Mozilo on distressed borrower’s appeal for help: “disgusting”

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In an e-mail inadvertently sent to a distressed homeowner trying to avoid foreclosure, embattled Countrywide Financial Chairman Angelo Mozilo lashed out at an online counseling service for distressed borrowers, calling the website’s efforts ‘unbelievable’ and ‘disgusting.’

‘This is unbelievable,’ Mozilo wrote in the e-mail, which was posted on a forum on the website LoanSafe.org. ‘Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the internet. Disgusting.’

Read full coverage of the e-mail flap from the Los Angeles Times here.

Mozilo was responding to an e-mail from Daniel Bailey, who wrote a ‘hardship letter’ to Mozilo and 16 other Countrywide employees. Bailey acknowledged he wrote the letter using a format provided by the website LoanSafe.org.

In his original e-mail, Bailey requested a loan modification, saying he was unable to make rising payments on his adjustable rate mortgage. ‘The main reason that caused me to have a hardship and to be late is my misunderstanding of the original loan,’ Daniel wrote in his e-mail to Countrywide. ‘I was told that after the first year of payments, I would be able to refinance to a better fixed rate -- then the bottom fell out of the industry. My payments for that first year were on time. I also lost my second income due to physical conditions in a very physically demanding industry.’

At least two other housing blogs wrote about the exchange Tuesday. On Tuesday evening, Countrywide issued the following statement: ‘Countrywide and Mr. Mozilo regret any misunderstanding caused by his inadvertent response to an e-mail by Mr. Bailey. Countrywide is actively working to help borrowers, like Mr. Bailey, keep their homes.’

After receiving the ‘disgusting’ e-mail comment from Mozilo, Bailey wrote a second e-mail to Countrywide, acknowledging he had consulted an online forum for advice in drafting a hardship letter to Countrywide: ‘In attempting to come to some way to save my home, I took the advice on forming my hardship letter from a forum. Why? Not all of us have been to a university to study business and we need some help in dealing with these matters. (perhaps, if we had, we would not have fallen for what we did, to start with).

‘To have recieved the e-mail that I did, stating by one of your employees, that what I did was ‘disgusting’ and ‘unbelievable’ has been just about the final straw. I am trying to do the right thing, I am trying with every ounce of what I have left in me not to blow my brains out over losing the home I have been in for 16 years. The only hope I had left was that perhaps the countrywide company did want to help the people it is servicing ... then I receive that responce to my letter. Just great. Now I know, that it is all a nice fat laughing matter to those who are supposed to help.’

Mozilo has been heavily criticized for reaping huge gains by selling Countrywide stock while the company’s value was collapsing and the mortgage industry was in crisis. The Times reported he was paid $48 million in compensation in 2006, and cashed in stock options worth $140 million in 2006 and 2007.

LoanSafe founder Moe Bedard said he founded the website to help homeowners find information about working with their lenders to avoid foreclosure. ‘I knew there was nothing on the Internet to help people work out their mortgage loans,’ he told L.A. Land. Among other resources, the website gives borrowers e-mail addresses and phone numbers for bank executives who handle loan modifications. It also provides sample ‘hardship letters’ to help borrowers make a written appeal for a loan modification. Bedard says his advice has helped 80 homeowners avoid foreclosure.

Bedard’s sample loan letter begins: ‘I am writing this letter to explain my unfortunate set of circumstances that have caused us to become delinquent on our mortgage. We have done everything in our power to make ends meet but unfortunately we have fallen short and would like you to consider working with us to modify our loan. Our number one goal is to keep our home and we would really appreciate the opportunity to do that.’

Bedard said he encourages distressed borrowers to use the format of the letter and then to ‘make it your own, and don’t be too lengthy.’

Bailey’s e-mailed hardship letter to Countrywide, which he posted online, begins: ‘I am writing this letter to explain my unfortunate set of circumstances that have caused me to become delinquent on my mortgage. I have done everything in my power to make ends meet but unfortunately I have fallen short and would like you to consider working with me to modify my loan. My number one goal is to keep my home that I have lived in for sixteen years, remodeled with my own sweat equity and I would really appreciate the opportunity to do that. My home is not large or in an upscale neighborhood, it is a “shotgun” bungalow style of only 900 sq. ft. built in 1921. I moved into this home in May of 1992 … this was the same year I got clean and sober from drugs and alcohol, and have been ever since, this home means the world to me.’

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