How Countrywide Used its VIP Loan Program - To Influence Washington Policymakers
To Influence Washington PolicymakersAs the Clinton administrationâs top housing official, âCisneros loosened mortgage restrictions so first-time buyers could qualify for loans they could never get before.â Cisneros first met Mozilo when the two negotiated a pledge to use âproactive creative effortsâ to extend homeownership to minorities and low-income Americans.207 Cisneros joined Countrywideâs board in 2001.
How Countrywide Used its VIP Loan Program
To Influence Washington Policymakers
Prepared for Chairman Darrell Issa
U.S. House of Representatives
Committee on Oversight and Government Reform
July 5, 2012
I. Executive Summary
Bank of America (the Bank) produced more than 120,000 pages of documents in
response to the subpoenas issued by Committee Chairmen Darrell Issa and Edolphus
Towns. The documents produced by the Bank shed additional light on the scope and
purpose of Countrywideâs VIP program, particularly as it related to the companyâs
strategic partnership with Fannie Mae.
In 1999, Countrywide reached an exclusive agreement to sell Fannie Mae billions
of dollars in mortgages at a discounted rate. The agreement led to a period of
codependence and mutual growth. Countrywide gave preferential treatment to Fannie
Mae executives and employees. Loans being financed for Fannie Mae employees
through an Employee Assistance Program were often transferred to Countrywideâs VIP
unit for processing.
Between January 1996 and June 2008, Countrywideâs VIP loan unit made
hundreds of loans to current and former Members of Congress, congressional staff, highranking
government officials, and executives and employees of Fannie Mae, including
Chairmen James âJimâ Johnson, Franklin Raines, and Daniel Mudd. VIPs who worked
at Fannie Mae enjoyed expedited loan processing and pricing discounts. Countrywide
also waived company guidelines for Fannie Maeâs senior executives to a greater extent
than it did for âregularâ VIPs.
Fannie Mae and Countrywide lobbied against government-sponsored enterprise
(GSE) reform legislation that would have diminished Fannie Maeâs ability to acquire and
hold subprime mortgages originated by Countrywide. Countrywide also lobbied against
predatory lending bills. Documents obtained by the Committee show that several
Members of Congress and congressional staff positioned to affect the legislation received
VIP loans. In fact, Countrywide lobbyists â and CEO Angelo Mozilo himself â referred
several Members and staff from the Senate Committee on Banking and the House
Committee on Financial Services to the VIP unit. Those are the committees of primary
jurisdiction for consideration of legislation related to the mortgage industry and the
Countrywideâs VIP unit processed loans for key Senators and Senate staff who
could be helpful when legislation that affected the company was drafted or up for a vote.
Countrywide gave VIP loans to former Senate Banking Committee Chairman Christopher
Dodd; Senate Budget Committee Chairman Kent Conrad; and Mary Jane Collipriest,
Communications Director for former Senator Robert Bennett, who served on the Banking
Committee. Dodd referred Collipriest to the VIP unit.
Countrywide also forged relationships with Members and staff of the U.S. House
of Representatives. The VIP unit processed loans for Congressmen Howard âBuckâ
McKeon; Pete Sessions; Edolphus Towns; and Elton Gallegly.Documents show Countrywide enrolled House Financial Services Committee.
Staff Director Joseph Ventrone and General Counsel Clinton Jones in the VIP loan
program. Jones was a trusted ally of Fannie Mae during GSE reform deliberations.
Documents also show that in early 2005, Countrywide gave a discounted loan to a staffer
in the office of Rep. Ruben Hinojosa, who has served on the Financial Services
Committee since 2001. Former Rep. Tom Campbell received a VIP loan in 1997.
Fannie Maeâs targeted lobbying campaign supplemented Countrywideâs outreach
to Committee Members and staff. The GSE assigned as many as 70 lobbyists to the
Financial Services Committee while it considered GSE reform legislation in 2000 â 2005.
During the 108th Congress, four GSE reform bills were introduced in the House. None
made it out of the Financial Services Committee.
Countrywide also had favorable relationships with key decision makers in the
Executive Branch. Two former Secretaries of Housing and Urban Development received
VIP loans â Alphonso Jackson and Henry Cisneros. The VIP unit processed Cisnerosâs
loan after he joined the companyâs Board of Directors. Jim Johnson referred former
Secretary of Health and Human Services Donna Shalala to the VIP unit.
The documents produced by the Bank show that VIP borrowers received
paperwork from Countrywide that clearly identified the VIP unit as the point of contact.
The conspicuous markings on documents provided to VIP borrowers made it clear that
Countrywideâs VIP unit was processing their loans. It was also the practice of staff in the
VIP unit to identify themselves as such on the phone.
Read full report: http://oversight.house.gov/wp-content/uploads/2012/07/Countrywide-112th-Report-7.3.12-1207-PM.pdf
Former HUD Secretary Henry Cisneros
President Bill Clinton nominated Henry Cisneros to serve as Secretary of Housing
and Urban Development on December 17, 1992.204 He was confirmed by the U.S. Senate
on January 21, 1993, and sworn into office the next day.205
As the Clinton administrationâs top housing official, âCisneros loosened mortgage
restrictions so first-time buyers could qualify for loans they could never get before.â206
Cisneros first met Mozilo when the two negotiated a pledge to use âproactive creative
effortsâ to extend homeownership to minorities and low-income Americans.207 Cisneros
joined Countrywideâs board in 2001.208
Cisneros received several loans from Countrywide while he served on the board.
The VIP unit processed the loans. Cisneros â apparently concerned about Sarbanes-
Oxley restrictions that applied to board members â requested not to receive a discount.
Maritza Cruz testified:
Q: . . . And did anyone ever tell you they can't accept a certain
benefit or certain discount or exception because they were a
A: I only heard it once.
Q: When was this?
A: I forgot his name. Board of directors.
Q: Was it Henry Cisneros?
A: Cisneros. I couldn't remember the name. I did a few loans for
him. And he did say, I don't want discounts. That's the only time I
have seen it.
Q: And when he told you that, what did you?
A: We did what he wanted us to do.
Q: Not give him any discounts? Is that correct?
204 Henry G. Cisneros, HUD Archives, available at http://archives.hud.gov/secretaries/cisnerosbio.cfm (last
visited May 7, 2012).
206 David Streitfeld and Gretchen Morgenson, Building Flawed American Dreams, N.Y. TIMES, Oct. 18,
208 REUTERS, Countrywide says ex-HUD chief Cisneros quits board, Oct. 24, 2007.