Angelo R. Mozilo, the brash chief executive who built Countrywide Financial into the nation’s largest home mortgage firm, only for the company to buckle and effectively collapse under the weight of subprime loans that helped fuel the 2008 financial crisis, died Sunday. He was 84.
Countrywide Financial CEO Angelo Mozilo speaks during a panel discussion on the subprime market fallout in Beverly Hills, Calif., on Oct. 29, 2007. Mozilo died Sunday. He was 84. Ric Francis/Associated Press, file
His death was announced by the Mozilo Family Foundation, a charity he founded with his wife, Phyllis. The foundation did not say where or how he died.
Before he became a widely criticized face of the financial crisis, Mozilo seemed to embody the classic American success story. A grandson of Italian immigrants, he grew up working in his father’s butcher shop in the Bronx, joined the mortgage industry as a messenger in his teens and co-founded Countrywide Financial in 1969, weathering downturns in the housing industry while growing the company into a home loan colossus.
Between 1982 and the summer of 2007, the firm’s stock price grew nearly 25,000%, according to the New York Times. Mozilo’s stature grew along with it: He was elected chairman of the Mortgage Bankers Association, enshrined in the National Housing Hall of Fame and appeared frequently on television, emerging as a blunt and perpetually tan spokesman for his industry while talking up his role in generating jobs and putting people in homes.
In part, his company’s growth was fueled by risky but lucrative mortgages it issued to borrowers with poor credit history. Countrywide started offering subprime loans in the late 1990s, after Mozilo launched an effort to reach customers in low-income and minority communities, where Black and Hispanic homebuyers had been disproportionately rejected for mortgages.
“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,’ ” Mozilo recalled. But as he saw it, the loans represented not just a business opportunity, but a chance to help customers who were underserved and in some cases disenfranchised. The company loosened its lending standards and was soon approving one loan for every two applications it reviewed, according to Mozilo.
Business boomed, at least for a while. At Countrywide’s peak in 2006, the firm had 55,000 employees, $11.4 billion in revenue and assets of $200 billion, including through subsidiaries that offered loan-closing services such as appraisals and flood certifications. The company was by then the country’s largest subprime lender, according to Reuters, although its roughly $40 billion in subprime mortgages accounted for less than 10% of its total loans.
Countrywide was far from alone in offering questionable loans to high-risk customers, but the business helped legitimize the idea that just about anyone could afford a home and fueled a housing boom.
In emails that were later released by the Securities and Exchange Commission, Mozilo described some of the company’s offerings as “poison” and “toxic” – traits that he neglected to mention in interviews and public appearances.
When housing prices slipped in 2007, defaults soared and foreclosures followed. Lenders cut off credit to Countrywide, and its stock price plummeted by more than 80%. Under pressure to sell, the company announced in January 2008 that it was being acquired by Bank of America for $4 billion in stock.
By the time the deal went through six months later, the price had slipped to about $2.5 billion. Financial journalist Gretchen Morgenson, writing in the New York Times, would later call it “the single worst corporate acquisition ever. Bar none.”
Bank of America spent tens of billions of dollars settling lawsuits and investor claims related to Countrywide, including a suit brought by Illinois, California and other states alleging that the firm had engaged in deceptive mortgage practices. It settled in October 2008, when the company agreed to pay more than $8 billion to modify troubled mortgages for some 400,000 homeowners.
“Countrywide’s lending practices turned the American dream into a nightmare for tens of thousands of families by putting them into loans they couldn’t understand and ultimately couldn’t afford,” California Attorney General Jerry Brown, the state’s former and future governor, said in a statement at the time.
Mozilo came under intense scrutiny for his leadership of the firm, including for a program that issued loans to politicians and other favored borrowers known as “Friends of Angelo.” In June 2009, the SEC charged him with securities fraud and insider trading, accusing Mozilo of misleading investors about the risks of the company’s mortgages, then lining his pockets by selling stock for almost $140 million in profit before information about the credit risks became public.
Days before his trial was set to begin in 2010, Mozilo agreed to a $67.5 million settlement. Bank of America was responsible for $45 million of the fee as part of Mozilo’s indemnification agreement with the company, while he was on the hook for a $22.5 million fine that the SEC called the largest financial penalty ever paid by a public company’s senior executive.
That sum represented just a fraction of Mozilo’s earnings. During an eight-year period that ended with his retirement in 2008, he received more than a half-billion dollars in total compensation, according to a Times report citing figures from the research firm Equilar.
Two other former Countrywide executives were also charged and reached settlements in the fraud case. Mozilo settled without admitting wrongdoing and was banned from working as an officer or director at a publicly traded company.
Federal prosecutors later announced that they had dropped a criminal investigation into Mozilo, who continued to defend his legacy even as critics noted that many of his former customers had lost their homes and were struggling to dig themselves out of debt.
Testifying before a government panel in 2010, weeks before he agreed to his civil settlement with the SEC, he credited his firm with helping put 25 million people in homes.
“Countrywide was one of the greatest companies in the history of this country,” he said, “and probably made more difference to society, to the integrity of our society, than any company in the history of America.”
The oldest of five children, Angelo Robert Mozilo was born in New York on Dec. 16, 1938, and grew up in the Bronx. He began working in his father’s butcher shop at age 12, sweeping the floors, making sausages and cutting up chickens.
“I didn’t like any aspect of it, so it kept me in school,” he recalled in a video for the Horatio Alger Association. “If I came out of school, that’s where I was going to end up – and I didn’t want to end up there.”
With help from an uncle who worked in the industry, he got an after-school job at a mortgage company, helping pay for his tuition at the Mount Saint Michael Academy, an all-boys’ Catholic high school. He later studied business and philosophy at Fordham University, earning a bachelor’s degree in 1960.
The next year, he married Phyllis Ardese, with whom he raised five children. She died in 2017.
Information on survivors was not immediately available.
Mozilo borrowed $75,000 to start Countrywide with his mentor, David Loeb, and moved west to open an office in Los Angeles. (The company was later based in nearby Calabasas.) He gained full control of the firm in 2000, after Loeb retired.
Over the years, the company grew with help from a suave sales force – “I want to be sure you are getting the best loan possible,” representatives would say – as well as a system that was “intended to wring maximum profits out of the mortgage lending boom no matter what it costs borrowers,” according to a 2007 report in the Times.
Government investigators found that by controlling almost every aspect of the home loan process, Countrywide could mark up costs, sometimes by more than 100%. In 2011, the firm agreed to pay a $108 million settlement after the Federal Trade Commission concluded the company had overcharged more than 450,000 homeowners.
After the financial crisis, Mozilo receded from public view, occasionally giving interviews in which he denied that he bore responsibility for the housing crisis.
The debacle’s real origins, he told the Wall Street Journal in 2018, were a liquidity squeeze and subsequent financial panic. “Not subprime mortgages, not Countrywide, not Angelo Mozilo,” he said. “I wish I had that kind of power.”
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