Countrywide chief sees ‘opportunity’
san francisco -- Angelo Mozilo, chief executive of beleaguered Countrywide Financial Corp., said Tuesday that the lender was making progress in adjusting to the harsh new realities of the home mortgage market.
“With pain comes opportunity,” Mozilo said at an investment conference here hosted by Bank of America Corp., which recently invested $2 billion in Countrywide.
One opportunity that Mozilo sees is for Countrywide to expand its banking operations. He announced plans to double the number of Countrywide financial centers in the next few months to more than 200.
The centers, run by only one or two employees, are inside Countrywide mortgage branches. The deposits they accumulate would help fund the lending operation, which has been starved for capital since the liquidity crisis began this summer.
Mozilo said flatly that “we are out of the sub-prime business,” referring to loans made to borrowers without sterling credit or steady income. Like most lenders, Countrywide has curtailed such loans amid rising defaults.
In subsequent remarks, he appeared to qualify that comment by saying Countrywide would continue to make a limited number of sub-prime loans that could be sold to Fannie Mae and Freddie Mac, the government-chartered wholesalers.
Asked to elaborate on Mozilo’s remarks, a Countrywide spokesman declined to detail the effect of the shift on its Full Spectrum unit, which specializes in sub-prime lending.
To counter the rising tide of defaults, Mozilo said a quarter of the company’s loan personnel -- 2,700 employees -- were now engaged in “loss mitigation,” trying to help homeowners avoid foreclosure.
Countrywide, based in Calabasas, is the nation’s largest mortgage lender, servicing about 1 in 7 U.S. home loans. In the turmoil of the last few months, its health faltered. Last week the lender said it had secured an additional $12 billion in financing. That followed the Bank of America deal and an August line of credit for $11.5 billion.
Although Mozilo applauded the Federal Reserve’s lowering of a key interest rate by half a point, an action the central bank took shortly before his lunchtime talk, he said more needed to be done.
Fannie Mae and the other government-chartered loan buyers -- the only safe harbor for lenders in the current storm -- should sharply raise their limits, he suggested. Currently, Fannie Mae and the others can buy only loans that are less than $417,000. That rules out many loans in high-priced areas like California.
Mozilo criticized media coverage of the mortgage meltdown several times Tuesday, saying reporters incorrectly blamed “aggressive lending and exotic reset products” for rising foreclosures.
During the boom, many lenders, including Countrywide, gave borrowers loans without requiring them to document their income. It was widely assumed that many of the borrowers didn’t document their incomes because they were lying.
Though Mozilo said stated-income loans were indeed much more likely to go into default, the reason the owners gave for their distressed status was the same as for those with fully documented loans: loss of income, followed by illness, followed by divorce.
Countrywide shares rose 61 cents Tuesday to $19.88.
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