Countrywide chairman Angelo Mozilo, the Vladimir Putin of mortgage banking is now the subject of further speculation or at least the company he leads is.
Because of CFC's active involvement in sub prime lending over the last several years, it was targeted yesterday by Senator Chuck Schumer who urged the company's use of its access to the Federal Home Loan Bank's (FHLB) lending system be reviewed and possibly curtailed.
In a letter sent this week to Ronald A Rosenfeld, Chairman of the Federal Housing Finance Board, Senator Schumer expressed:
"serious concern over the lending practices of the Federal Home Loan Bank of Atlanta, specifically in regard to the significant volume of advances made to Countrywide Bank."
According to recent SEC filings, the FHLB Atlanta made advances to Countrywide of 51.1 billion as of September 30 of this year. Countrywide pledged 62.4 billion of mortgages as collateral for the advances. These transactions represent 37 percent of the FHLB's total advances as of the end of the third quarter and 78 percent of Countrywide's total portfolio of mortgage loans.
The Senator said he found the FHLB lending numbers;
"alarming as reports continue to emerge about how Countrywide's reckless and predatory lending practices were a leading contributor to today's foreclosure crisis. Moreover, it is my understanding that Countrywide's loans held for investment at the bank have been far from immune from the credit deterioration that has resulted from unsound lending."
With the Fed considering lowering the Fed rate yet again and CFC's use of Federal Home Loan Bank's (FHLB) lending system, the question to be answered is, are the taxpayers of our nation indirectly subsidizing Countrywide existence and Mozilo's subsequent generational wealth?
While having a conversation yesterday with Brian Brady, it appeared he was having similar thoughts regarding this issue and was just finishing a post regarding this. I would highly recomend visiting his post at:
Another post from The Mortgage Cicerone.