On Friday, Reps. Howard McKeon (R-CA) and Elton Gallegly (R-CA) were named as recipients of discounted mortgage loans from the now-defunct Countrywide Financial Corp., previously the nation’s largest mortgage lender before being bought out by Bank of America.
Reps. McKeon and Gallegly both claim they did not know their loans were processed through the so-called “Friends of Angelo’s” VIP division, a reference to Angelo Mozilo, the former head of Countrywide whom TIME magazine named as one of its “25 People to Blame for the Financial Crisis” report.
The two California Republicans join Democratic Congressman Rep. Edolphus Towns (D-NY) as the three of four House members identified by the House Oversight and Government Reform Committee as having had loans processed through Countrywide’s VIP loan program. Rep. Towns also says he was unaware that his loan had been routed through Countrywide’s VIP loan division. The fourth House member the Committee has identified as having received a discounted loan has yet to be publicly identified.
Rep. McKeon’s spokesperson, Alissa McCurley, says Rep. McKeon was “shocked and angry” when he learned his $315,000 mortgage loan had been processed through Countrywide’s VIP loan division. Ms. McCurley stated that Rep. McKeon, who serves as the chairman of the House Armed Services Committee, “had no knowledge of the Friends of Angelo designation” and “has never met or spoken to Angelo Mozilo. Mr. McKeon is going back trying to figure out what Countrywide did to this loan 13 years ago.”
Similarly, Rep. Elton Gallegly, who is not running for reelection, has stated through his spokesperson, Thomas Pfeifer, that he never even knew a VIP division existed at Countrywide, nor that it approved discounted loans for special individuals. Rep. Gallegly’s 2004 loan was for $77,000 at 5.75 percent interest and was paid off the following year in 2005. Mr. Pfeifer told the Wall Street Journal that had Rep. Gallegly known that his loan would receive preferential treatment and be routed through the “Friends of Angelo” division Rep. Gallegly would have “run away from” it.
Both Reps. McKeon and Gallegly say they have never met Angelo Mozilo.
In 2010, Mr. Mozilo agreed to pay $67.5 million in Securities and Exchange Commission penalties. Bank of America, which bought Countrywide, set aside $8.7 billion to settl predatory lending charges against Countrywide filed by attorney generals in 11 states.
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