![]() In his 2010 interview with the commission that analyzed the financial crisis, Mozilo expressed pride in his company’s record of helping 25 million people buy homes, including minorities, who had historically been the victims of discrimination in housing. Countrywide needed a $2 billion investment by Bank of America to get through 2007 but lasted just one month into 2008. A wave of subprime lenders declared bankruptcy, announced significant losses or put themselves up for sale in the first months of 2007, the pain spreading to a broad swath of hedge funds, commercial banks and investment banks that had bought, sold, repackaged and invested in the loans. ![]() “Housing suddenly went from being part of the American dream to house my family to settle down - it became a commodity,” he said. “Housing prices were rising so rapidly - at a rate that I’d never seen in my 55 years in the business - that people, regular people, average people got caught up in the mania of buying a house, and flipping it, making money,” he said in a 2010 interview with the US Congress-appointed Financial Crisis Inquiry Commission. Looking back on those boom years, Mozilo said Countrywide had been swept up in a “gold rush” mentality that had overtaken the US. From 2000 until 2008, Mozilo received total compensation of $521.5 million, according to Equilar, a compensation-research firm. ![]() Chairman and CEO Jamie Dimon by $10 million and Bank of America CEO Kenneth Lewis by $20 million. In 2006, he was paid $48 million, beating JPMorgan Chase & Co. With their enhanced interest rates, these mortgages were in high demand on Wall Street, where firms bundled them with other, less-risky forms of consumer debt and sold them as mortgage-backed securities. It was after 2000, when Loeb left the company, that Mozilo fully embraced the looser practices of surging subprime mortgage companies. Those unconventional buyers were willing to agree to higher-than-normal interest rates to offset their added risk. That was several years after other non-bank lenders, with the government cheering them on, began loosening their borrowing requirements and extending mortgages to those who previously might have been turned away. The tactics Countrywide used toward the end of his career as CEO were starkly different from the tried-and-true loan-verification methods he and his partner, David Loeb, had used when they started the company in 1969 as a two-person operation focused on low-cost loans with little risk.įor much of his long career, Mozilo “believed strongly in the importance of underwriting standards - that is, in making loans to people who had the means to pay them back,” Bethany McLean and Joe Nocera wrote in All the Devils Are Here: The Hidden History of the Financial Crisis (2010).īut Countrywide dipped its toes into subprime lending - issuing mortgages to borrowers with poor credit histories - in the late 1990s. In some ways, Mozilo was an unlikely villain in the saga. Even at that discount price, the sale came to be seen as a painful mistake by Bank of America, which over subsequent years paid more than $50 billion to resolve regulatory probes and litigation tied to Countrywide. for $4 billion - one-sixth of what it had been worth a year earlier. ![]() Mozilo’s long tenure as CEO ended abruptly in January 2008 when Countrywide, running out of funds to finance loans, was sold to Bank of America Corp. Time magazine, citing Countrywide’s loosened lending standards and exotic mortgages, named him one of the “25 People to Blame.” Countrywide was a pioneer in the field, and, fairly or not, Mozilo became a public face of the financial crisis. The housing bubble that burst in 2008, sending the US economy into a recession and erasing almost $8 trillion in value from the stock market, was built on exceptionally cheap and available credit extended to homebuyers, along with creative options to repay their debt. ![]()
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