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
November 8
1977 - Castaic residents vote 168-54 to withdraw 7th-8th grades from Hart District, making CUSD K-8 [story]
vote tally


Statement from Rep. Howard “Buck” McKeon’s office

U.S. Rep. Howard "Buck" McKeon

U.S. Rep. Howard “Buck” McKeon

The Ethics Committee has unanimously decided to end their review of the FOA program and take no further action.  The Committee has found that there are no grounds for opening an investigation and that any further review is unwarranted.  The Committee found that customers often didn’t know their loans were being processed through any different channel, the loans were required to meet the same underwriting standards as any other loan, the loan conditions were often not the best “deals” available in the marketplace and were typical of commonplace negotiated loans and can not be considered “gifts”, and that mere inclusion in the program was not a violation of any House rules or ethics.

The committee found that the FOA program was first designed as merely a customer service program, and evolved into a larger program  in the early 2000’s.  Most of these FOA loans were originated during the mortgage boom between 2002-2004, well after Congressman McKeon’s 1998 home re-finance.  In particular, the committee found that: “the V.I.P loan unit handled thousands of loans worth billions of dollars for a very broad spectrum of individuals, large numbers of whom had never met, let alone befriended, Mr. Mozilo.  Overall it appears that V.I.P.s were often offered quicker, more efficient loan processing and some discounts.  However, it also appears that all V.I.P. loans, including F.O.A. loans, were required to meet the same underwriting standards and conditions for resale on the secondary market as non-V.I.P. loans.  Furthermore, there is evidence on the record that the discounts offered to V.I.P.s and F.O.A.s were not the best deals that were available at Countrywide or in the marketplace at large.  In sum, participation in the V.I.P. or F.O.A. programs did not necessarily mean that borrowers received the best financial deal available either from Countrywide or other lenders.

Therefore, mere inclusion in one of these programs is not, in and of itself, a violation of any rules, laws, or standards of conduct governing Members, officers, or employees of the House of Representatives.  In addition, insofar as the widely available and indisputable evidence indicates that loan “discounts” or “discount points” are labels applied to standard and publicly available terms in every day arms-length negotiations with commercial lenders, they are not the kind of “gift” which would be, in and of itself, outside the realm of reasonable market rates for commercially available loans.  Finally, given that the standard market practices on negotiating for desirable loan customers varies widely, it is not evident that any of the fee structures presented by the evidence are outside of reasonable market rates for commercially available loans, even if those loans were within the jurisdiction of the Committee.”

From the beginning Mr. McKeon has been completely upfront and transparent about his 1998 home re-finance loan.  Congressman McKeon never knew about the Friends of Angelo program, had never met Angelo Mozilo and was unaware of any V.I.P designation given to his loan.  Upon learning of the FOA program, Congressman McKeon immediately provided the media and the public all his personal loan documents, including an itemized closing statement and all supporting documentation, showing that he paid over $2500 in applicable closing costs, and paid an interest rate of 6.75%, well above the 6.49% national average. Additionally, Mr. McKeon was never aware of Countrywide’s internal discussions and emails regarding his loan.  All of these facts have been confirmed.  Congressman McKeon is pleased that the conclusions made by the Committee on Ethics confirm what he has always known to be true.

 

Statement of the Chairman and Ranking Member of the Committee on Ethics Regarding Allegations Concerning the “V.I.P.” Loan Unit of Countrywide Financial Corporation

DEC 27, 2012

Today we announce the conclusion of the Committee on Ethics’ review of the allegations related to the “V.I.P.” program of the Countrywide Financial Corporation (Countrywide).  In accordance with Committee Rules, this review was conducted in order to determine whether the allegations presented warranted further investigation by the Committee.  After a lengthy and deliberate review, including over 2,000 of pages of documentation provided by Countrywide or its successor, Bank of America, as well as giving careful and serious consideration to the submission and reports of the Chairman of the Committee on Oversight and Government Reform, the Committee has unanimously agreed to end its review with the publication of this statement, and the issuance of a general advisory issued simultaneously on the subject of the use of one’s position in the House of Representatives for personal gain or benefit.

Numerous allegations have been made that certain Members and employees of the House of Representatives acted improperly when they received “discounts” on personal residential or vacation property loans, or when their loan applications were handled by an office within Countrywide called the “V.I.P Loan Unit,” or handled as “Friends of Angelo,” referring to Angelo Mozilo, the former CEO of Countrywide.  In addition, the evidence suggested that certain House employees made explicit requests to Countrywide lobbyists or spoke to a Countrywide lobbyist about their personal loan needs, and that the lobbyists then facilitated those loans.

While these allegations concern serious matters, almost all of the allegations concerned actions taken outside, or well outside, the jurisdiction of this Committee, as designated in House Rule XI, clause 3(b)(3), because they occurred before the third Congress prior to the current Congress.  In addition, several of the Members and employees mentioned in the allegations are no longer serving in or employed by the House, and therefore are outside the Committee’s jurisdiction pursuant to House Rule XI, clause 3(a)(2).

However, while there are no allegations of actual violations that fall within the Committee’s jurisdiction, we take this opportunity to provide the House community and the public at large with an analysis of these allegations, and guidance that may be helpful in considering future conduct and avoiding even the appearance of impropriety.

To begin with, the Committee conducted its own analysis of the role and practices of the Countrywide V.I.P. loan unit to determine if participation on its own indicated something improper had occurred.  The Committee reached largely the same conclusion as the Senate Select Committee on Ethics, which indicated in 2009, in public letters to Senators also involved in the V.I.P. unit, that:

It appears the V.I.P. Loan unit was initially established for the purposes of originating, processing, and funding home loans as a courtesy to senior-level employees and V.I.P. customers, but it increasingly grew in scope and size.  A large subset of V.I.P. loans referred by Angelo Mozilo, former Countrywide C.E.O., were known as the “Friends of Angelo” or F.O.A.  During the mortgage boom that occurred from late 2002 through 2004, the V.I.P loan unit handled thousands of loans worth billions of dollars for a very broad spectrum of individuals, large numbers of whom had never met, let alone befriended, Mr. Mozilo.

Overall it appears that V.I.P.s were often offered quicker, more efficient loan processing and some discounts.  However, it also appears that all V.I.P. loans, including F.O.A. loans, were required to meet the same underwriting standards and conditions for resale on the secondary market as non-V.I.P. loans.  Furthermore, there is evidence on the record that the discounts offered to V.I.P.s and F.O.A.s were not the best deals that were available at Countrywide or in the marketplace at large.  In sum, participation in the V.I.P. or F.O.A. programs did not necessarily mean that borrowers received the best financial deal available either from Countrywide or other lenders.

Therefore, mere inclusion in one of these programs is not, in and of itself, a violation of any rules, laws, or standards of conduct governing Members, officers, or employees of the House of Representatives.  In addition, insofar as the widely available and indisputable evidence indicates that loan “discounts” or “discount points” are labels applied to standard and publicly available terms in every day arms-length negotiations with commercial lenders, they are not the kind of “gift” which would be, in and of itself, outside the realm of reasonable market rates for commercially available loans.  Finally, given that the standard market practices on negotiating for desirable loan customers varies widely, it is not evident that any of the fee structures presented by the evidence are outside of reasonable market rates for commercially available loans, even if those loans were within the jurisdiction of the Committee.

To be clear, however, whether terms are within or without a commercially reasonable range, it is improper to knowingly use one’s position or influence within the House of Representatives to obtain a personal benefit.  Therefore, if a Member, officer, or employee has reason to believe there was such an explicit connection between their position and some personal business transaction, it is incumbent on that Member, officer, or employee to take steps to ensure they are being treated no differently than a member of the public who is similarly situated in other relevant ways.  Without doubt, there is a wide range of possible and appropriate steps.  For instance, while the steps reportedly taken by Representative Pete Sessions, rejecting any offers of negotiated discounts, are an excellent way to avoid even the appearance of impropriety, there is still no requirement that a Member, officer, or employee refuse to participate in normal negotiations, or refuse to accept terms of negotiation regularly available to a member of the public..  In other words, while Members, officers, and employees must not personally benefit in a manner directly caused by their position, they also need not suffer financially due to nothing but their position.

Instead, other steps that may be taken if and when a Member or employee is given specific reason to believe they may be treated differently based on their position include receiving reasonable assurances or certifications that the offered terms are commercially reasonable and would be available to the borrower based entirely on reasons unrelated to the individual’s position in the House. Another option that is always available to all Members, officers and employees is calling the Ethics Committee for assistance in examining the nature of the loan offer and negotiations.

While these are just some of the steps that may be taken to avoid the appearance of impropriety, they would not be required under normal commercial circumstances when one visits or calls a commercial institution for a loan, indicates their place of employment onlyon a loan application (as is almost always required) and continues to be handled by the regular loan department.  In this matter, for instance, with one exception occurring well outside the Committee’s jurisdiction, there has been no evidence presented that the Members or employees of the House of Representatives were aware of their inclusion in the V.I.P. unit or that they were labeled “Friends of Angelo.”  If, however, they were referred by, or handled by, persons who were not regular loan officers, or, more significantly, persons involved in congressional affairs, then steps should have been taken to ensure that no improper connection was being made between their sphere of influence and their personal loan negotiations.

Of greatest concern to the Committee, therefore was email evidence regarding the specific conduct of some employees of the House of Representatives  who may have reached out to lobbyists or other government affairs officials at Countrywide for assistance with their personal loans (there was no such credible evidence that Members engaged in this kind of conduct).  Had any of these actions occurred within the Committee’s jurisdiction, further investigations would have been conducted that may have led to disciplinary action against these staffers or former staffers.     This is because, as most Members, officers, and employees understand, it is improper to, for instance, take a meeting with a representative of an outside organization or a constituent seeking some action or general assistance, and then immediately make a request for assistance with one’s own personal finances at the same meeting.  This conduct is not made any less improper merely because there is some separation in time between a past or future meeting and the personal request.

Therefore, every member of the House community should understand that, when your relationship with a representative of a particular business or outside organization is based on your power to affect that person’s organization, and their efforts to influence you or your office in the exercise of that power, that is a relationship that should never be used for your personal benefit.  Where there is credible evidence of such conduct within the jurisdiction of this Committee, the Committee will act to enforce this standard.

However, for all the reasons indicated above, and after lengthy and careful consideration, it does not appear that there is any specific credible evidence of actual violations that remain within the jurisdiction of the Committee.  The Committee therefore has unanimously determined to end its consideration of allegations related to improper participation in Countrywide’s V.I.P. program.

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
Thursday, Nov 7, 2024
UPDATE: Local Election Results as of Thursday Evening
The close race for Santa Clarita City Council shows Patsy Ayala increasing her slim lead from yesterday over Tim Burkhart by 96 votes at the close of business Thursday, 3,469 to 3,376
Thursday, Nov 7, 2024
Nov. 21: Salt Creek Grille, Veteran Services Collaborative Host Fundraiser
The Santa Clarita Veteran Services Collaborative has announced the "Bringing it Home" fundraiser, an exclusive wine and hors d'oeuvre event hosted by Salt Creek Grille, will be held Thursday, Nov. 21.
Thursday, Nov 7, 2024
USPS Announces Holiday Mailing, Shipping Dates
The U.S. Postal Service announced its recommended mailing and shipping dates for holiday mail and packages. The following are recommended send-by dates for expected delivery before Dec. 25.
Keep Up With Our Facebook

Latest Additions to SCVNews.com
1977 - Castaic residents vote 168-54 to withdraw 7th-8th grades from Hart District, making CUSD K-8 [story]
vote tally
The close race for Santa Clarita City Council shows Patsy Ayala increasing her slim lead from yesterday over Tim Burkhart by 96 votes at the close of business Thursday, 3,469 to 3,376
UPDATE: Local Election Results as of Thursday Evening
The Child & Family Center has announced its Merry Mocktail Winter Wonderland Event Monday, Dec. 2, from 5-7 p.m. at 21545 Centre Pointe Parkway, Santa Clarita, CA 91350.
Dec. 2: Merry Mocktail Winter Wonderland Event
All For Kids is celebrating National Adoption Month by 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.
Nov. 21: All For Kids Offering Virtual Orientations for National Adoption Month
Did you know that our local Santa Clarita Public Library offers passport acceptance services? Whether you’re planning a vacation, studying abroad or reconnecting with family, the Santa Clarita Public Library is here to support your journey.
Jason Gibbs | Get Your Passport at the Santa Clarita Public Library
Parents and caregivers are invited to Empowered Families Workshops hosted by the Child & Family Center’s Prevention and Outreach team in collaboration with First Presbyterian Church of Newhall beginning 2-3:30 p.m. Sunday, Nov. 10 with a workshop on Social Media and mental health.
Nov. 10: Child & Family Center, First Presbyterian Church Collab for Workshops
Samuel Dixon Family Health Center, Inc. has announced that it was awarded a $1.1 million grant from the Department of Health and Human Services Health Resources and Services Administration to add new services that will include substance use disorder treatment programs.
Samuel Dixon Awarded 1.1 Million Grant for SUD Program
The American Cancer Society Relay for Life of Santa Clarita Valley will host its annual holiday boutique fundraiser, 10 a.m.-3 p.m. Saturday, Nov. 23, at Santa Clarita United Methodist Church
Nov. 23: ACS Relay for Life SCV Holiday Boutique
The Santa Clarita Veteran Services Collaborative has announced the "Bringing it Home" fundraiser, an exclusive wine and hors d'oeuvre event hosted by Salt Creek Grille, will be held Thursday, Nov. 21.
Nov. 21: Salt Creek Grille, Veteran Services Collaborative Host Fundraiser
The U.S. Postal Service announced its recommended mailing and shipping dates for holiday mail and packages. The following are recommended send-by dates for expected delivery before Dec. 25.
USPS Announces Holiday Mailing, Shipping Dates
1940 - William S. Hart deeds land for theater at Spruce & 11th Street to American Legion [story]
American Theater
Due to projected power shutoffs related to the current wind advisory, the Child & Family Center’s Centre Pointe Pkwy location, will be closed for in-person services beginning 5 pm Wednesday
Child & Family Center’s Centre Pointe Pkwy Location Closes Due to Power Shutoffs
Beginning Wednesday, November 13, crews will begin the construction of median modifications, paving, grinding and overlay operations along portions of McBean Parkway at Newhall Ranch Road.
Upcoming Lane Closures on McBean Parkway and Newhall Ranch Road
The California Highway Patrol is proud to announce it received a $350,000 grant to address the growing issue of distracted driving on California roads.  
CHP Receives Grant to Combat Adult Distracted Driving in California
The Los Angeles County Economic Development Corporation has once again recognized the city of Santa Clarita as a finalist for the prestigious 2024 "Most Business-Friendly City" award in the category of large cities (population over 60,000).
City of Santa Clarita Named 2024 Most Business-Friendly City Finalist
The County of Los Angeles is experiencing critical fire weather and is under a Particularly Dangerous Situation Red Flag advisory from now until Friday evening. .
Animal Care and Control Urges Emergency Pet Preparedness
The city of Santa Clarita is pleased to announce the release of the 2025-2026 Notice of Funding Availability and has scheduled informational meetings for organizations interested in applying for 2025-2026 Community Development Block Grant funding.
Santa Clarita Non-Profits Invited to Apply for 2025-2026 Funding Cycle
California State University, Northridge’s CSUN-al Gardening series returns this month just in time to prepare for fall planting.
CSUN-al Garden Class to Get Ready for Fall Planting
The Los Angeles County Board of Supervisors unanimously approved a motion introduced by Supervisor Kathryn Barger and co-authored by Board Chair Lindsey P. Horvath
Supes Support Expansion of Tax Credit Program for Entertainment Sector
Local educational performing arts charity Mission Opera, together with Oksana Foundation and Bella Cucina Italian Restaurant, is excited to announce “Bella Notte,” a new monthly event starting this Fall that blends the worlds of Italian fine dining, live opera, and community support.
Nov. 23: “Bella Notte” Italian Night Comes to Santa Clarita
For the fourth year in a row, California State University, Northridge has been named a Fulbright HSI Leader by the U.S. Department of State’s Bureau of Educational and Cultural Affairs.
CSUN Named a Fulbright HSI Leader For a Fourth Year in a Row
Thompson Von Tungeln Trust and Estate Lawyers will host a free successor trustee training workshop on Saturday, Nov. 9, from 10 a.m. to noon at the Hyatt Regency Valencia, 24500 Town Center Drive, Valencia, Calif. 91355.
Nov. 9: Free Successor Trustee Training Workshop
No. 12 College of the Canyons football scored 24 points, highlighted by a 95-yard kickoff return from sophomore Da'Marrie Smith, in what turned out to be a decisive second quarter to outlast visiting Moorpark College 27-21 on Saturday, Nov. 2 at Cougar Stadium.
No. 12 Canyons Outlasts Moorpark College 27-21
SCVNews.com