Angelo Mozilo, Whose Mortgage Giant Fell in Housing Bust, Dies at 84

Angelo Mozilo, a founding father of Countrywide Financial who presided over that lending large’s fast ascent after which its collapse through the monetary disaster of 2008, died on Sunday. He was 84.

His dying, within the Santa Barbara, Calif., space, was introduced in a press release by the Mozilo Family Foundation, the household’s philanthropic group. It didn’t specify a trigger.

Countrywide was a serious participant within the run-up to the housing disaster, when looser monetary rules enabled lenders to aggressively promote dangerous mortgage merchandise to potential owners, contributing to a bubble in housing costs. That burst, in 2008, when house values got here crashing down, led the U.S. economic system into a chronic recession.

Mr. Mozilo, the son of a Bronx butcher and who labored his approach via Fordham University, grew to become one of the vital acknowledged executives related to the disaster. Motivated by his modest beginnings, he had constructed Countrywide into one of many nation’s largest mortgage lenders by the early 2000s. But he nonetheless wasn’t glad: He wished the corporate to realize 30 to 40 p.c market share, excess of any single lender had achieved.

Countrywide started pushing gross sales of advanced mortgages to potential owners with weaker monetary profiles, a gaggle sometimes called “subprime” debtors. The loans required little or no cash down and put many debtors in properties they’d have in any other case been unable to afford. Many of those loans, referred to as “no-doc” loans, didn’t require any earnings verification.

That go-go gross sales tradition propelled the corporate’s progress and income however finally led to its downfall. As the housing market crashed and borrower defaults soared, Countrywide’s lending practices got here below the scrutiny of legislators, regulators and client advocates.

Financial pressures started to mount, and the corporate, based mostly in Calabasas, Calif., west of Los Angeles, was acquired by Bank of America in 2008 on the fireplace sale worth of $4 billion. But the acquisition ended up costing Bank of America billions extra in authorized and different prices it had inherited.

At the time, almost 150 mortgage lenders had failed, lots of which had been taken over by more healthy establishments.

Mr. Mozilo, recognizable by his crisp fits and deep tan, continued to defend his firm all through the ordeal. “Countrywide was one of the greatest companies in the history of this country,” he informed congressional examiners in September 2010, greater than two years after Bank of America purchased the corporate.

Regulators had a decidedly completely different take. In October 2010, Mr. Mozilo agreed to pay $22.5 million to settle federal expenses that he had misled traders about Countrywide’s dangerous mortgage portfolio. At the time, the settlement was the biggest penalty levied by the Securities and Exchange Commission towards a senior govt of a public firm.

As a part of the deal, Mr. Mozilo, who didn’t admit or deny wrongdoing, agreed to forfeit $45 million in “ill-gotten gains” to settle insider buying and selling and different expenses.

Angelo Robert Mozilo, the oldest of 5 youngsters, was born on Dec. 16, 1938, within the Bronx, the place he was raised. When he was about 12, he began serving to his father, Ralph Mozilo, in his butcher store, cleansing flooring and reducing up chickens, in line with his member profile within the Horatio Alger Association.

By the time he was 14 he had his first job within the monetary business, working as a messenger boy for a Manhattan mortgage firm.

He was married to Phyllis (Ardese) Mozilo for greater than 50 years. She died in 2017. He is survived by their 5 youngsters, Christy Mozilo Larsen and David, Elizabeth, Eric and Mark Mozilo; and 11 grandchildren.

Mr. Mozilo stated he had been unfairly portrayed because the villain of the housing disaster when scores of different lenders had been concerned, a perspective echoed by his household.

“Independent of how people outside of the industry may perceive this man, insiders know what an incredible force he was,” Eric Mozilo stated in a LinkedIn put up on Tuesday.

“He was an excellent father and a legend in the mortgage industry,” he added throughout a cellphone name.

Mr. Mozilo and a associate, David Loeb, who died in 2003, began Countrywide in 1969 with $500,000. Within just a few a long time, the corporate had grown from a conservative house lender, initially based mostly in New York, to the biggest mortgage lender within the United States. As of 2007, it had 900 places of work and $200 billion in belongings and made $500 billion in loans that 12 months.

In the early Nineties, after authorities information revealed that lenders had been disproportionately rejecting minority debtors for house loans, Countrywide noticed an untapped market and started providing extra loans in low-income and minority communities.

“When I first brought the loans into the office, they said: ‘You’re nuts, you’re crazy, don’t do this. There’s a reason why we’re rejecting these people,’” Mr. Mozilo later informed the congressional fee investigating the disaster. The mortgage officers, he stated, “had very static, inflexible guidelines.”

As he noticed it, Countrywide was serving to to interrupt down the racial and financial obstacles to homeownership.

So he put the workers via “sensitivity training” and employed extra Black and Hispanic staff. Countrywide quickly began approving one mortgage for each two functions reviewed, in line with Mr. Mozilo. Previously, it had been approving one mortgage for each 4 functions. The new loans “did perform,” he stated.

But that efficiency didn’t final. In 2006, Mr. Mozilo described a number of the firm’s riskier loans as “poison,” in line with inside Countrywide emails launched by the S.E.C. in 2009. “In all my years in the business, I have never seen a more toxic” product, he wrote in a single e mail.

More than a decade later, Mr. Mozilo recalled how tough that interval was for his household, however continued to defend his and his firm’s legacy at a monetary convention in Las Vegas.

“Of course it bothers me,” he stated, in line with a 2019 CNBC report. “It affected my reputation, it affected my family, it had a profound impact on my entire life. So I cared. Then a lot of years went by, and my wife passed away, and I turned 80 years old, and now I don’t care. There’s other things more important in life.”

Ben Protess contributed reporting.