U.S. reportedly drops case against former Countrywide head Angelo Mozilo
The U.S. Justice Department has reportedly dropped an effort to bring a civil suit against Angelo Mozilo, the former chief executive of loan giant Countrywide Financial that made billions of dollars in risky loans that contributed to the 2008 financial crisis.
The department informed the former head of the Calabasas lender in a letter that it would not bring a case, according to Bloomberg News, which cited unnamed sources.
A spokesman for the U.S. attorney’s office in Los Angeles declined to comment.
Federal prosecutors had launched a criminal investigation but shelved that inquiry in 2011 after deciding Mozilo’s actions did not amount to criminal wrongdoing.
According to Bloomberg, the Justice Department has been investigating its civil case since 2014 but dropped its effort just weeks after an appeals court overturned a civil fraud verdict against Rebecca Mairone, a former Countrywide and Bank of America executive.
Mairone had overseen a program begun at Countrywide nicknamed the “hustle” that encouraged underwriters to approve loans faster. She had been the only executive since the housing bust to be found liable for mortgage fraud
Mozilo, a hard-driving son of a Bronx butcher, built Countrywide into the nation’s top mortgage originator. Though the company specialized for many years in relatively low-risk loans, it later jumped into subprime and other risky mortgages that helped fuel the housing bubble.
When that bubble popped, Countrywide suffered huge losses and Mozilo became a symbol of the industry’s excesses.
In 2008, Bank of America acquired Countrywide.
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Two years later, Mozilo agreed to pay $67.5 million as part of a settlement with the Securities and Exchange Commission.
The SEC had accused Mozilo and other former Countrywide executives of downplaying the risks of subprime and other high-risk mortgages they were writing to homeowners and selling to investors.
Bank of America and insurance companies covered the majority of Mozilo’s payments and he did not admit wrongdoing.
The civil case dropped by the Justice Department, which could have led to larger penalties, essentially ends the government’s investigation of Mozilo, Bloomberg said.
An attorney representing Mozilo did not respond to an email requesting comment.
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