Fraud charge for Countrywide boss

[arjay]

http://news.bbc.co.uk/2/hi/business/8084227.stm

Fraud charge for Countrywide boss

Angelo Mozilo, former boss of Countrywide Financial, has been charged with civil fraud and insider trading by the Securities and Exchange Commission.

He is the highest profile executive to face charges relating to the US sub-prime mortgage crisis in 2007.

Bank of America eventually rescued the biggest US mortgage lender, buying it for $2.5bn (£1.5bn) in July 2008.

Mr Mozilo has denied doing anything wrong. Two other former executives have also been charged with civil fraud.

Former chief operating officer David Sambol and former chief financial officer Eric Sieracki "misled the market by falsely assuring investors that Countrywide was a prime quality mortgage lender that had avoided the excesses of its competitors", the SEC alleged.

It added that Mr Mozilo had deliberately misled investors about the credit risks that the company was taking.

'Flying blind'

The SEC also said that he had made nearly $140m in profit from selling his Countrywide shares "based on non-public information".

The sub-prime crisis, which was caused by mortgages being given to people who could not really afford them.

The loans were then repackaged by banks and sold on to investors, made to look like low-risk investments.

The SEC published extracts from e-mails sent by Mr Mozilo.

"The bottom line is that we are flying blind on how these loans will perform in a stressed environment of higher unemployment, reduced values and slowing home sales," he wrote on 26 September 2006

Is this another chicken coming home to roost (be roasted)?

[WBU ALUM]

It will be interesting to see which politicians who took campaign contributions from Countrywide also fall under the microscope. But I'm sure that Mozilo will fall on the sword himself like a good soldier and protect his political protectors during his days of high living that eventually came at the expense of taxpayers.

[aznyron]

I had a mortgage with country side I bought a house in 1996 at 8.25 and later when the rates dropped I wanted to refinance and was told I did not make enough money for 6% but I was well in the market for 8.25 so if he does fall on the sword i do hope he spills the beans

[WBU ALUM]

I had a mortgage with country side I bought a house in 1996 at 8.25 and later when the rates dropped I wanted to refinance and was told I did not make enough money for 6% but I was well in the market for 8.25

This has nothing to do with your situation, but I have never perceived borrowing money to be a right, and I certainly don't think that the lowest interest rate is a right either.

As is always the case with loans, mortgage rates are awarded to those who need the money least or have the highest credit ratings. I would never hold that against a lender who is trying to protect his savers' assets (I could be one of them). I am less likely to be as kind to a lender who lends to anyone -- even to those with little or no ability to repay.