a Countrywide loan and later refinanced it, that would be counted as two loan transactions.
Filing bankruptcy is commonly a daunting issue. Where should one start? What types of bankruptcy must a individual apply for? How will the current bankruptcy regulations influence an individual's case? What are going to be the outcomes of a bankruptcy processing? You just have one shot, therefore it's in fact essential that you have it best at the very first try. This definitely is why selecting the suitable Bankruptcy Lawyers is needed.
I wonder what's the feeling of having a VIP loan? I want to try having that though. But as of now, I want to find some reviews with regards to VIP loaning and it's functions first before I will apply for that VIP loan option.