A story in June 2008 recounted how Countrywide was responding to the foreclosure wave—by blowing off requests from borrowers for help.
Here’s the advice one borrower got from Countrywide’s “home retention team.”
“I told her that I probably spend $10 a day on groceries,” Bailey recalls. “And she said ‘Maybe you can eat less.’ “
That was the same story in which Morgenson reported that Mozilo mistakenly hit “reply” instead of “forward” on an email so a borrower (and we) could learn of Mozilo’s true reaction to his call for help:
“This is unbelievable,” Mozilo said in his message. “Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the Internet. Disgusting.”
Disgusting indeed to be counseled by “some other person.”
Other Morgenson stories simply followed civil suits filed by states, including Illinois and California, alerting the nation that Countrywide stood accused in those states of deceiving borrowers on a mass scale and as a matter of corporate policy.
But the best work may have been those that reported on bankruptcy judges and trustees around the country who were finding that Countrywide’s predations continued even after forelosees had filed for legal protection.
One story, “Dubious Fees Hit Borrowers in Foreclosures”, reported that a bankruptcy trustee in Pittsburgh had found that Countrywide had destroyed or “lost” $500,000 in mortgage checks, then imposed penalties and fees on the borrowers.
Another reported Countrywide’s admission to a bankruptcy judge that it had “recreated” letters that purportedly been sent to borrowers that had never in fact been mailed.
The stories prompted a Senate subcommittee to look into Countrywide’s foreclosure practices, tempering its behavior. If you think the subcommitee does that on its own, you are wrong again.
The SEC’s case, by necessity, is brought on behalf of Countrywide investors, who, the agency says, weren’t told of the deteriorating loan quality that Mozilo privately decried. In a perfect word, someone would take action on behalf of borrowers, the real center of the mortgage storm.
It’s not too much to say that Morgenson put a face on a rogue industry, and it was Mozilo’s. The SEC’s case didn’t happen by accident.
1. “Countrywide Writes Mortgages for the Masses —- Dwarfed by Its Big-Bank Rivals, Company Manages to Grab Lead In White-Hot Home-Loan Market,” WSJ, 12/21/04.
2.”The Mortgage Maker Vs. The World,” NYT, 10/16/05.
3. “Workers Say Lender Ran ‘Boiler Rooms,’” LAT, 2/5/05.
4. “The House that IndyMac Built; In the low-rate days of 2003, big pension and hedge funds were hungry for higher yields – and upstarts like IndyMac were only too eager to please. Their creations became time bombs that still threaten the financial system,” The Globe and Mail, 7/19/08.
5. “Home Stretch: At a Mortgage Lender, Rapid Rise, Faster Fall —- Wall Street Fueled Growth at New Century; A Party-Hard Culture,” WSJ, 3/13/07.
6. “Banking on Misery: Citigroup, Wall Street, and the Fleecing of the South,” Southern Exposure, Summer 2003.
7. “Saying Yes, WaMu Built Empire on Shaky Loans,” NYT, 12/27/08.