Washington — A House Committee Thursday released the results of a three-year investigation that detailed the relationship between Countrywide Financial Corp. and lawmakers, including former Connecticut Sen. Chris Dodd and others in influential positions.
Countrywide’s subprime loans helped start the nation’s foreclosure crisis.
The report by the House Oversight and Government Reform Committee said the failed mortgage company made hundreds of discount loans to buy influence with members of Congress, including Dodd, congressional staff, top government officials and executives of troubled mortgage giant Fannie Mae.
The report said Dodd became a member of an exclusive club, “Friends of Angelo,” as early as 1999. Angelo Mozilo, Countrywide’s founder and CEO, gave Dodd two cut-rate mortgages that year.
Documents obtained by the committee show that Mozilo ordered a Countrywide official to give Dodd a 1.5 percent discount in the loans’ interest rate and waive all processing and document preparation fees. The loans were also rushed because Dodd’s wife was set to leave the country.
The investigation also disclosed that when Dodd refinanced the mortgage for his East Haddam, Conn., home in the summer of 2001, Mozilo again ordered his “VIP unit” to apply the “employee discount” to Dodd’s loan. The discount reduced the cost of Dodd’s refinance by $1,025.
Mozilo also knocked off a half-point, waived fees and instructed that the loan be processed with minimal documentation.
Another email showed that Mozilo advised his assistant Kay Gerfen to “stay close to this deal because this is a very important person.”
At the time Dodd was a senior member of the Senate Banking Committee with oversight of mortgage companies such as Countrywide.
In addition to reducing the cost of the refinance, Countrywide also reduced the mortgage rate on Dodd’s Connecticut home by .625 points, dropping the mortgage to about 7 percent, 30-year fixed, the committee’s report shows.
Dodd, who now heads the Motion Picture Association of America, has maintained he was unaware he was receiving preferential treatment, but that he was aware of the VIP team.
On Thursday, Dodd spokesman Bryan DeAngelis released a statement saying that Dodd was cleared by the Senate Ethics Committee of wrongdoing and that there’s no evidence that any of the mortgages offered to him by Countrywide were lower than the “prevailing market rates.”
“This report recycles old allegations that Republicans and Democrats on the Senate Ethics Committee investigated for 14 months before concluding that Senator Dodd did nothing wrong,” DeAngelis said. “The Senate Ethics Committee found that the rates and terms Senator Dodd received were widely advertised and available to other borrowers.”
While the Senate Ethics Committee cleared Dodd of wrongoing, it sent the former senator a letter saying he should have questioned why they were being put in the “Friends of Angelo” VIP program.
“Once you became aware that your loans were in fact being handled through a program with the name ‘V.I.P.’ that should have raised red flags for you,” the letter said.
According to the House report, other lawmakers who received favorable treatment included Sen. Kent Conrad, D-N.D.; Rep. Howard McKeon, D-Calif.; Rep. Edolphus Towns, D-N.Y.; and Rep. Elton Gaggley, D-Calif.
Key Capitol Hill staffers also benefited from sweetheart deals.
The report said Dodd referred Mary Jane Collipriest to Countrywide’s VIP unit. She was communications director for former Sen. Robert Bennett, R-Utah, then a member of the Banking Committee.
Rep. Darrell Issa, R-Calif., the chairman of the oversight and government reform committee, said the Countrywide’s VIP program “helped Mozilo increase his own company’s profits while dumping the risk of bad loans on taxpayers.”