Fannie Mae Employees Got VIP Loans from Countrywide

Fannie Mae
Fannie Mae

Newly released documents from the House Committee on Oversight show that Fannie Mae employees accepted special loans and treatment from Countrywide Financial years before the 2008 mortgage meltdown brought financial markets to their knees, according to news reports.

Countrywide's "VIP" mortgage program made 153 loans to employees of Fannie Mae, the giant, federally backed buyer of mortgages that helped fuel Countrywide's growth, the Wall Street Journal reported, citing a letter released Tuesday by Rep. Darrell Issa, R-Calif.

Another 20 such VIP loans, which often provided mortgages on terms more favorable than those available to the general public, went to employees of Fannie Mae's sister organization, Freddie Mac, the Issa letter said.

According to investigators, Countrywide's VIP treatment ranged from special handling of customer phone calls to discounted loan rates worth thousands of dollars on a loan, CBS News reported.

Previously named recipients of VIP loans from Countrywide include Sen. Christopher Dodd, D-Conn., who isn't seeking re-election this fall, and fellow Senate Democrat Kent Conrad of North Dakota.

The documents show that some borrowers accepted multiple VIP loans from Countrywide, the mortgage giant that was purchased by Bank of America (BAC) for $4 billion in 2008, amid the mortgage crisis.

According to the documents, the number of loans spiked twice during the VIP program's existence: in 1998, when Countrywide was in negotiations for Fannie Mae to buy billions of dollars of mortgages; and in 2001-03, during the height of the mortgage boom.

The documents indicate Countrywide Chief Executive Angelo Mozilo gave Fannie Mae CEO Jim Johnson preferential treatment on more than $10 million in personal loans, CBS News reported.

Rep. Issa said the documents also show that more senators and staff members than previously known received sweetheart mortgages from Countrywide, the Associated Press reported.

Issa, who didn't provide details of discounted loans to House members and their staffs, said at least 30 loans went to Senate staff, including 12 to the office of Sen. Robert Bennett, a Utah Republican who lost his re-election bid in May when his state party convention rejected him as a candidate.