Friendly terms for Mozilo’s favorites
Details of one of the so-called VIP loans made by Countrywide Financial Corp. for “friends of Angelo” show how Chief Executive Angelo R. Mozilo personally saw to it that prominent borrowers enjoyed very attractive rates and a glitch-free mortgage process.
Other top executives at the company also were authorized to make VIP loans, but no one rivaled the numbers put up by Mozilo, a former Countrywide executive said, speaking on condition of anonymity because he had not been authorized to discuss the program.
Many of the borrowers who benefited from Mozilo’s involvement say they were unaware he had intervened -- an assertion that the former executive said wasn’t far-fetched. The CEO, proud that he still handled individual loans, in some cases simply wanted to ensure a positive experience for well-known or influential people, the former executive said.
Several former employees described one such mortgage made to Ross C. DeVol, director of regional economics at the Milken Institute, a Santa Monica think tank.
Mozilo was a panelist at a Milken Institute conference, where he met DeVol not long after the economist bought a Moorpark home for just under $1.2 million in the summer of 2004 using two loans from another lender, one of the former employees said.
Loan documents obtained by The Times show that DeVol refinanced the old loans after only four months with a new 30-year Countrywide mortgage for $1.16 million, cashing out $156,729 in home equity in the process. Countrywide had appraised the home at $1.5 million, up more than 25% from the appraisal done when DeVol bought the home four months earlier.
The documents show the mortgage was made through a branch of Full Spectrum Lending, Countrywide’s sub-prime operation, instead of through the prime lending channels that DeVol normally would have used. (One employee said DeVol knew an employee of the Full Spectrum branch.)
The loan carried an interest rate of 5.25% and none of the upfront fees known as points, the documents show. That rate was at least one percentage point below what an ordinary prime customer could have expected on a no-point mortgage of that size at the time, the former executive said.
Two other knowledgeable former Countrywide employees said the loan also was an exception to a Countrywide ban on cash-out refinancings unless the initial financing was at least 12 months old.
Through a Milken Institute spokesman, DeVol said he never asked Mozilo for any favors. He said he applied to “numerous financial institutions, and the loan he took was based on his excellent credit score,” spokesman Skip Rimer said.
But a former employee with firsthand knowledge of the loan said Mozilo had insisted on its terms. Indeed, the mortgage caused an uproar at Full Spectrum because the branch that originated it had its profit docked on the grounds that the mortgage was so favorable to DeVol, the ex-employee said.
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