May 22, 2008 7:37AM
Countrywide’s Mozilo Calls Borrower’s Plea “Disgusting”
By Elizabeth MacDonald
“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…this home means the world to me…. it’s to the point where I cannot afford to pay what is owed to Countrywide. It is my full intention to pay what I owe. But at this time I have exhausted all of my income and resources so I am turning to you for help.”–Countrywide borrower Dan Bailey
“This is unbelievable. Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the internet. Disgusting.“–Countrywide Financial founder, chairman and chief executive Angelo Mozilo
So read excerpts from an email exchange that has Countrywide Financial (CFC) boss Angelo Mozilo sitting once again in the middle of a firestorm of controversy.
Borrower Dan Bailey sent the e-mail to Mozilo and other Countrywide officials this week, asking for a loan modification that would lower his payment. The full email exchange is at the bottom of my blog. I have reported to you before in prior blogs on Mozilo’s outsized pay during the housing crisis and his embarrassing testimony about his compensation on Capitol Hill (see “Final Thoughts on the Fat Cat CEO Pay Hearing,” and “Highlights from CEO Pay Hearing Today”).
Bailey had used a form email posted on LoanSafe.org, an Internet coaching service for troubled borrowers.
Evidently, Mozilo meant to forward the e-mail to a bank colleague, but instead hit the reply button to Bailey.
Countrywide issued a response: “Countrywide and Mr. Mozilo regret any misunderstanding caused by his inadvertent response to an email by Mr. Bailey. Countrywide is actively working to help borrowers, like Mr. Bailey, keep their homes.”
The email exchange raises a host of issues. Internet sites helping borrowers email form letters to lenders have caused a barrage of boilerplate demands, disrupting operations, bankers say. Also subject of debate are borrowers who should be responsible for not signing loan documents they don’t understand.
Mozilo’s use of the word “disgusting” with regards to these Internet form letters in his embarrassing email comes at a difficult time for the nation’s largest lender. Lawsuits against the lender have cropped up like dandelions. The FBI is reportedly investigating whether Countrywide’s management misrepresented the quality of its mortgages in routine securities filings, which in turn may have led investors to overvalue the loans securitized into more than $100b worth of investment vehicles between 2004 and 2007. And the embarrassing email comes at a time when Mozilo himself has had to contend with a probe of his stock sales by the Securities and Exchange Commission.
It was just this past March that Mozilo, along with E. Stanley O’Neal, former CEO of Merrill Lynch (ML), and Charles Prince, former CEO of Citigroup testified about their rich pay at a time when the government is now struggling with a housing and credit crisis these three helped engineer.
Banks have written off $335bn in the housing slump, while thousands of jobs have been lost, including at Countrywide, and home foreclosures soar to record highs. Moody’s estimates 3.5mn people will lose their homes to foreclosure during this crisis.
During the five-year period from January 2002 through December 2006, the stock of Countrywide, Merrill Lynch, and Citigroup appreciated, and the three CEOs collectively received more than $460mn in compensation.
Mozilo in particular got $250mn in compensation plus made $414mn in stock sales, which he attributes to a pre-existing company plan that lets him unload shares. However, Mozilo was selling shares through last fall at a time when he was also cheerleading Countrywide as a good stock to invest in, and at a time when he publicly criticized a Merrill Lynch analyst who issued a report last summer saying the lender was in peril.
The three executives received rich payouts largely based on profits that didn’t exist. The three banks to date have reported more than $45bn in writedowns from the crisis. Stocks in their companies have plunged to record lows, and investors have lost tens of billions of dollars.
Meanwhile, Bank of America (BAC) is still moving ahead with its $4b acquisition of Countrywide. Countrywide Financial Corp.’s 14 senior executives are expected to receive stock-based awards of $28.5 million upon completion of the lender’s sale to Bank of America, a regulatory filing showed. Mozilo, who isn’t joining the bank, would get $7.7 million, the filing said.
In other news, Countrywide Financial directors and executives now must defend a federal suit by shareholders claiming they engaged in insider trading and failed to halt policies that caused the mortgage lender’s value to collapse.
The bank had tried to dismiss the suit, brought by the Arkansas Teacher Retirement System, Fire & Police Pension Association of Colorado, Public Employees Retirement System of Mississippi and the Central Laborers Pension Fund. The US District Court in Los Angeles ruled the shareholders can go forward with their claim that the officers and directors are financially responsible for losses at Countrywide, the biggest U.S. mortgage lender.
The Countrywide email exchange:
”removed@yahoo.com
CC: Steve_Bailey@Countrywide.Com
Subject: Re: bailey acct# xxxxxxxxxx
From: Angelo_Mozilo@countrywide.com Add Mobile Alert
Date: Mon, 19 May 2008 06:41:34 -0700
This has already been sent on to our senior manager who will determine the facts behind your request and he will take the appropriate actions.
Dan Bailey
05/19/2008 06:37 AM
To Angelo_Mozilo@countrywide.com
cc
Subject Re: bailey acct# xxxxxxxxxx
Interesting to find that you think my letter is disgusting. I will send this on….
Angelo_Mozilo@countrywide.com:
This is unbelievable. Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the internet. Disgusting.
Original email. Did this warrant this response from Angelo Mozilo? I sure don’t think so!!!!
Dan Bailey Photography Studio
05/19/2008 06:12 AM To advocacy@countrywide.com, customer_service@countrywide.com, pressroom@countrywide.com, david_bigelow@countrywide.com, angelo_mozilo@countrywide.com, lisa_riordan@countrywide.com, elizabeth_moyer@countrywide.com, sarah_perek@countrywide.com, chris_oltmann@countrywide.com, gabrielle_williams@countrywide.com, maheshika_ruwanpathirana@countrywide.com, adrienne_ely@countrywide.com, raquel_robinson@countrywide.com, linda_turner@countrywide.com, daniel_whitehead@countrywide.com, melissa_guerra@countrywide.com, mary_archer@countrywide.com, aline_ramirez@countrywide.com, kacie_miller@countrywide.com, patricia_mckenzie@countrywide.com
cc
Subject bailey acct# xxxxxxxxxxx
To Whom It May Concern:
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.
The main reason that caused me to have a hardship and to be late is my misunderstanding of the original loan. 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.
As my ARM payments increased, I have had less money to put towards making my business (income) work. I had been unable to generate business because all of my funds were going towards attempting to make my loan payments. This, coupled with major repairs to my vehicle (93 jeep) and paying out of pocket for medical and dental issues (I have no ins.) caused me to fall further and further behind, destroying my credit rating.
Now, it’s to the point where I cannot afford to pay what is owed to Countrywide. It is my full intention to pay what I owe. But at this time I have exhausted all of my income and resources so I am turning to you for help.
I feel that a loan modification would benefit us both. With that, and knowing my home will not be foreclosed, I would be able to obtain a roommate in order to generate more income, have the funds to generate more business and have a good working relationship with Countrywide. I would appreciate if you can work with me to lower my delinquent amount owed and payment so I can keep my home and also afford to make amends with your firm.
I truly hope that you will consider working with me and I am anxious to get this settled so we all can move on.
Sincerely and Respectfully,
Daniel A Bailey Jr.
Loan # xxxxxxxxxxx
Dan Bailey
Don’s final email to Countrywide:
Mr./Ms Jemisaon,
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 ovewr 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.
Comment by Tammy
May 22nd, 2008 at 10:12 am
Wow! That is one of the most horrific things that I have ever heard!
Comment by Justin
May 22nd, 2008 at 10:22 am
geeze. Our country is about to go under. People without virtue aren’t fit for self government. It scares me to say this, but I think we are going to see alot of industries nationalized over the next four years in a vain attempt to keep our broken monetary system/ecomony afloat.
Comment by John
May 22nd, 2008 at 11:32 am
This reply to Dan Bailey is DISGUSTING AND UNBELIEVABLE. I hope that Mr Mozilo and other bankers responsible for this mortgage mess are held accountable and have to fork over their grossly excessive compensation $$$ to help cover the expenses of doing the right thing for Mr. Bailey and others. Bank of America should cancel its deal to purchase Countrywide; this pending transaction is why I sold my shares in BAC.
Comment by Suzanne Ridinger
May 22nd, 2008 at 1:03 pm
I fully agree that this email is somewhat pathetic. “I was told” is no excuse. If someone told him that he would find a million dollars on his front porch in the morning, would he buy into that, too? We DIDN’T buy a house during the boom because we sat down and figured out all the expenses required in home ownership and found that it sounded (and was) too good to be true. Does any one have commonsense any more?
Comment by Brian Lilienthal
May 22nd, 2008 at 1:51 pm
That is the pot calling the kettle black.
5 years ago I bought a condo at a resonable price within my budget. Morgage companys came up with intrest only and creative arms to get people into homes. I remember talking to people who made half the salary I did getting qualified for $250,000 morgages. Back then I knew the housing market would crash, but everyone thoght I was nutz. Now I have moved and am paying rent and a morgage because my house will not sell. My house value has dropped 37% and with gas prices incresing the value will continue to go down. My listed price is the lowest in the city and no bites. Will government let me write-down the loss if I have to take a significant 401k loan out to cover my loss. Of course not, but you (Morgage comapanies can). You make me sick. When intrest rates drop does the fixed rate drop? No only short term rates. And for those who need to refiance at a lower fixed rate are out of luck because the house no appraises less than what they owe.
This problem goes on two fronts. People do not no how to budget, and big business looks for short term gains not long term stability. You are lucky the government bailed you out. As for me I can always move back or continue to pay to payments because I understand a budget.
If Wall Street thinks there is a rebound in the future they are about as dumb as the folks who said “corn ethanol is a great idea”. As gas prices increase, unempolyment rises due to outsourcing, medical costs increase, taxes go up, baby boomers trying to move out of house they can no longer afford the taxes on or can upkeep; the market will continue to drop. Who will buy the boomers expensive homes? I have not even began to speak about social security not being there. This country is on the verge of major changes.
Comment by Ric
May 22nd, 2008 at 4:29 pm
I am “disgusted” by Mozilo, Countrywide, and every other bank/loan officer who turned a blind eye to these ridiculous, illegal transactions. On the other hand, I was a loan officer for a short while, and can’t count the times I tried to explain complex Neg Am loans or “Adjustable Rate Riders” and people didn’t care. Not “didn’t understand”, didn’t care. Many borrowers I would speak to found other banks/brokers to do their loans because the other person pushed them through the process, and got the money in front of them quicker. They wanted the same thing Mozilo wanted, money. Keep in mind fraud and deception takes two, and banks and borrowers made their beds. Banks/brokers are more to blame, but there’s a lot to go around. It’s amazing to me how many borrowers now are acting like innocent lambs.
2nd - On the other siderson is responsible for this mess
Comment by JS
May 23rd, 2008 at 12:10 am
Talk about a total intellectual, psychological, social and spiritual disconnect between CEO Mozilo, who is in the top 1% of earnings, and the rest of the population. It seems his life must have been insulated, silver spoon, best schools, no association with anyone who has led a difficult life. I’m just guessing, I could be wrong, I didn’t do a background check. But what else can explain such calous and vicious attitudes towards those who are destitute? When you look, however, at the whole ARM scam scandle scamdle, and you think, well, was Mozilo one of the executives who designed or approved or watched uneducated people sign ARM deals, well, then, is it that hard to believe that he would be disgusted simultaneously when one of his victims can’t pay? When has a con-man been sorry for his actions, or empathising with his victims. No, no, no, thats not how it works. As soon as feasible, the con man gets out of the lime light, and then takes as many more victims with him as possible. And does so while telling himself the rest of mankind is disgusting.
Look in the mirror Mozilo. When you look at the rest of mankind, especially the disenfranchised, uneducated, hard working blue collar, who you and your kind conned, and you call them “disgusting”, please look in the mirror at the same time. If you can still look in the mirror, and not flinch, then you are so far gone that your own case is hopeless, and you will need every penny of your illbegotten salary to keep you company, and make sure to keep some very materialistic trophy women and friends around you, and together, maybe you can sit around a cozy fire while on skiiing vacations, and talk about how disgusting all the people are who you made enough money off of to feed a small country…. disgusting? What is really disgusting Mozilo? Everyone else knows the answer, do you? I hope congress and a prosecutor find a way to uncover the mess, and find a way to prosecute you and all those who did this with you, and then we will listen to the echo of “disgusting” from a freshly unsanitized prison block…..disgusting? Disgusting!
Comment by unknown
May 23rd, 2008 at 12:52 pm
I’m sure due to all this negative media Mozilo will finally 1st hand have to deal with helping someone. I use to work for countrywide and Mozilo is so stuck to his money he’s clueless as to the damage he has caused other people. I hope every last dollar he has made is taken away. Hell he should personally pay off Dan Bailey’s house and let him keep the title. Selfish jerk
Comment by Elaine
May 23rd, 2008 at 2:12 pm
I think the CEO’s comment is being taken wildly out of context. The word “Disgusting” refers to the tactic used to generate the message the CEO received, not the situation of the ewriter. This is so plainly obvious that I cannot believe anyone is spending time pursuing this. The focus on the discussion should not be on this; rather it should be on Countrywide’s tactics in approving loan apps from borrowers who clearly had no ability to pay/repay their loans, and the company’s internal policies and guidelines associated with packaging and reselling known bad loans overseas.
Comment by Olen
May 23rd, 2008 at 4:28 pm
I am not particularly pleased by Mr. Mozilo’s email. Nor am I pleased that Countrywide no longer uses an “if the loan makes good sense, then fund it” attitude toward underwriting. As a mortgage broker, I have now reached a level of 10 loans I wanted to place with C’wide that do make sense, that I would bet my life would not go bad, but which C’wide will not consider…though they would have been fine in March!
On the other hand, though there are plenty of “scummy” mortgage people who probably deceived borrowers, the burden of reading your mortgage paperwork is still on the borrower. Sure, there is a lot of paperwork, but the adjustable rate mortgage disclosure, in particular, is very understandable. It is not legal gibberish and it is also given to the borrower when he signs the original loan package to sign…and copy to retain and read long before the borrower has to approve it again at the closing.
I would bet my bottom dollar that Mr. Baily’s problem is not that he was not informed as to how much his loan could go up, but, rather, that he was sure that, given a little breathing room, he could get his financial house in order. And, it turned out that he didn’t get enough room. Though I have a lot more sympathy for Mr. Bailey than I do for Mr. Mozilo, he obviously refinanced his property while he was under some financial duress and was, in no way, as cautious as he should have been.
As a mortgage broker, I have not discouraged borrowers from accepting ARMs in general, but I always urge borrowers to go for fixed terms of at least 3 years. Anyone should be able to dig themselves out of a hole in that time. But, 1 year? That is risky. For at least the last 1.5 to 2 years, the interest rate for a 3-year ARM is a little bit lower than a 1-year ARM and not even that much different than a 30 year fixed rate. For most people, during this time, there has really been little advantage to accepting an ARM vs a fixed rate mortgage.
Mr. Bailey was obviously in dire straits, regardless, and then slit his own throat by going for the very lowest rate he could get, rather than giving himself that breathing room. In addition, the rate increase cap on a 1-year ARM is somewhat reasonable. It sounds like Mr. Bailey would have been in trouble, at some point, even with a fixed rate loan.
On the other hand, to avoid appearing like “Simon Legree”, most lenders are willing to work out reasonable terms…ranging from a refinance, to tacking the arrearage onto the end of the original term, to forgiveness of part of the arrearage, to an additional short-term loan for the arrearage. He needs to contact the right people and agencies and continue his dialog with his lender. He has to realize that the lender will probably suffer a bigger loss by taking his home or accepting a “short sale”, etc. It is to their benefit to work something out, not to be “hard-headed”. Mr. Bailey has to be as persistent with them to work out a mutually satisfactory solution as the lender would be in pursuing the arrearage.
Comment by Olen
May 23rd, 2008 at 4:39 pm
I also have to add that Mr. Bailey might have had a stroke of luck by Mr. Mozilo having accidentally replied to him with those comments that are being seen as very hard-nosed. More than anything else, that incident may bring adequate help and support to Mr. Bailey, either from third parties or the very lender that might have, otherwise, maintained that same hard-nosed attitude.
Finally, I have to say that I can only imagine the stress that Mr. Mozillo must be in. No, we don’t need to run him a benefit. Countrywide made him extremely wealthy. But it must be heart-breaking to watch the company that you started and led for nearly 40 years, and that was originating 20% of all US residential loans, that you put your heart into for that long…going down the tubes! In addition, while I am pretty “pissed off” at Countrywide right now, I have to say that they, previously, were very flexible. It’s not that they, so much, had a policy of approving “deadbeat” people for loans, but that they realized that not everyone fit into the same mold and they often could fund a loan for those people. Again, whether or not we have any sympathy for Mr. Mozilo, the loss of Countrywide would be a loss for all of us.
Comment by Carla Baynes
May 25th, 2008 at 9:54 pm
If the borrower is truly a hardship case, I sympathize with him. It seems the form letter strategy has lost its effectiveness. Most people’s real life stories are more compelling than “copying” a form letter. A trusted advisor would have directed the borrower to be honest and forthcoming.
Comment by Carla Baynes
May 25th, 2008 at 11:57 pm
I feel like a heel, I should have read further, it sounds like Mr. Bailey has been through a rough patch. I hope his situation improves. Although, I hope he does have a person who is knowledgeable and can counsel him on his predicament.
Comment by san
May 30th, 2008 at 4:15 pm
Mozillo is a pompous over paid jerk with no feelings and an attitude problem !
Comment by Michael
Jun 1st, 2008 at 8:40 pm
The thing that no one gets, it that the lender cannot “re-do” the loan. In most cases, the actual note was sold at time of funding. The original lender does keep the servicing rights to about 18% of the loans they actually funded. If you read the reply of Mozilo, I dont think that he was calling that nitwit “discusting” he was referring to the whole form letter, and could be thinking someone is using this as a way to make money.
I also feel that it is a copout for anyone to use the whole “I didn’t know what I was signing excuse” What about those smart ones who cashed out $200k or more, did the lenders come back and want a piece of that? Being in the business for 15+ years, and knowing how I conducted myself, and my staff, I find it hard to believe that everyone can get away with blaming the lenders, LO’s, etc. Blame Our President, and Alan Greenspan for getting us into this mess. 7 years ago, you could get a “free” HELOC loan take it up to 95% LTV, at 3% interest only for 5 years. Go ahead and debt consolidate, put everything into this “free” loan. Keep your cash in the bank. No one understands for most of the american population, their home is their savings account, retirement, etc. That is who is to blame. I knew when Greenspan was getting out of his job duties, and he starting raising the fed by 100 bps at a time, we were in for a rude awakning. People, this has been happening for over 2 years. WE have been in a deep recession since, and it will only get worst. People are losing their jobs at an alarming rate. Go to the central part of the US. The occupancy rate of a huge mall in a very large town I was in was 27%. 18 months ago it was 98%. The population has dropped in some towns by 25% in the past two years. EVEN the gaming industry is showing a loss.
Stop blaming the big wigs of these companies who dont even have their hands tied, their hands are chopped off. Their is nothing they can do. There are no investors to buy these b/c loans. They dont have the capital to invest in you. Write to the white house. Blame them. There is someone making zillions of dollars in all of this. Look there.