Former Countrywide Executive Testifies on Senators' Mortgages

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Executive Testifies on Senators' Mortgages

By Zachary A. Goldfarb
Washington Post Staff Writer
Tuesday, July 28, 2009


The Senate ethics committee has interviewed a former Countrywide Financial executive who testified under oath that Sens. Christopher J. Dodd (D-Conn.) and Kent Conrad (D-N.D.) were aware that they were accessing a special program to give below-market-rate mortgages to the powerful and famous when he arranged their loans, according to the executive's attorneys.

The statements from Robert Feinberg, who worked as a loan officer at the mortgage lender, stand in direct contradiction to statements made by Dodd and Conrad, who maintain that they did not know they were part of the Countrywide program created by its chief executive at the time, Angelo Mozilo.

"He always made a big deal about them being in the VIP program. Does he remember the exact words he spoke with Conrad and Dodd? No, but he always made it clear," said Elana Goldstein, one of Feinberg's attorneys.

Feinberg testified for several hours before the ethics committee on June 23. Questioning him were Chairman Barbara Boxer (D-Calif.), ranking Republican Johnny Isakson (Ga.) and Sen. Jim Risch (R-Idaho). Dodd and Conrad responded to questions from the committee last year.

Battered by a swift decline in the market for subprime mortgages, Countrywide accepted a takeover offer from Bank of America in early 2008. Mozilo faces civil fraud and insider-trading charges in connection with Countrywide's lending practices.

"As the Dodds have said from the beginning, they did not seek or expect any special rates or terms on their loans, and they never received any," said Dodd spokesman Bryan DeAngelis. "We are glad to hear that Mr. Feinberg has met with the Senate ethics committee, so we can finally get to the bottom of this matter."

Conrad spokesman Christopher Gaddie said: "Senator Conrad never asked for, expected, or was aware of loans on any preferential terms."

A spokesman for the ethics committee declined to comment.

The Associated Press reported Monday night that Feinberg talked to the ethics committee.

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Conrad, Dodd tied to VIP loans

Larry Margasak ASSOCIATED PRESS

Despite their denials, influential Democratic Sens. Kent Conrad and Christopher J. Dodd were told from the start they were getting VIP mortgage discounts from one of the nation's largest lenders, the official who handled their loans has told Congress in secret testimony.

Both senators have said that at the time the mortgages were being written they didn't know they were getting unique deals from Countrywide Financial Corp., the company that went on to lose billions of dollars on home loans to credit-strapped borrowers. Mr. Dodd still maintains he got no preferential treatment.

Mr. Dodd got two Countrywide mortgages in 2003, refinancing his home in Connecticut and another residence in Washington. Mr. Conrad's two Countrywide mortgages in 2004 were for a beach house in Delaware and an eight-unit apartment building in Bismarck in his home state of North Dakota.

Robert Feinberg, who worked in Countrywide's VIP section, told congressional investigators last month that the two senators were made aware that "who you know is basically how you're coming in here."

"You don't say 'no' to the VIP," Mr. Feinberg told Republican investigators for the House Oversight and Government Reform Committee, according to a transcript obtained by the Associated Press.

The next day, Mr. Feinberg testified before the Senate Select Committee on Ethics, an indication the panel is actively investigating two of the chamber's more powerful members:

c Mr. Dodd heads the Committee on Banking, Housing and Urban Affairs and is a major player in two big areas: solving the housing foreclosure and financial crises and putting together an overhaul of the U.S. health care system. A five-term senator, he is in a tough fight for re-election in 2010, partly because of the controversy over his mortgages.

c Mr. Conrad is chairman of the Budget Committee. He, too, shares an important role in the health care debate, as well as on legislation to curb global warming.

Both senators were VIP borrowers in the program known as "friends of Angelo." Angelo Mozilo was chief executive of Countrywide, which played a big part in the foreclosure crisis triggered by defaults on subprime loans. The Calabasas, Calif.-based company was bought last July by Bank of America Corp. for about $2.5 billion.

Mr. Mozilo has been charged with civil fraud and illegal insider trading by the Securities and Exchange Commission. He denies any wrongdoing.

Asked by a House investigator whether Mr. Conrad, the North Dakota senator, "was aware that he was getting preferential treatment?" Mr. Feinberg answered: "Yes, he was aware."

Referring to Mr. Dodd of Connecticut, the investigator asked:

"And do you know if during the course of your communications" with the senator or his wife "that you ever had an opportunity to share with them if they were getting special VIP treatment?"

"Yes, yes," Mr. Feinberg replied.

Dodd spokesman Bryan DeAngelis said Mr. Feinberg has repeatedly made allegations of special treatment that were not true.

"As the Dodds have said from the beginning, they did not seek or expect any special rates or terms on their loans and they never received any. They were never offered special or sweetheart deals and if anyone had made such an offer, they would have severed that relationship immediately," Mr. DeAngelis said.

Mr. DeAngelis also repeated Mr. Dodd's statements from February that an independent report showed the terms received by the senator and his wife were widely available at the time.

The ethics committee determines whether senators violated standards of conduct. The outcome of the investigation could hinge on whether the mortgage violated strict limits on gifts to lawmakers or ran afoul of other Senate rules.

Mr. Feinberg could face criminal prosecution if shown to have made false statements. He was questioned closely by three of the ethics committee's six senators: Chairman Barbara Boxer, California Democrat; the panel's senior Republican member, Sen. Johnny Isakson of Georgia; and Sen. Jim Risch, Idaho Republican, said Elana Goldstein, one of Mr. Feinberg's attorneys who accompanied him to both closed-door committee appearances.

Countrywide VIPs, Mr. Feinberg told the committees, received discounts on rates, fees and points. Mr. Dodd received a break when Countrywide counted both his Connecticut and Washington homes as primary owner-occupied residences - a fiction, said Mr. Feinberg. Mr. Conrad received a type of commercial loan that he was told Countrywide didn't offer.

http://www.washingtontimes.com/news/...-to-vip-loans/

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http://thehill.com/leading-the-news/...009-07-28.html

Dodd, Conrad say Countrywide testimony ‘old news’
By Susan Crabtree
Posted: 07/28/09 07:07 AM [ET]
Sens. Kent Conrad (D-N.D.) and Chris Dodd (D-Conn.) vehemently denied Monday that they knew they were receiving sweetheart mortgage deals from Countrywide Financial in the wake of testimony by a loan officer to the Senate ethics committee.

Dodd spokesman Bryan DeAngelis called the allegations “old news” and said the facts show that Dodd’s loans were at market rates.

“As they have said all along, they did not seek or expect any special rates or terms on their and they never received any; they were never offered special or sweetheart deals and if anyone had made such an offer they would have severed that relationship immediately,” DeAngelis said in a e-mailed statement to reporters sent late Monday evening.

Conrad also denied any knowledge of a special deal.

His spokesman Chris Gaddie said Monday that the senator “never asked for, expected or was aware of loans on any preferential terms.”

The Associated Press reported Monday night that Robert Feinberg, a loan officer who worked in Countrywide’s “VIP” department, told Congressional investigators last month that both senators knew they were getting preferred rates and treatment.

Angelo Mozilo, the chief executive of Countrywide at the time, created the “VIP” program for influential people. He faces civil fraud and insider-trading charges in connection with Countrywide’s lending practices. He denies any wrongdoing.

According to a partial transcript of an interview with Republican investigators for the House Oversight and Government Reform Committee obtained by The Hill, Feinberg asserted that Conrad and Dodd were aware of the special treatment.

“And in your communications with Sen. Conrad, whether the one call you made or the e-mails you exchanged with his office, do you know whether he was aware that he was getting preferential treatment?” the investigator asked.

“Yes, he was aware,” Feinberg responded.

He said that while loan officers were not allowed to tell anyone that points were being waived, “”it was always instilled in them to let them know their sense of importance of where they were.”

Feinberg made a similar assertion about Dodd and his wife.

“And do you know if during the course of your communications with Sen. Dodd [sic] were his wife that you ever had an opportunity to share with them if they were getting special VIP treatment?” an investigator asked.

“Yes, yes,” Feinberg responded.

Feinberg reportedly made similar statements to the Senate Ethics Committee in late June.

Dodd, who is facing one of the toughest reelection fights of his life, refinanced mortgages on his residences in Washington, D.C. and Connecticut in 2003. Conrad’s countrywide mortgages financed in 2004 were for a beach house in Delaware and an eight-unit apartment building in Bismarck, N.D.

Congressional ethics rules bar senators from receiving loans and financing at rates unavailable to the general public.

Silla Brush contributed to this report.