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Home » Santa Clarita News » McKeon Named in Congressional Probe of Countrywide

McKeon Named in Congressional Probe of Countrywide

By Mark Archuleta

While 25th District Congressman Howard “Buck” McKeon rode down Lyons Avenue in an army jeep for the City of Santa Clarita July 4th Parade, the U.S. House of Representatives Committee on Oversight and Government Reform was preparing to publish its report on “How Countrywide Used its VIP Loan Program To Influence Washington Policymakers.”

McKeon is named as one of the Countrywide VIP home loan borrowers who got sweetheart deals.

Chaired by California Republican Darrell Issa, the Oversight Committee report cast a wide bi-partisan net that caught both Democratic and Republican members of Congress, some staffers, the White House, Fannie Mae, Freddie Mac, federal agencies, and other government entities.

The foremost benefit of being a VIP borrower was access to discounted loans, below market rates. The standard reduction was 0.5 points. Additionally, Countrywide routinely waived junk fees typically ranging from $350 to $400 for VIP borrowers.

U.S. Rep. Howard “Buck” McKeon

The Justice Department has not prosecuted any Countrywide official for actions related to the VIP loan program. Documents and testimony show that Angelo Mozilo, Countrywide Founder/CEO, and Countrywide’s lobbyists may have skirted the federal bribery statute by keeping conversations about discounts and other forms of preferential treatment internal.

The report states “Rather than making quid pro quo arrangements with lawmakers and staff, Countrywide used the VIP loan program to cast a wide net of influence.”

Internal Countrywide documents show that Angelo Mozilo ordered a point off McKeon’s loan and waived garbage fees. The discount is not reflected on documents signed by McKeon. However, internal Countrywide documents show that one point was in fact waived.

McKeon did not make himself available for an interview but his spokesperson Alissa McCurley issued the following statement:

“Mr. McKeon has been completely upfront and transparent about his loan. He was never aware of any Friends of Angelo designation, and he has provided the media all his loan documentation from the 1998 loan.”

(McKeon’s office has never provided KHTS with the loan documents and did not fulfill a request by newstime.)

The VIP Loan Unit was established in 1991, it processed loans for members of Countrywide’s Board of Directors and friends and customers referred by Mozilo.The VIP unit identified customers referred by Mozilo internally as “Friends of Angelo.”

McCurley says McKeon has never met Mozilo, however, Countrywide internal documents show he certainly knew McKeon:

“Per Angelo – ‘take off 1 point, no garbage fees, approve the loan and make it a no doc.’


In the February 12, 2012 edition of the Los Angeles Times writers Abby Sewell and Catherine Saillant reported that McKeon told them he paid garbage fees and did not get a point off on the loan.

According to their reporting:

“McKeon received a $315,000 mortgage refinance in 1998 as his family-owned business, Howard & Phil’s Western Wear, was going through a Chapter 11 bankruptcy, according to documents reviewed by The Times. McKeon was no longer involved in the daily operation of the business after his 1992 election to Congress, but he had retained a stake in it. He saw his income plummet in the years before refinancing his Stevenson Ranch home, financial disclosures and bankruptcy filings show.

In spite of that, McKeon received a favorable rate and wasn’t required to produce documentation proving he could repay the mortgage — terms ordered by Mozilo himself, according to documents subpoenaed for a House inquiry.”

The entire article can be found by clicking here.

The report also makes McKeon an example of how loan applicants certainly knew they were getting VIP treatment.

VIP Loan Underwriter Maritza Cruz testified that it was common for VIP customers to receive cover letters that identified the VIP unit.

Q: Would he have also — as part of the VIP unit, would he have also have received a letter, like we saw for Mr. McKeon, saying, “Welcome to the VIP unit”?Click to Enlarge

A: Very likely, yes.

Click to enlarge

Although McKeon says we was unaware of a Friends of Angelo (FOA) designation it was clear to Countywide that he was a member of the FOA.

According to the report, on October 5, 1998, Joseph Reed in the VIP unit updated a “Countrywide Comment Sheet” for McKeon’s loan. Reed’s comments about the McKeon loan reflected the content of a series of telephone conversations with McKeon, his wife, and his secretary. Reed stated:

“FOA [Friends of Angelo] referral, Please order appraisal ASAP. You may call the borrower at his Washington office [number redacted] and get the Sons phone number for the appraiser contact. The borrower would like to hear from the appraiser this week. The borrower is a bit difficult to deal with. He seems on the edgy side.”

McCurley says “Mr. McKeon shares Chairman Issa’s interest in determining if there was any wrongdoing by Countrywide.”

Whereas McKeon seems unsure, Issa’s report makes the matter clear:

“In the years that led up to the 2007 housing market decline, Countrywide VIPs were positioned to affect dozens of pieces of legislation that would have reformed Fannie and Freddie and protected taxpayers.”

Countrywide lobbyist Jimmie Williams seemed to acknowledge something unethical with the VIP loans. Williams testified that he occasionally advised staff that they should not discount those loans because of congressional ethics rules. Documents show that customers referred by Williams did in fact receive discounts.

The report details infighting among the committee members on just how far to investigate the Countrywide matter, suggesting members were trying to protect their own parties. Issa’s Director of Communication Frederick Hill seems to come to McKeon’s defense.

“You may also want to note that while a number of Members and staff who had loans processed in the VIP unit were Members of the House Financial Services Committee or the Senate Banking Committee, Rep. McKeon was not,” said Hill.

In an internal e-mail from September 29, 1998, Mozilo assistant Kay Gerfen noted that McKeon was referred to Countrywide by “Mike Farrell/MBA.” Farrell was the chief lobbyist and legislative strategist for the Mortgage Bankers Association of America (MBA).

According to his online business bio, Farrell was working on “leading the industry’s successful campaign in 1998 to raise the maximum loan amount for FHA single-family insured mortgages.”

RogersDr. Lee Rogers a Democratic candidate for McKeon’s 25th District seat is demanding McKeon “come clean and be honest” about the Countrywide perks.

“I’m calling on McKeon to pay this money back, not to Countrywide, but to the US Treasury since it was the taxpayer who absorbed Countrywide’s losses through TARP, which McKeon also voted for,” said Rogers.

Rogers questions the timing of the loan:

“On October 6, Congress passed HR 4194, which increased the FHA loan maximums as an amendment to a Veteran’s Affairs authorization act.  McKeon voted “yes” on that measure.  On October 7, McKeon’s loan was approved and he was sent the “opening package” of loan documents indicating the VIP team had processed the loan.”

Whether the loan benefits McKeon received influences his vote on Troubled Asset Relief Program (TARP) or any other beneficial FHA or Countrywide legislation can only be known by him.

While it would seem no one would turn down the VIP treatment from Mozilo, one congressman in fact did – Republican Congressman Pete Sessions from Texas.

In January 17, 2012, a statement from a Sessions spokesperson appeared in a story by John Bresnahan in Politico. According to the spokesperson:

“Out of an abundance of caution in managing his personal finances, Congressman Sessions specifically requested that he not be extended any special benefits or treatment from Countrywide.”

While the Oversight Committee’s report spanned 136 pages, in terms of punitive actions they put on the brakes.

“The Committee’s efforts were fact finding in nature.  While the Oversight Committee shared information related to Congressional employees with the House and Senate Ethics Committees, it did not make recommendations,” said Hill.

The Oversight Committee did however have suggestions for moving forward:

“Congress should consider legislation prohibiting companies from offering discounts and other forms of preferential treatment to Members of Congress and congressional staff. In addition to mortgage lenders like Countrywide, such legislation should cover banks, auto dealerships, jewelry stores, and any other company that offers financing to customers.”

The report also seemed to address McKeon’s plausible deniability, while complimenting Congressman Sessions’ ethics:

“To foreclose the possibility that a lender might apply a discount to a loan without their knowledge, Members of Congress and congressional staff should consider notifying all parties to complex financial transactions that they must not receive discounts due to congressional ethics rules, as Congressman Sessions did.”

In addition to those mentioned above, the report said the following received loan discounts from Countrywide:

* Former Senate Banking Committee Chairman Christopher Dodd, D-Conn.

* Senate Budget Committee Chairman Kent Conrad, D-N.D.

* Mary Jane Collipriest, who was communications director for former Sen. Robert Bennett, R-Utah, then a member of the Banking Committee.

* Rep. Edolphus Towns, D-N.Y., former chairman of the Oversight Committee.

* Rep. Elton Gallegly, R-Calif.

* A staff member of Rep. Ruben Hinojosa, D-Texas, a member of the Financial Services Committee.

* Former Rep. Tom Campbell, R-Calif.

* Former Housing and Urban Development Secretaries Alphonso Jackson and Henry Cisneros;

* Former Health and Human Services Secretary Donna Shalala. -Former Fannie Mae heads James Johnson, Daniel Mudd and Franklin Raines.

McKeon Named in Congressional Probe of Countrywide

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