He was bigger than life…and he was an industry superstar.
It was the 1990s, and he was the featured speaker at the California Association of Realtors EXPO at the Long Beach Convention Center and the room was packed. He was in his element, speaking to real estate professionals from all over California whose client base was making him money hand over fist. After all…he WAS Mr. Countrywide himself…Angelo Mozilo.
If there was ever any truth to the old saying, “The bigger they are, the harder they fall,” then it can be found in Mozilo’s story over the past decade. Countrywide Financial Corp. and its CEO represented everything that was broken with the way the real estate industry does business. In the end, the acquisition of Countrywide in 2008 nearly took down the nation’s biggest bank at the time — Bank of America — and being one of the largest originators of subprime loans in the nation, its demise helped take down the U.S. economy and lead us into the worst recession since the Great Depression of the 1930s.
Those loans, given to people who really couldn’t afford to get into a house any other way, helped pump up the homeownership rate in this country to the level that President Bush couldn’t wait to gloat about, while allowing people to cheat the system, and get away with qualifying for loans without documenting any income whatsoever.
In the end, as everyone knows, the first wave of foreclosure activity struck, followed by the other shoe dropping, as unemployment skyrocketed well into the double digit stratosphere. Leaving us with today’s situation of short sales and bank-owned properties (REOs) accounting for a significant segment of home sales nationwide.
Now, years after his fall from grace, Mozilo is still in the hot seat. Talk has resurfaced about the “Friends of Angelo,” his allegedly close group of cronies in Congress who were supposedly given favorable deals on their home loans via the so-called VIP loan unit at Countrywide.
Congress has now released a report documenting the situation and apparently naming names of its own members who received these favorable terms from Countrywide. It seems they were members of the House Financial Services and Senate Banking committees, which were instrumental in reforming Fannie Mae and Freddie Mac and directing policy regarding unfair lending practices, reported the Associated Press.
With all the goodwill Countrywide and Mozilo built up on Capitol Hill over the years, one can only wonder how much influence he might have had in keeping the banking industry deregulated to the point that eventually led to the bursting of the real estate “bubble” that led to our nation’s current predicament.
The question is, now that this report and names of Mozilo’s friends are published, what should Congress do? What should the American public think of their elected officials now? Let us know your thoughts.
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