Video: Countrywide’s ‘VIP’ program explained

By Associate Producer
Dateline NBC
updated 3/22/2009 9:08:38 PM ET 2009-03-23T01:08:38

Editor's Note: This is a web-exclusive supplement to a three-part Dateline NBC series, "Inside the Financial Fiasco." Watch the Countrywide report here.

Countrywide Financial was once the nation’s largest mortgage lender—the gold standard in the business.  But then came the financial crisis, leaving the company battered, a veritable poster child for abusive lending practices.

Last year, the company was taken over by Bank of America.  And, in April, Countrywide Financial is expected to change its name to Bank of America Home Loans, essentially wiping out any trace of the once reputable company founded by charismatic CEO Angelo Mozilo.  His legacy has been tarnished by a scandal involving Countrywide's special VIP loan program, dubbed “Friends of Angelo.”

Bob Feinberg, a senior account executive who worked at Countrywide for twelve years, said, in an interview withDateline NBC that he unwittingly found himself running the VIP mortgage program from 2000-2004.

Condé Nast Portfolio initially broke the story, reporting that the VIP program wrote hundreds of millions of dollars worth of loans in those years.

According to Feinberg, prominent people in the “Friends of Angelo” program received special treatment on pricing, fees, and even qualifications.  As a result, Mozilo has been accused of attempting to curry favor with lawmakers, senators and other politicians, who might be able to influence the company’s future.

Bob Feinberg showed NBC’s Chris Hansen several e-mails documenting the exceptions and preferential treatment. He also said that "VIPs" often got better deals than those available to ordinary borrowers.

Feinberg said "VIPs" included two U.S. senators, several former cabinet members, and two former heads of Fannie Mae, the government-backed agency that bought a lot of Countrywide’s loans.

Kent Conrad, a Democratic senator from North Dakota and Chairman of the Senate Budget Committee, refinanced at least one mortgage through Countrywide’s VIP program in 2004, according to internal e-mails between Bob Feinberg and Angelo Mozilo.

In response to Feinberg’s question on how to proceed with regards to Senator Conrad’s loan, Mozilo wrote “Take off 1 point.”

Senator Conrad says he was not aware of any special treatment and only discovered that one point of fees was waived off the loan when a reporter showed him internal Countrywide e-mails. He says he is no longer a Countrywide customer. In fact, he has donated all the money he saved to Habitat for Humanity in  North Dakota.

But Conrad was not alone. Feinberg said a city official in Calabasas also got VIP treatment at a time when Countrywide was considering a possible expansion of its headquarters there. 

Electronic trail of evidence
Feinberg showed Hansen a 2003 e-mail from a managing director stating that Countrywide’s “expansion will be highly visible and controversial.” In the e-mail, the director asked Feinberg and his colleague to “see if you can ease the process” of getting a mortgage for the city official. 

Feinberg thought Countrywide was offering preferential treatment in hopes that it would bode well for the company.

Senator Chris Dodd of Connecticut is, perhaps, the "VIP" who has faced the most public scrutiny for his reported involvement in the program.  Dodd, the Chairman of the Senate Banking Committee, has been outspoken about abuses in the mortgage business, something that Feinberg finds hypocritical.

Dodd has repeatedly denied seeking special treatment and has said that he will use another company to refinance the two mortgages he received from Countrywide in 2003.  Dodd has recently made public over 100 pages of documents that include the details on his loans.  Dodd says he is doing so partly because he was wrongfully labeled a “Friend of Angelo.” And, he adds that he regrets having ever done business with Countrywide and regrets not having made the documents public sooner.

All the supposed friends of Angelo, who have been named, have said they didn’t realize they were getting special treatment on their mortgages.

But, this month, Republican members of the House Committee on Oversight and Government Reform issued a report that concluded that Countrywide used mortgage deals to “buy influence” and “block reform.”

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