New Document Raise Questions about VIP Loans
The partnership between Countrywide and government-backed Fannie Mae is partly to blame for the housing crisis. They made billions buying and selling each other's toxic loans.
But as they were sending America's housing market down the tubes, CBS News investigative correspondent Sharyl Attkisson reports new documents show Countrywide and Fannie Mae were quietly scratching each other's backs.
Rep. Darrell Issa, (R-Calif.) the ranking member of the House Committee on Oversight and Government Reform, says to sweeten the deal, Countrywide gave dozens of top Fannie Mae officials VIP loans and special treatment that often included discounts worth many thousands of dollars.
Countrywide's VIP Loan Unit "Targeted" Fannie Mae Employees
Taxpayers lost out. They've kicked in $84 billion so far for Fannie Mae's bad decisions. But for the well-paid executives, things turned out okay.
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New Twist in Countrywide Loan Probe
Documents provided to Congress under subpoena show Jim Johnson, who made $21 million as Fannie Mae CEO, took $10 million dollars in VIP Countrywide loans. Other Fannie Mae executives who got VIP loans from Countrywide include: then-Vice Chair Jamie Gorelick, who earned $26 million over four years at Fannie Mae and now represents BP. And former CEO Franklin Raines who earned $90 million dollars in his five years at Fannie Mae. The amounts of their loans aren't known.
But Gorelick, Raines and others have said they wouldn't have taken any loans if they'd thought they were getting a special deal.
During a December 9, 2008, Oversight and Government Reform Committee hearing on the role of Fannie Mae and Freddie Mac in the Housing Meltdown, Rep. Dan Burton asked Mr. Raines about his Countrywide VIP loan.
Raines replied, "I am unaware of any preferential treatment."
In an email today, Jamie Gorelick responded, "No one ever told me that the rate I received -- which looked to be a market rate, with the usual fees -- was discounted. Had they, I would not have taken this loan."
In all, documents show at least 42 Fannie Mae officials took 153 VIP loans from Countrywide - sometimes three and four loans per person.
In one 2001 email, Countrywide officials talk about giving a below market loan to Fannie Mae's then-COO Dan Mudd: "make sure the branch and Regional Vice President understand the sensitivity of this deal. We are already taking a loss, it would be horrible to add a service complaint on top and lose any benefit we generate."
"On top of giving a loan below cost, they wanted to make sure he was very pleased with the service," Rep. Issa said. "No question at all they knew they were losing money and they knew they were currying favor that would be valuable."
In a statement, Mudd said, "The facts regarding this matter were reported nearly two years ago and remain the same; after rates declined steeply in 2001 and 2003, I gave thought to refinancing my mortgage. As reported in The Wall Street Journal (9/25/08), I asked my financial advisor to obtain several quotes. Countrywide quoted rates and terms competitive with the other lenders. I did not contact any of the lenders myself, and did not seek any preferential treatment. At no time did I or my financial advisor have any contact with Countrywide's national office, and as also reported in 2008, my loan was obtained through a local, retail Countrywide branch."
Rep. Issa is asking for a full investigation into all the Fannie Mae-Countrywide connections.
Read Rep. Issa's Letter Below
