Countrywide Financial founder Angelo Mozzilo, who presided over the lending giant’s rapid rise and then its fall during the 2008 financial crisis, died on Sunday. He was 84 years old.
His death was announced in the Santa Barbara area of California a statement by the family’s philanthropic organization, the Mozillo Family Foundation. No reason was given for this.
Nationwide was a key player during the housing crisis, when loose financial regulations enabled lenders to aggressively sell risky mortgage products to potential homeowners, contributing to a bubble in housing prices. That explosion, in 2008, came when home values plummeted, sending the US economy into a prolonged recession.
Mr. Mozilo, the son of a Bronx butcher and who worked his way through Fordham University, became one of the most recognized officials associated with the crisis. Inspired by his modest beginnings, he built Countrywide into one of the nation’s largest mortgage lenders in the early 2000s. But he still wasn’t satisfied: He wanted the company to capture 30 to 40 percent market share, far more than any single lender.
Across the country the emphasis began on selling compounded mortgages to potential homeowners with weak financial profiles, a group often referred to as “subprime” borrowers. The loans required little or no down money, and many borrowers found homes they would otherwise have been unable to afford. Many of these loans, known as “no-doc” loans, did not require any income verification.
That go-go sales culture fueled the company’s growth and profits but ultimately led to its downfall. As the housing market crashed and borrower defaults mounted, lending practices across the country came under scrutiny from legislators, regulators and consumer advocates.
Financial pressures began to mount, and the company, based in Calabasas, California, west of Los Angeles, was acquired by Bank of America in 2008 at a fire sale price of $4 billion. But the buyout cost Bank of America billions of dollars more in legal and other legacy costs.
At that time, approximately 150 mortgage lenders had failed, many of which were taken over by healthy institutions.
Mr. Mozilo, known for his crisp suit and dark brown complexion, stood up for his company throughout the ordeal. In September 2010, more than two years after Bank of America bought the company, he told congressional examiners, “Countrywide was one of the greatest companies in the history of this country.”
The regulators had a completely different opinion. In October 2010, Mr. Mozilo agreed to pay $22.5 million to settle federal charges that he misled investors about Countrywide’s risky loan portfolio. At the time, the settlement was the largest penalty ever imposed by the Securities and Exchange Commission against a senior official of a public company.
As part of the deal, Mr. Mozilo, who did not admit or deny wrongdoing, agreed to forfeit $45 million in “wrongfully earned profits” to settle insider trading and other charges.
Angelo Robert Mozzilo, the eldest of five children, was born on December 16, 1938, in the Bronx, where he was raised. When he was about 12 years old, he began helping out in his father Ralph Mozilo’s butcher shop, sweeping floors and butchering chickens. his member profile In the Horatio Alger Association.
He got his first job in the financial industry when he was 14, working as a messenger boy for the Manhattan Mortgage Company.
His marriage to Phyllis (Ardesi) Mozilo lasted for over 50 years. He died in 2017. They are survived by five children, Christy Mozilo Larsen and David, Elizabeth, Eric, and Mark Mozilo; and 11 grandchildren.
Mr Mozilo said he had been unfairly portrayed as the villain of the housing crisis when several other lenders were involved, a perspective his family reiterated.
Eric Mozilo said in LinkedIn, “Independent of how people outside the industry perceive this man, insiders know what an incredible force he was.” Post on Tuesday.
“He was an outstanding father and a legend in the mortgage industry,” they said during a phone call.
Mr. Mozilo and a partner, David Loeb, who died in 2003, started Countrywide in 1969 with $500,000. Within a few decades, the company had grown from a conservative home lender, originally based in New York, to the largest mortgage lender in the United States. As of 2007, it had 900 offices and $200 billion in assets and made $500 billion in loans that year.
In the early 1990s, when government data showed that lenders were disproportionately rejecting minority borrowers for home loans, Countrywide saw an untapped market and began offering more loans to low-income and minority communities. Gave.
“When I first came into the office with the loan, they said: ‘You’re crazy, you’re crazy, don’t do this. There’s a reason we’re rejecting these people,'” Mr. Mozilo later recalled of the crisis. The loan servicers had “very fixed, inflexible guidelines,” he told the congressional commission investigating.
As he saw it, Countrywide was helping to break down racial and economic barriers to home ownership.
So he gave employees “sensitivity training” and hired more black and Hispanic employees. According to Mr. Mozilo, the country soon began approving one loan for every two applications reviewed. Earlier, it was sanctioning one loan for every four applications. The new loans “underperformed”, he said.
But that performance could not last. According to internal Countrywide emails released by the SEC in 2009, in 2006 Mr. Mozilo described some of the company’s risky loans as “poison”. “In all my years in business, I have never seen a more toxic product than this,” he wrote in an email.
More than a decade later, Mr. Mozilo remembered how difficult that period was for his family, but he continued to defend himself and his company’s legacy at a financial conference in Las Vegas.
“Of course it bothers me,” he said. 2019 cnbc report, “It affected my reputation, it affected my family, it affected my whole life. That’s why I cared. Then several years passed and my wife passed away and I turned 80 and now I don’t care. There are other things more important in life.”
Ben Proteus Contributed reporting.
