header image

[Sign Up Now] to Receive Our FREE Daily SCVTV-SCVNews Digest by E-Mail

Inside
Weather


 
Calendar
Today in
S.C.V. History
March 28
1934 - Bouquet Canyon Reservoir, replacement for ill-fated St. Francis Dam & reservoir, begins to fill with water [story]
Bouquet Reservoir


While 25th District Congressman Howard “Buck” McKeon rode down Lyons Avenue in an army jeep for the City of Santa Clarita July 4th Parade, the U.S. House of Representatives Committee on Oversight and Government Reform was preparing to publish its report on “How Countrywide Used its VIP Loan Program To Influence Washington Policymakers.”

McKeon is named as one of the Countrywide VIP home loan borrowers who got sweetheart deals.

Chaired by California Republican Darrell Issa, the Oversight Committee report cast a wide bi-partisan net that caught both Democratic and Republican members of Congress, some staffers, the White House, Fannie Mae, Freddie Mac, federal agencies, and other government entities.

The foremost benefit of being a VIP borrower was access to discounted loans, below market rates. The standard reduction was 0.5 points. Additionally, Countrywide routinely waived junk fees typically ranging from $350 to $400 for VIP borrowers.

U.S. Rep. Howard “Buck” McKeon

The Justice Department has not prosecuted any Countrywide official for actions related to the VIP loan program. Documents and testimony show that Angelo Mozilo, Countrywide Founder/CEO, and Countrywide’s lobbyists may have skirted the federal bribery statute by keeping conversations about discounts and other forms of preferential treatment internal.

The report states “Rather than making quid pro quo arrangements with lawmakers and staff, Countrywide used the VIP loan program to cast a wide net of influence.”

Internal Countrywide documents show that Angelo Mozilo ordered a point off McKeon’s loan and waived garbage fees. The discount is not reflected on documents signed by McKeon. However, internal Countrywide documents show that one point was in fact waived.

McKeon did not make himself available for an interview but his spokesperson Alissa McCurley issued the following statement:

“Mr. McKeon has been completely upfront and transparent about his loan. He was never aware of any Friends of Angelo designation, and he has provided the media all his loan documentation from the 1998 loan.”

(McKeon’s office has never provided KHTS with the loan documents and did not fulfill a request by newstime.)

The VIP Loan Unit was established in 1991, it processed loans for members of Countrywide’s Board of Directors and friends and customers referred by Mozilo.The VIP unit identified customers referred by Mozilo internally as “Friends of Angelo.”

McCurley says McKeon has never met Mozilo, however, Countrywide internal documents show he certainly knew McKeon:

“Per Angelo – ‘take off 1 point, no garbage fees, approve the loan and make it a no doc.’

In the February 12, 2012 edition of the Los Angeles Times writers Abby Sewell and Catherine Saillant reported that McKeon told them he paid garbage fees and did not get a point off on the loan.

According to their reporting:

“McKeon received a $315,000 mortgage refinance in 1998 as his family-owned business, Howard & Phil’s Western Wear, was going through a Chapter 11 bankruptcy, according to documents reviewed by The Times. McKeon was no longer involved in the daily operation of the business after his 1992 election to Congress, but he had retained a stake in it. He saw his income plummet in the years before refinancing his Stevenson Ranch home, financial disclosures and bankruptcy filings show.

In spite of that, McKeon received a favorable rate and wasn’t required to produce documentation proving he could repay the mortgage — terms ordered by Mozilo himself, according to documents subpoenaed for a House inquiry.”

The entire article can be found by clicking here.

The report also makes McKeon an example of how loan applicants certainly knew they were getting VIP treatment.

VIP Loan Underwriter Maritza Cruz testified that it was common for VIP customers to receive cover letters that identified the VIP unit.

Q: Would he have also — as part of the VIP unit, would he have also have received a letter, like we saw for Mr. McKeon, saying, “Welcome to the VIP unit”?

A: Very likely, yes.

Click to enlarge

Although McKeon says we was unaware of a Friends of Angelo (FOA) designation it was clear to Countywide that he was a member of the FOA.

According to the report, on October 5, 1998, Joseph Reed in the VIP unit updated a “Countrywide Comment Sheet” for McKeon’s loan. Reed’s comments about the McKeon loan reflected the content of a series of telephone conversations with McKeon, his wife, and his secretary. Reed stated:

“FOA [Friends of Angelo] referral, Please order appraisal ASAP. You may call the borrower at his Washington office [number redacted] and get the Sons phone number for the appraiser contact. The borrower would like to hear from the appraiser this week. The borrower is a bit difficult to deal with. He seems on the edgy side.”

McCurley says “Mr. McKeon shares Chairman Issa’s interest in determining if there was any wrongdoing by Countrywide.”

Whereas McKeon seems unsure, Issa’s report makes the matter clear:

“In the years that led up to the 2007 housing market decline, Countrywide VIPs were positioned to affect dozens of pieces of legislation that would have reformed Fannie and Freddie and protected taxpayers.”

Countrywide lobbyist Jimmie Williams seemed to acknowledge something unethical with the VIP loans. Williams testified that he occasionally advised staff that they should not discount those loans because of congressional ethics rules. Documents show that customers referred by Williams did in fact receive discounts.

The report details infighting among the committee members on just how far to investigate the Countrywide matter, suggesting members were trying to protect their own parties. Issa’s Director of Communication Frederick Hill seems to come to McKeon’s defense.

“You may also want to note that while a number of Members and staff who had loans processed in the VIP unit were Members of the House Financial Services Committee or the Senate Banking Committee, Rep. McKeon was not,” said Hill.

In an internal e-mail from September 29, 1998, Mozilo assistant Kay Gerfen noted that McKeon was referred to Countrywide by “Mike Farrell/MBA.” Farrell was the chief lobbyist and legislative strategist for the Mortgage Bankers Association of America (MBA).

According to his online business bio, Farrell was working on “leading the industry’s successful campaign in 1998 to raise the maximum loan amount for FHA single-family insured mortgages.”

RogersDr. Lee Rogers a Democratic candidate for McKeon’s 25th District seat is demanding McKeon “come clean and be honest” about the Countrywide perks.

“I’m calling on McKeon to pay this money back, not to Countrywide, but to the US Treasury since it was the taxpayer who absorbed Countrywide’s losses through TARP, which McKeon also voted for,” said Rogers.

Rogers questions the timing of the loan:

“On October 6, Congress passed HR 4194, which increased the FHA loan maximums as an amendment to a Veteran’s Affairs authorization act.  McKeon voted “yes” on that measure.  On October 7, McKeon’s loan was approved and he was sent the “opening package” of loan documents indicating the VIP team had processed the loan.”

Whether the loan benefits McKeon received influences his vote on Troubled Asset Relief Program (TARP) or any other beneficial FHA or Countrywide legislation can only be known by him.

While it would seem no one would turn down the VIP treatment from Mozilo, one congressman in fact did – Republican Congressman Pete Sessions from Texas.

In January 17, 2012, a statement from a Sessions spokesperson appeared in a story by John Bresnahan in Politico. According to the spokesperson:

“Out of an abundance of caution in managing his personal finances, Congressman Sessions specifically requested that he not be extended any special benefits or treatment from Countrywide.”

While the Oversight Committee’s report spanned 136 pages, in terms of punitive actions they put on the brakes.

“The Committee’s efforts were fact finding in nature.  While the Oversight Committee shared information related to Congressional employees with the House and Senate Ethics Committees, it did not make recommendations,” said Hill.

The Oversight Committee did however have suggestions for moving forward:

“Congress should consider legislation prohibiting companies from offering discounts and other forms of preferential treatment to Members of Congress and congressional staff. In addition to mortgage lenders like Countrywide, such legislation should cover banks, auto dealerships, jewelry stores, and any other company that offers financing to customers.”

The report also seemed to address McKeon’s plausible deniability, while complimenting Congressman Sessions’ ethics:

“To foreclose the possibility that a lender might apply a discount to a loan without their knowledge, Members of Congress and congressional staff should consider notifying all parties to complex financial transactions that they must not receive discounts due to congressional ethics rules, as Congressman Sessions did.”

In addition to those mentioned above, the report said the following received loan discounts from Countrywide:

* Former Senate Banking Committee Chairman Christopher Dodd, D-Conn.

* Senate Budget Committee Chairman Kent Conrad, D-N.D.

* Mary Jane Collipriest, who was communications director for former Sen. Robert Bennett, R-Utah, then a member of the Banking Committee.

* Rep. Edolphus Towns, D-N.Y., former chairman of the Oversight Committee.

* Rep. Elton Gallegly, R-Calif.

* A staff member of Rep. Ruben Hinojosa, D-Texas, a member of the Financial Services Committee.

* Former Rep. Tom Campbell, R-Calif.

* Former Housing and Urban Development Secretaries Alphonso Jackson and Henry Cisneros;

* Former Health and Human Services Secretary Donna Shalala. -Former Fannie Mae heads James Johnson, Daniel Mudd and Franklin Raines.

Comment On This Story
COMMENT POLICY: We welcome comments from individuals and businesses. All comments are moderated. Comments are subject to rejection if they are vulgar, combative, or in poor taste.
REAL NAMES ONLY: All posters must use their real individual or business name. This applies equally to Twitter account holders who use a nickname.

0 Comments

You can be the first one to leave a comment.

Leave a Comment


SCV NewsBreak
LOCAL NEWS HEADLINES
Wednesday, Mar 27, 2024
California Launches New Youth Suicide Prevention Campaign
The California Department of Public Health launched the “Never a Bother” campaign, a youth suicide prevention public awareness and outreach campaign for youth, young adults, and their parents, caregivers, and allies.
Wednesday, Mar 27, 2024
April 20: Santa Clarita Master Chorale’s Cabaret, Cabernet Fundraiser
The Santa Clarita Master Chorale invites the community to "Let the Sunshine In," a delightful evening of food, wine and song at the annual Cabaret & Cabernet fundraising benefit.
Wednesday, Mar 27, 2024
Schiavo Introduces Bill to Prohibit ‘Derogatory’ School Mascot Names
California State Assemblywoman Pilar Schiavo (D-Chatsworth) and Assemblyman James Ramos (D-Highland) have introduced AB 3074 the "School or athletic team names: California Racial Mascots Act."
Keep Up With Our Facebook

Latest Additions to SCVNews.com
PFLAG Santa Clarita has announced the establishment of the Peggy and Jeff Stabile PFLAG SCV Scholarship. The scholarship will provide financial assistance to LGBTQIA+ students pursuing higher education and committed to advocating for LGBTQIA+ rights and promoting diversity and inclusion.
PFLAG SCV Announces Stabile PFLAG Scholarship
1934 - Bouquet Canyon Reservoir, replacement for ill-fated St. Francis Dam & reservoir, begins to fill with water [story]
Bouquet Reservoir
The California Department of Public Health launched the “Never a Bother” campaign, a youth suicide prevention public awareness and outreach campaign for youth, young adults, and their parents, caregivers, and allies.
California Launches New Youth Suicide Prevention Campaign
The Santa Clarita Master Chorale invites the community to "Let the Sunshine In," a delightful evening of food, wine and song at the annual Cabaret & Cabernet fundraising benefit.
April 20: Santa Clarita Master Chorale’s Cabaret, Cabernet Fundraiser
The Los Angeles County Department of Public Health cautions residents who are planning to visit the below Los Angeles County beaches to avoid swimming, surfing, and playing in ocean waters:
March 27 Ocean Water Warning
As an integral ingredient necessary to help the Santa Clarita Valley to flourish, feedback from the business community is the secret sauce for achieving great things.
SCVEDEC Asks For the Business Community’s Opinion on Santa Clarita
Raise your heart rate while raising funds for the Santa Clarita Sister Cities Dollars-for-Desks campaign to provide school desks for students in Sariaya, Santa Clarita's Sister City in the Philippines.
April 13: Sister Cities Zumba-thon Fundraiser
Remo, Inc. is is the world's leading manufacturer and developer of synthetic drumheads and shells. They’ve been in business for 60 years
SCVEDC Company Spotlight: Drumming Up Big Business with Remo, Inc.
California State Assemblywoman Pilar Schiavo (D-Chatsworth) and Assemblyman James Ramos (D-Highland) have introduced AB 3074 the "School or athletic team names: California Racial Mascots Act."
Schiavo Introduces Bill to Prohibit ‘Derogatory’ School Mascot Names
Los Angeles County’s Justice, Care and Opportunities Department  in collaboration with Local Initiatives Support Corporation Los Angeles is proud to announce the 2nd Annual Pitch Competition for the cohorts of JCOD's Incubation Academy.
March 28: JCOD Incubation Academy Helps Grassroots Non-Profits For the Second Year
Children’s Bureau is seeking foster families and now offers two virtual ways for individuals and/or couples to learn how to help children in foster care while reunifying with birth families or how to provide legal permanency by adoption.
April 18: Children’s Bureau Hosts Virtual Orientation
The Sunburst track was constructed in 1887 by the Southern Pacific Railroad and was a part of the main line running between San Francisco and Los Angeles.
Enjoy Spring With a Ride On The Sunburst Track
California State Superintendent of Public Instruction Tony Thurmond hosted a Personal Finance Summit today where he announced his support for Assembly Bill 2927 (McCarty), legislation that would require a personal finance education course for California high school graduation.
State Superintendent Announces Support for Personal Finance Graduation Requirement
1847 - Probable birth date of Pico Canyon oil driller Charles Alexander Mentry [story]
C.A. Mentry
The first Music Jam Session at The MAIN was held on Thursday, Feb. 22 and was a hit. Come out and join in for the next one on Thursday, March 28 7 p.m.-9 p.m.
March 28: The MAIN to Host Musicians’ Jam Session
Los Angeles County Inspector General Max Huntsman of the Office of Inspector General has issued a report entitled "Tenth Report Back on Implementing Body-Worn Cameras in Los Angeles County."
Office of Inspector General Issues Latest Report on LASD Body Cams
College of the Canyons women's tennis played to a convincing 7-2 conference win over Ventura College on Moica to strengthen its potential playoff resume.
Canyons Closes Out Ventura 7-2 in Final Home Match
Join the Santa Clarita Valley Chamber of Commerce with the Latino Business Alliance at the Cinco de Mayo Networking Celebration on Tuesday, May 7.
May 7: Latino Business Alliance Cinco de Mayo Celebration
The Los Angeles County Department of Animal Care and Control is hosting March Meowness promotion where all cat adoptions are just $15 from now until April 9.
Adopt a Cat During March Meowness at Castaic Animal Center
California State University, Northridge is partnering with the Fernandeño Tataviam Band of Mission Indians and the Tataviam Land Conservancy to battle the impact of climate change in disadvantaged communities throughout the San Fernando Valley by establishing “urban forests.”
CSUN Partners with Fernandeño Tataviam Band to Build Urban Forests
Join the Santa Clarita Artists Association on Monday, April 15, 6:30-8:30 p.m. at Barnes and Noble, 23630 Valencia Blvd., Valencia, CA 91355, for the SCAA monthly meeting and guest demonstrator.
April 15: SCAA Presents Debbie Abshear Watercolor Demo
Residents are invited to join members of the Santa Clarita City Council for a special ribbon-cutting ceremony to celebrate the addition of Santa Clarita's 38th park, Skyline Ranch Park, 18355 Skyline Ranch Road, Santa Clarita, CA 91351, to the Santa Clarita parks system on Saturday, April 6, at 10 a.m.
April 6: Grand Opening for Santa Clarita’s 38th Park
The Santa Clarita Valley Senior Center is preparing for the annual fundraising event, Celebrity Waiter, with the theme “California Dreamin’” on Saturday, April 27 at Bella Vida, 27180 Golden Valley Road, Santa Clarita, CA 91351.
Table Sponsorships Still Available for Celebrity Waiter Dinner
SCVNews.com