I Am Shocked, SHOCKED to Learn That Countrywide Financial’s Loan Practices Were Lax

Steve Sailer, iSteve, October 24, 2012

Here’s the top story in the Washington Post right now:

US suit cites ‘brazen’ mortgage fraud at Countrywide, even after Bank of America purchase

By Associated Press, Updated: Wednesday, October 24, 2:15 PM

NEW YORK — The latest federal lawsuit over alleged mortgage fraud paints an unflattering picture of a doomed lender: Executives at Countrywide Financial urged workers to churn out loans, accepted fudged applications and tried to hide ballooning defaults.

The suit, filed Wednesday by the top federal prosecutor in Manhattan, also underscored how Bank of America’s purchase of Countrywide in July 2008, just before the financial crisis, backfired severely.

The prosecutor, Preet Bharara, said he was seeking more than $1 billion, but the suit could ultimately recover much more in damages.

“This lawsuit should send another clear message that reckless lending practices will not be tolerated,” Bharara said in a statement. He described Countrywide’s practices as “spectacularly brazen in scope.”

He also charged that Bank of America has resisted buying back soured mortgages from Fannie Mae and Freddie Mac, which bought loans from Countrywide.

A relevant fact that has disappeared down the memory hole is that during the Housing Bubble, Angelo Mozilo, CEO of Countrywide, keptboasting that Countrywide was going hog wild in the name of increasing minority homeownership. For example, here’s a press release from January 2005. (I suspect that this immediately followed a meeting between Mozilo and Daniel Mudd, head of Fannie Mae, in which Fannie agreed to buy more mortgages from Countrywide).

Countrywide sets $1 trillion goal for real estate loan program

Funding aims to help minority, low-income borrowers

BY INMAN NEWS, FRIDAY, JANUARY 14, 2005.

Countrywide Home Loans today announced an expansion of its We House America initiative to fund $1 trillion in home loans to minorities and lower-income borrowers and communities through 2010.

“The $1 Trillion We House America Challenge, expanded from $600 billion announced in 2003, embodies Countrywide’s long-standing commitment to lead the mortgage industry in closing the home-ownership gap for minority and lower-income families and communities,” said Angelo Mozilo, Countrywide Financial Corp. chairman and CEO, who announced the initiative at the International Builders’ Show in Orlando.

“For several years now, Countrywide has been a leading lender to minorities and lower-income households,” Mozilo said. “I am proud of our lending record and pleased to announce the expansion of our lending commitment to $1 trillion.” The We House America program has already placed 2.4 million families into homes, Mozilo said that number should nearly triple by 2010.

The company will continue to develop innovative programs emphasizing non-traditional lending criteria, according to the announcement, such as calling for improved underwriting systems that eliminate the over-reliance on traditional credit scores that can mask a borrower’s true credit-worthiness.

Countrywide last year launched Optimum Loan, a program that addresses obstacles for hard-to-qualify borrowers, such as allowing for non-occupant co-borrowers, other secondary income, and pooled funds for down payments. …

“To ensure that this objective is achieved, we intend to expand upon our existing partnerships with specific community groups,” Mozilo said.

Henry Cisneros, a Countrywide director and a former secretary of Housing and Urban Development, said, “This company is leading the industry in closing the homeownership gap through ambitious lending commitments, innovative programs, and a strong corporate culture that constantly looks for ways to improve.”

Countrywide formalized its commitment to affordable lending more than a decade ago by launching We House America, an initiative to provide increased homeownership opportunities for all Americans. The previous commitment covered the years of 2001-10 and has provided $341 billion of home loans as of Dec. 31, 2004. The company is now extending the goal to $1 trillion by 2010.

And back in February 2003, Mozilo had given a well-publicized Harvard address pledging $600 billion (with a B) in minority and low income mortgages in support of President Bush’s October 15, 2002 call for closing the racial gap in homeownership by freeing up lenders from discriminatory regulations like insisting upon down payments.

And Mozillo had been demanding deregulation in the name of minorities from nine years before that, when Cisneros and the Clinton Administration threatened Countrywide with having the Community Reinvestment Act, with all its paperwork, extended to non-bank mortgage lenders like Countrywide if they don’t start lending more to minorities:

Eased guidelines seen as key to boost in minority lending

AUTHOR(S) Prakash, Snigdha
PUB. DATE October 1994
SOURCE American Banker; 10/13/1994, Vol. 159 Issue 198, p20 …

ABSTRACT Presents the guidelines outlines by Angelo Mozilo, chairman of Countrywide Funding Corp. regarding loans awarded to minority borrowers. Recommendation for the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corp.to loosen underwriting guidelines; Presentation of the guidelines during a speech delivered to the Mortgage Bankers Association.

The central thread in the Housing Bubble / Bust was excessive deregulation in the name of increasing minority lending. This all did a lot more for Angelo Mozilo’s net worth than it did for minorities’ net worth, but, there are simply no interest groups in America who want to hear what really happened. Everybody wants to promote their ideologically congenial fragment of the full story.

Sure, trillions evaporated and trillions may evaporate again in the future because nobody wants to learn this lesson of history, but I guess that’s a small price to pay for keeping the embarrassing truth covered up.

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  • Tom_in_Miami

    “…reckless lending practices will not be tolerated…”?

    I thought it was mandatory.

    • The__Bobster

      Yes, it was mandated…and when the banks protested, the government gave them a wink and nod, indicating that it would cover their losses. 

      • Tom_in_Miami

        Oh yeah, my mind drifts back in time.

  • This really is one of the weaknesses of Whites: We make movies about cartoon deer and weep when the deer’s mother dies, and we try to give blacks and hispanics their “chance.” Because all they need is their “chance.” We had ours, it’s only fair. We brought them here in chains, and if we just give them their chance, and education/housing/food/a stipend– then they’ll be little English Lords and Ladies.
    Whoops, it doesn’t work out that way, but hey– here is a funny video:

    http://www.youtube.com/watch?v=R6H0i1RAdHk

  • Tomshuford

    Hindsight is 20/20 as they say, but I can’t help but wonder that if anybody in the Clinton administration, Bush Administration,  Bank of America or Countrywide Financial had some basic understanding of what is sometimes called “human biodiversity,” much of this folly could have been avoided.

    Knowledge is power.

    Most Americans, alas, are powerless when placed in situations which requiring such understanding.

  • How about blaming Barry Dunham and his friends at Acorn for pressuring the banks into making loans that they never wanted to make.

  • Mercerian Jed

    The BRA Fedz will force you to embrace Diversity, then they will try to put you out of business when Diversity doesn’t finish the job.

    A “deep commitment to promoting Diversity” is how businesses run False Flag operations against themselves without even knowing it.

    “Outrunning the harmful and dangerous effects of Diversity is proof that your business is infected with extreme and prejudicial systemic bias, institutional racism, structural inequity, elitist bigotry, and worst of all, ugly unearned White privilege.  Since you survived the Diversity Curse, we  must now crush you the name of social justice and economic retribution.  We just can’t afford to leave private businesseses like yours in the hands of Whites like you, so we must nationalize your company for the sake of transformational and historic Diversity and hand everything over to the wonderful BRA.”

    -pretty much any prophet who sees the future coming as fast as we see it…

  • And to think that the left blames deregulation for these problems. Would they support a measure making it hard for banks to give loans to minorites?


  • The company will continue to develop innovative programs emphasizing non-traditional lending criteria, according to the announcement, such as calling for improved underwriting systems that eliminate the over-reliance on traditional credit scores that can mask a borrower’s true credit-worthiness.

    Huh?  What does that even mean?

    How do “traditional credit scores” “mask a borrower’s true credit worthiness?”  People and firms that sell goods and services beyond the average person’s ability to save money for the entire cost of those goods and services simply must offer financing, either in house or swing a third party deal with a bank, usually the latter.  And people who want to buy said goods and services simply must use financing.  A lot of the economy is based on revolving lines of credit.  Do you think that all the monied interests that make money from lending money are going to tolerate flawed individual credit rating metrics?  No, because the whole system needs accurate information on an individual’s ability and desire to repay loans and to make monthly nuts.  If the business and financial world at the time didn’t think that Angelo Mozilo was popping off, his insinuation that credit ratings were flawed would have set off the scandal of scandals.

    The reality is that what Mozilo said is business school gobbledygewk for “cheat on behalf of un credit worthy racial minorities.”

  • tickyul

    The corrupt Government is most at fault in the whole housing bubble explosion. And the banks….well, Big Brother makes threats about lending to so and so….you better toe the line.

  • A typical player in the shake-down-whitey sub-prime loan debacle was a young black Chicago lawyer named Barack Obama.
    In 1995 Obama led 186 black plaintiffs in a lawsuit against Citibank as their lead attorney. Citibank, they said, refused to loan them money for mortgages because they were black.Citibank did not coerce poor blacks to sign mortgage papers. Rather, the lawsuit pressured Citibank to the table.It was not predatory lending. It was predatory borrowing.The bank did not want to loan them money. The skin tone of the borrowers was not relevant. It was their inability to repay the loans that worried the bank.Now, 17 years later, we understand how Obama’s lawsuit, and other like it, forced the nation and the world into a financial disaster.Nearly half of the 186 black plaintiffs have since filed bankruptcy or received foreclosure notices. Only 19 of the black plaintiffs (about 10 percent) still own their homes and retain clean credit ratings.The 1990s was a decade of predatory borrowing when lending institutions were pressured to dole out billions of dollars to borrowers who were unable to repay. It could be described as a massive, nationwide ATM hold up.Predatory attorneys, like Obama, were effectively licensed by Jimmy Carter’s Community Reinvestment Act.”Regulators instructed banks to consider alternatives to traditional credit histories because CRA targeted borrowers often lacked traditional credit histories. The banks were expected to become creative, to consider other indicators of reliability,” explains John Carney of The Business Insider. “Banks were expected by regulators to relax income requirements.” [source]Tampering with free markets didn’t bode well for those who thought they could shake down the system. The predatory-borrowing housing bubble lingers in the form of a trailing recession. The national unemployment rate remains over 8 percent; over 14 percent for blacks Americans and around 41 percent for black teens.Think of Obama as a street thug; the gang leader who held up an ATM machine. Only the venue has changed from ATM to courtroom.How much did Obama earn in attorney fees?We don’t know.Does anyone see the irony?Barack Obama, whose message of hope and change rallied blacks to vote for him in 2008, was a typical key player in causing the bubble that led to the recession and the subsequent dire unemployment rate among blacks. American Africans are supporting the gangster whose 1995 heist still contributes to ghetto blight.The lesson remains unlearned: Prosperity doesn’t come to the hood by robbing white people at ATM machines. Nor does it come by filing discrimination suits against mortgage companies.They call it predatory lending.In the leftist lexicon predatory lending it’s a procedure used by mortgage sellers to pressure poor folks — poor blacks in particular — to sign on the dotted line. In so doing, borrowers are misled. They find themselves in over their heads. Unable to make ends meet, these victims of predatory capitalism are forced into bankruptcy, foreclosure, or both.The housing crisis that crippled the world economy, they say, is due to predatory lending; the outcome of greedy rich white people screwing poor black folks.Add predatory lending to the long list of myths manufactured in the minds of Marxists to demonize free markets, Western culture, and white people.In short, predatory lending is a lie. It never happened.Any sane person understands that lending institutions don’t profit from making loans to unqualified borrowers. The sub-prime loan debacle that nearly bankrupted the nation and the world (and may still) was not the outcome of greedy rich white people. Rather it was the outcome of militant black activists and their liberal white enablers. It was just another street-corner shake down played out on a grand scale in America’s courtrooms.There is an enduring theory of economics embraced by the political left that follows something akin to a syllogism: (a) White privilege is the cause of lagging black prosperity. (b) Shaking down white people — at ATMs or in courtrooms — is, therefore, justified. (c) The bounty received from those shakedowns will provide blacks the prosperity they deserve.In true economic theory, prosperity does not come to white people or black people. Rather, prosperity comes to productive people who provide goods and services demanded by the market.Meanwhile, Obama has moved on to his next, much bigger, shake down: ObamaCare.[source]

    • Howard W. Campbell

      I would be curious to see the foreclosure rate(s) in states with really high white populations. (ME, SD, ND, VT, NH, etc).

      “Nearly half of the 186 black plaintiffs have since filed bankruptcy or received foreclosure notices. Only 19 of the black plaintiffs (about 10 percent) still own their homes and retain clean credit ratings.” Wow. 10%, and how many of these people have AA jobs that they could never hope to get in the free market? Somewhere I read that the average black woman has a net worth of $5. (My kids have more than that in their piggy banks. But then again, they aren’t supporting a multitude of deadbeats).

  • tickyul

    Fannie and Freddie injects TRILLIONS of dollars into the mortgage markets…fueling speculation, price bubbles and bidding wars on homes. So your friend, F&F,  artificially inflates the cost of housing on a big scale. The politicians love this scam because it gives them more and more power over you peasants…and you peasants are more and more beholden to the scumaticians.

    A house that would cost 90K without F&F actually cost 200K……that is a bad thing IMHO.

  • Jay11

    I tried to get a home loan recently.  My credit score is 812.  I had the 20% for a down payment and I make good money every month.

    Did I get it?

    No, and the mortgage broker told me that it’s super hard for anyone to get a loan these days because of a whole raft of new rules.  Ironically, the house I wanted to buy was a HUD house.  If I were black or latino I could have bought it with a lousy credit score, 3% down and no income verification.  That’s what the broker told me.

    This a true story

    •  As far as i know the CRA is still being enforced, but maybe now they limiting to “borrowers of color”

    • Sloppo

      I think you should sue them.  Your claim should be much more valid than the minority non-farmers who received $50,000 cash awards for not receiving agricultural loans in the “Pigford” Case.

    • Detroit_WASP

      You should have told them you’re a White Hispanic… like George Zimmerman.

  • tickyul

    Haha, remember around 2007 when the corrupt politicians were squeaking about unwinding Fannie & Freddie……….LMFAO.

    Big Brother is the ultimate dictator…..court………haha.

  • Deny noncredit worthy minorities a loan, you’re a racist. Give noncredit worthy minorities who have no prospect of paying back loans, you’re a racist.

    When it comes to minorities, you’re damned if you do and damned if you don’t.

    •  When it comes minorities, we’re totally damned, there’s no two ways about it!

    • Sloppo

      Here is how I’ve heard the same thing expressed … Deny noncredit worthy minorities a loan and you’re guilty of “discriminatory lending practices”.  Give noncredit worthy minorities who have no prospect of paying back loans and you’re a “predatory lender”.

  • Before Bill Clinton tweaked the Carter era CRA in 1993 the total amount of CRA compliant mortgages was $200 billion, afterwards it totaled $4 trillion. This is the direct cause of the housing bubble and the financial collapse, and why the GOP hasn’t exploited this is hard to understand, especially since obama was/is a big proponent of the CRA

  • Detroit_WASP

    I am in the real estate business and I see very finincially unstable blacks get loans all the time.  

    •  ” …that area turns into a black helhole, crime goes up, schools turn to dung and PROPERTY VALUES DROP.”

      Good point, not only were blacks the primary cause of the financial collapse,  they had a secondary impact that put everyone around them at financial risk

  • Blacks, to me, are little walking comedy routines.

    •  “Nature’s clowns,” I always say–with their flouncy movements and ill-fitting, garish clothing, and silly hairdos.  If they’ve become a dangerous sideshow act in recent years, we have only ourselves to blame for allowing them on the big stage.

    • Denise

      Actually, that first video was pretty crude for the most part. What I found so hilarious was the Big Band music over the melee. It sort of reminded me of those old Buster Keaton silent comedies.

      The Deuce Bigelow clip reminds me that the only honest dialogue about race takes place in comedy. Well, with the exception of Michael Richards. Poor guy. I think he was a genuine physical comedian like Keaton and Chaplin.

  • Bon, From the Land of Babble

    These were called NINJA loans — No Income, No Job Applicants.

    Braaack 0bama, as the lead counsel representing ACORN in two lawsuits, sued lenders to force them to give out substandard loans. Now as president, he’s suing those same lenders for giving out the loans!

    Under the new mortgage standards, lenders could no longer turn down a loan for someone whose primary income was unemployment, SSI, welfare or child support.  Food stamps were counted as “income.”

    As for Cisneros:  The former HUD official left office in disgrace after he lied to the FBI about payouts to a mistress.  Cisneros pleaded guilty to a misdemeanor and was never sent to prison.  Bill Clinton pardoned him in 2001.
    Bon

    •  And as president obama actually supported a 2009 bill (co-sponsored by 50 dems) that would have expanded the CRA and given it more power

  • JvNk

    In South Africa, only approximately 2 million, mostly white, taxpayers pay any significant amount of tax. And likewise, only 1000 companies are big enough to pay significant tax.

    So, what happens when blacks are in power? Well, simple. 2 million tax payers and 1000 companies are forced to support 17 million (yes, 17 million) blacks by means of all kinds of parasitic grants, such as “child grants” and “old age grants.”

    So each taxpayer in South Africa is forced to support nine blacks.

    Welcome to your future, white America.

    http://www.bdlive.co.za/opinion/2012/10/26/assurances-aplenty-but-few-solutions-to-sas-problems

  • I Forgot

    The next story you see like this will be regarding student loans.  They are giving literally 10s of thousands of dollars to blacks who have no hope of graduating from a reputable college with any sort of meaningful degree and even less hope of finding a job that would generate enough income to pay the loans back.  I see them every day — 20, 30, 40, 70 thousand dollars worth of student loans and the borrower is earning close to minimum wage.

    • Next?  Heck, it seems like the Instapundit has a story every day about the “higher education bubble.”  That bubble is popping, but Obama is doing everything he can to keep you from hearing it pop because the Democrat Party is the party of the education-industrial complex.

  • If we only knew . . .