"I am writing this letter to explain my unfortunate set of circumstances that have caused me to become delinquent on my mortgage. I have done everything in my power to make ends meet but unfortunately I have fallen short and would like you to consider working with me to modify my loan. My number one goal is to keep my home that I have lived in for sixteen years, remodeled with my own sweat equity...this home means the world to me.... it's to the point where I cannot afford to pay what is owed to Countrywide. It is my full intention to pay what I owe. But at this time I have exhausted all of my income and resources so I am turning to you for help."--Countrywide borrower Dan Bailey
"This is unbelievable. Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the internet. Disgusting."--Countrywide Financial founder, chairman and chief executive Angelo Mozilo
So read excerpts from an email exchange that has Countrywide Financial (CFC) boss Angelo Mozilo sitting once again in the middle of a firestorm of controversy.
Borrower Dan Bailey sent the e-mail to Mozilo and other Countrywide officials this week, asking for a loan modification that would lower his payment. The full email exchange is at the bottom of my blog. I have reported to you before in prior blogs on Mozilo's outsized pay during the housing crisis and his embarrassing testimony about his compensation on Capitol Hill (see "Final Thoughts on the Fat Cat CEO Pay Hearing," and "Highlights from CEO Pay Hearing Today").
Bailey had used a form email posted on LoanSafe.org, an Internet coaching service for troubled borrowers.
Evidently, Mozilo meant to forward the e-mail to a bank colleague, but instead hit the reply button to Bailey.
Countrywide issued a response: "Countrywide and Mr. Mozilo regret any misunderstanding caused by his inadvertent response to an email by Mr. Bailey. Countrywide is actively working to help borrowers, like Mr. Bailey, keep their homes."
The email exchange raises a host of issues. Internet sites helping borrowers email form letters to lenders have caused a barrage of boilerplate demands, disrupting operations, bankers say. Also subject of debate are borrowers who should be responsible for not signing loan documents they don't understand.
Mozilo's use of the word "disgusting" with regards to these Internet form letters in his embarrassing email comes at a difficult time for the nation's largest lender. Lawsuits against the lender have cropped up like dandelions. The FBI is reportedly investigating whether Countrywide's management misrepresented the quality of its mortgages in routine securities filings, which in turn may have led investors to overvalue the loans securitized into more than $100b worth of investment vehicles between 2004 and 2007. And the embarrassing email comes at a time when Mozilo himself has had to contend with a probe of his stock sales by the Securities and Exchange Commission.
It was just this past March that Mozilo, along with E. Stanley O'Neal, former CEO of Merrill Lynch (ML), and Charles Prince, former CEO of Citigroup testified about their rich pay at a time when the government is now struggling with a housing and credit crisis these three helped engineer.
Banks have written off $335bn in the housing slump, while thousands of jobs have been lost, including at Countrywide, and home foreclosures soar to record highs. Moody's estimates 3.5mn people will lose their homes to foreclosure during this crisis.
During the five-year period from January 2002 through December 2006, the stock of Countrywide, Merrill Lynch, and Citigroup appreciated, and the three CEOs collectively received more than $460mn in compensation.
Mozilo in particular got $250mn in compensation plus made $414mn in stock sales, which he attributes to a pre-existing company plan that lets him unload shares. However, Mozilo was selling shares through last fall at a time when he was also cheerleading Countrywide as a good stock to invest in, and at a time when he publicly criticized a Merrill Lynch analyst who issued a report last summer saying the lender was in peril.
The three executives received rich payouts largely based on profits that didn't exist. The three banks to date have reported more than $45bn in writedowns from the crisis. Stocks in their companies have plunged to record lows, and investors have lost tens of billions of dollars.
Meanwhile, Bank of America (BAC) is still moving ahead with its $4b acquisition of Countrywide. Countrywide Financial Corp.'s 14 senior executives are expected to receive stock-based awards of $28.5 million upon completion of the lender's sale to Bank of America, a regulatory filing showed. Mozilo, who isn't joining the bank, would get $7.7 million, the filing said.
In other news, Countrywide Financial directors and executives now must defend a federal suit by shareholders claiming they engaged in insider trading and failed to halt policies that caused the mortgage lender's value to collapse.
The bank had tried to dismiss the suit, brought by the Arkansas Teacher Retirement System, Fire & Police Pension Association of Colorado, Public Employees Retirement System of Mississippi and the Central Laborers Pension Fund. The US District Court in Los Angeles ruled the shareholders can go forward with their claim that the officers and directors are financially responsible for losses at Countrywide, the biggest U.S. mortgage lender.
This has already been sent on to our senior manager who will determine the facts behind your request and he will take the appropriate actions.
05/19/2008 06:37 AM
Subject Re: bailey acct# xxxxxxxxxx
Interesting to find that you think my letter is disgusting. I will send this on....
This is unbelievable. Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the internet. Disgusting.
Original email. Did this warrant this response from Angelo Mozilo? I sure don't think so!!!!
Dan Bailey Photography Studio
05/19/2008 06:12 AM To email@example.com, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com, firstname.lastname@example.org
Subject bailey acct# xxxxxxxxxxx
To Whom It May Concern:
I am writing this letter to explain my unfortunate set of circumstances that have caused me to become delinquent on my mortgage. I have done everything in my power to make ends meet but unfortunately I have fallen short and would like you to consider working with me to modify my loan. My number one goal is to keep my home that I have lived in for sixteen years, remodeled with my own sweat equity and I would really appreciate the opportunity to do that. My home is not large or in an upscale neighborhood, it is a "shotgun" bungalow style of only 900 sq. ft. built in 1921. I moved into this home in May of 1992...this was the same year I got clean and sober from drugs and alcohol, and have been ever since, this home means the world to me.
The main reason that caused me to have a hardship and to be late is my misunderstanding of the original loan. I was told that after the first year of payments, I would be able to refinance to a better fixed rate- then the bottom fell out of the industry. My payments for that first year were on time. I also lost my second income due to physical conditions in a very physically demanding industry.
As my ARM payments increased, I have had less money to put towards making my business (income) work. I had been unable to generate business because all of my funds were going towards attempting to make my loan payments. This, coupled with major repairs to my vehicle (93 jeep) and paying out of pocket for medical and dental issues (I have no ins.) caused me to fall further and further behind, destroying my credit rating.
Now, it's to the point where I cannot afford to pay what is owed to Countrywide. It is my full intention to pay what I owe. But at this time I have exhausted all of my income and resources so I am turning to you for help.
I feel that a loan modification would benefit us both. With that, and knowing my home will not be foreclosed, I would be able to obtain a roommate in order to generate more income, have the funds to generate more business and have a good working relationship with Countrywide. I would appreciate if you can work with me to lower my delinquent amount owed and payment so I can keep my home and also afford to make amends with your firm.
I truly hope that you will consider working with me and I am anxious to get this settled so we all can move on.
Sincerely and Respectfully,
Daniel A Bailey Jr.
Loan # xxxxxxxxxxx
Don's final email to Countrywide:
In attempting to come to some way to save my home, I took the advice on forming my hardship letter from a forum. Why? Not all of us have been to a university to study business and we need some help in dealing with these matters. (perhaps, if we had, we would not have fallen for what we did, to start with)
To have recieved the e-mail that I did, stating by one of your employees, that what I did was "disgusting" and "unbelievable" has been just about the final straw. I am trying to do the right thing, I am trying with every ounce of what I have left in me not to blow my brains out ovewr losing the home I have been in for 16 years. The only hope I had left was that perhaps the countrywide company did want to help the people it is servicing....then I receive that responce to my letter. Just great. Now I know, that it is all a nice fat laughing matter to those who are supposed to help.