Countrywide exec warned on loans at Fed '06 meeting

Callahan said McMurray appeared "balanced" in his statements at a time when many others in the industry were "wearing rose-colored glasses."

At the Fed conference, McMurray gave an almost academic presentation that included 29 slides packed with graphics and charts on the risks and causes of mortgage delinquency.

He explained how larger loans, lower credit scores, higher loan-to-value ratios, and less required documentation from loan applicants were coinciding with greater delinquency, wrote Cabray Haines, who summarized the conference for the Chicago Fed Letter.

"McMurray pointed out that this finding is particularly worrisome, given the recent popularity of loans that require little to no documentation of borrowers' income and credit history," Haines wrote

10 MILLION LOANS

Countrywide's internal study included about 10 million mortgages and examined them on a number of variables that helped approximate risk for lenders, Haines wrote. The presentation touched on the types of loans that accompany the most risk and how lenders could adjust course.

McMurray, who declined to comment, left Countrywide in August 2007, a month after the company's surprise disclosure that it had drawn down an $11.5 billion credit line because it had trouble selling short-term debt.

On August 31, 2007, Washington Mutual announced it had hired McMurray as chief credit officer. Countrywide announced his replacement within a week.

McMurray, who was promoted in April 2008 to chief enterprise risk officer at WaMu, is no longer with the company, whose banking units were acquired by JPMorgan Chase & Co (JPM.N) after it failed and was seized by federal authorities last September.

Mike Fratantoni, an economist who reported to McMurray at WaMu, calls him "an extremely impressive guy" who "fully understands every aspect of risk management."

"My observation was that he could work well with management at any level of an organization," Fratantoni said. "He was respected, but he was also very persistent. If he saw something he thought was a problem, he would keep pushing at it until he got it fixed."

On May 1, McMurray began working as a senior vice president and chief risk officer with the Federal Home Loan Bank of Seattle, a cooperative that provides liquidity to help make affordable housing available to the public.

(Reporting by Steve Eder; Editing by Gary Hill)