Senators Deny Knowing Of Home Loan Favoritism
Wednesday, June 18, 2008
Senate banking committee Chairman Christopher J. Dodd said yesterday that he knew he was part of a "VIP" mortgage program offered by Countrywide Financial, but he said he was not aware that the privilege included waiving fees that regular customers must pay to obtain lower interest rates.
Dodd (D-Conn.) -- who reportedly received the special treatment as part of the company's "Friends of Angelo" program, named for chief executive Angelo Mozilo -- said loan officers told him and his wife in 2003 that they would be part of an exclusive program. But the couple assumed the plan gave them unspecified courtesies and did not ask whether it included a waiver of the fees, known as points, or a reduced interest rate on their loans, the senator said.
"I don't know that we did anything wrong. I negotiated a mortgage at a prevailing rate, a competitive rate. . . . I did what I was supposed to do," Dodd told reporters at a news conference called to discuss the matter and legislation to address the nation's housing crisis.
The Senate ethics committee has begun a preliminary investigation of the special treatment afforded Dodd and Sen. Kent Conrad (D-N.D.), who received a one-point reduction on his Countrywide mortgage.
The committee Dodd chairs oversees the mortgage industry, and he is the lead Senate negotiator on a package of legislation designed to deal with the fallout from the subprime mortgage crisis. At the time the loan was offered, Dodd was a senior member of the banking committee.
Countrywide, the nation's largest mortgage lender, is being purchased by Bank of America. It held about 20 percent of all U.S. mortgages two years ago and was the nation's largest holder of subprime mortgages before the housing crisis rocked the company's finances last year, sending its stock tumbling.
Conrad is chairman of the Budget Committee and a senior member of the Finance Committee, which has a role in negotiating the housing legislation.
According to Condé Nast Portfolio magazine, Dodd and Conrad were not the only officials to receive mortgage deals under Countrywide's program. Others included former housing secretary Alphonso Jackson, former U.N. ambassador Richard C. Holbrooke and former Health and Human Services secretary Donna E. Shalala, the magazine reported.
Dodd borrowed $506,000 at 4.25 percent to refinance a Capitol Hill townhouse, originally purchased in 1999, and $275,042 at 4.5 percent to refinance a home in East Haddam, Conn.
Rather than requiring him to pay the full amount to obtain the reduced mortgage rates, as other customers must, Countrywide waived three-eighths of a point, or about $2,000, on the first loan and a quarter-point, or $700, on the second.
Conrad spoke to Mozilo about his mortgage in 2002, but the deals under scrutiny were not finalized until 2004. Mozilo ordered one point waived on a loan for a more than $1 million vacation home in Bethany Beach, Del., providing a $10,700 benefit to Conrad.
Conrad also received financing in 2004 for an eight-unit apartment building in North Dakota from Countrywide, in apparent contradiction of the company's rules prohibiting mortgages for any dwelling with more than four units, according to Conrad's staff. Mozilo ordered subordinates to approve the apartment-building loan, according to an internal e-mail obtained by Portfolio, because "the borrower is a senator."