Angelo Mozilo, a founding father of Countrywide Financial who presided over that lending large’s fast ascent after which its collapse through the monetary disaster of 2008, died on Sunday. He was 84.
His dying, within the Santa Barbara, Calif., space, was introduced in a press release by the Mozilo Family Foundation, the household’s philanthropic group. It didn’t specify a trigger.
Countrywide was a serious participant within the run-up to the housing disaster, when looser monetary rules enabled lenders to aggressively promote dangerous mortgage merchandise to potential owners, contributing to a bubble in housing costs. That burst, in 2008, when dwelling values got here crashing down, led the U.S. economic system into a protracted recession.
Mr. Mozilo, the son of a Bronx butcher and who labored his means by Fordham University, turned probably the most acknowledged executives related to the disaster. Motivated by his modest beginnings, he had constructed Countrywide into one of many nation’s largest mortgage lenders by the early 2000s. But he nonetheless wasn’t glad: He needed the corporate to achieve 30 to 40 % market share, way over any single lender had achieved.
Countrywide started pushing gross sales of complicated mortgages to potential owners with weaker monetary profiles, a bunch sometimes called “subprime” debtors. The loans required little or no cash down and put many debtors in houses they might have in any other case been unable to afford. Many of those loans, often known as “no-doc” loans, didn’t require any earnings verification.
That go-go gross sales tradition propelled the corporate’s development and income however in the end led to its downfall. As the housing market crashed and borrower defaults soared, Countrywide’s lending practices got here below the scrutiny of legislators, regulators and shopper advocates.
Financial pressures started to mount, and the corporate, based mostly in Calabasas, Calif., west of Los Angeles, was acquired by Bank of America in 2008 on the hearth sale worth of $4 billion. But the acquisition ended up costing Bank of America billions extra in authorized and different prices it had inherited.
At the time, almost 150 mortgage lenders had failed, lots of which had been taken over by more healthy establishments.
Mr. Mozilo, recognizable by his crisp fits and deep tan, continued to defend his firm all through the ordeal. “Countrywide was one of the greatest companies in the history of this country,” he informed congressional examiners in September 2010, greater than two years after Bank of America purchased the corporate.
Regulators had a decidedly completely different take. In October 2010, Mr. Mozilo agreed to pay $22.5 million to settle federal prices that he had misled traders about Countrywide’s dangerous mortgage portfolio. At the time, the settlement was the biggest penalty levied by the Securities and Exchange Commission in opposition to a senior government of a public firm.
As a part of the deal, Mr. Mozilo, who didn’t admit or deny wrongdoing, agreed to forfeit $45 million in “ill-gotten gains” to settle insider buying and selling and different prices.
Angelo Robert Mozilo, the oldest of 5 kids, was born on Dec. 16, 1938, within the Bronx, the place he was raised. When he was about 12, he began serving to his father, Ralph Mozilo, in his butcher store, cleansing flooring and reducing up chickens, in line with his member profile within the Horatio Alger Association.
By the time he was 14 he had his first job within the monetary business, working as a messenger boy for a Manhattan mortgage firm.
He was married to Phyllis (Ardese) Mozilo for greater than 50 years. She died in 2017. He is survived by their 5 kids, Christy Mozilo Larsen and David, Elizabeth, Eric and Mark Mozilo; and 11 grandchildren.
Mr. Mozilo mentioned he had been unfairly portrayed because the villain of the housing disaster when scores of different lenders had been concerned, a perspective echoed by his household.
“Independent of how people outside of the industry may perceive this man, insiders know what an incredible force he was,” Eric Mozilo mentioned in a LinkedIn publish on Tuesday.
“He was an excellent father and a legend in the mortgage industry,” he added throughout a cellphone name.
Mr. Mozilo and a companion, David Loeb, who died in 2003, began Countrywide in 1969 with $500,000. Within a couple of a long time, the corporate had grown from a conservative dwelling lender, initially based mostly in New York, to the biggest mortgage lender within the United States. As of 2007, it had 900 workplaces and $200 billion in property and made $500 billion in loans that yr.
In the early Nineteen Nineties, after authorities information revealed that lenders had been disproportionately rejecting minority debtors for dwelling loans, Countrywide noticed an untapped market and started providing extra loans in low-income and minority communities.
“When I first brought the loans into the office, they said: ‘You’re nuts, you’re crazy, don’t do this. There’s a reason why we’re rejecting these people,’” Mr. Mozilo later informed the congressional fee investigating the disaster. The mortgage officers, he mentioned, “had very static, inflexible guidelines.”
As he noticed it, Countrywide was serving to to interrupt down the racial and financial obstacles to homeownership.
So he put the employees by “sensitivity training” and employed extra Black and Hispanic workers. Countrywide quickly began approving one mortgage for each two purposes reviewed, in line with Mr. Mozilo. Previously, it had been approving one mortgage for each 4 purposes. The new loans “did perform,” he mentioned.
But that efficiency didn’t final. In 2006, Mr. Mozilo described a number of the firm’s riskier loans as “poison,” in line with inside Countrywide emails launched by the S.E.C. in 2009. “In all my years in the business, I have never seen a more toxic” product, he wrote in a single e mail.
More than a decade later, Mr. Mozilo recalled how tough that interval was for his household, however continued to defend his and his firm’s legacy at a monetary convention in Las Vegas.
“Of course it bothers me,” he mentioned, in line with a 2019 CNBC report. “It affected my reputation, it affected my family, it had a profound impact on my entire life. So I cared. Then a lot of years went by, and my wife passed away, and I turned 80 years old, and now I don’t care. There’s other things more important in life.”
Ben Protess contributed reporting.
Source: www.nytimes.com