Countrywide’s Mozilo Faces Possible Civil Suit Over Bad Loans

Angelo Mozilo is back.

Mozilo, the co-founder of Calabasas, Calif.-based Countrywide Financial Corp., is facing a possible civil lawsuit over the excesses of the subprime mortgage boom, according to Bloomberg.

Bloomberg reports that the U.S. attorney’s office in Los Angeles is poised to bring a new civil suit against Mozilo and 10 other former Countrywide employees.

“There is no sound or fair basis, in law or fact, to pursue any claim against Angelo Mozilo,” said David Siegel, Mozilo’s defense lawyer at Irell & Manella LLP in Los Angeles. Mozilo, 75, “stands virtually alone among banking and mortgage executives to actually have been pursued by this government before and already paid a record penalty.”

In 2010, Mozilo paid the U.S. Securities and Exchange Commission $67.5 million to settle allegations that he misled Countrywide investors.

In the wake of the housing bust, Countrywide was toppled by bad subprime loans, and Bank of America bought the troubled subprime lender in a shotgun wedding in July 2008 for $4.5 billion. Since 2009, Bank of America has paid $55 billion in fines and charges, mostly attributed to shoddy Countrywide loans.

RealtyTrac data shows that loans originated by some variation of Countrywide (Countrywide Home Loans Inc., Countrywide Bank and America’s Wholesale Lender) still account for a combined 7 percent of all loans still in the foreclosure process or bank owned (REO). Loans originated by Bank of America account for an additional 5 percent of all loans still in foreclosure or REO as of September 2014, giving Bank of America the highest percentage of any originator even before including the Countrywide loans. When the Countrywide loans are included, Bank of America accounts for three times the share of distressed loans than the next closest originator — Wells Fargo.

Mozilo is baffled by the government’s new effort to punish him.

In a separate interview with Bloomberg on Sept. 1, Mozilo said: “You’ll have to ask those people, ‘What do you have against Mozilo? What did he do? Countrywide didn’t change. I didn’t change. The world changed.”

Mozilo lives in a 12,000 square foot home in Santa Barbara, Calif., with his wife, Phyllis. He also owns a 4,000 square foot vacation home in La Quinta, Calif., which he purchased in 2005 for $1.9 million.

“Countrywide was one of the greatest companies in the history of this country and probably made more difference to society, to the integrity of our society, than any company in the history of America,” Mozilo told the Financial Crisis Inquiry Commission in 2010.

It is unclear if prosecutors will indeed take action against Mozilo, and the former Countrywide directors.

But many still believe that bad Countrywide loans contributed to the foreclosure crisis, and the Calabasas-based company’s loan policies were front and center in the real estate crash of 2006.

What are your thoughts? Should the U.S. government go after Angelo Mozilo for the subprime crisis? Write a comment below.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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