UPDATE 2-US senator: No Countrywide VIP treatment received
(Adds Conrad comments)
By John Poirier
WASHINGTON, June 13 (Reuters) - The chairman of the powerful Senate Banking Committee on Friday denied a media report that he received preferential mortgage terms from Countrywide Financial Corp CFC.N, a key player in the U.S. housing crisis.
Conde Nast's Portfolio.com website reported on Thursday that Sen. Christopher Dodd, a Democrat from Connecticut who is trying to push a housing rescue bill through the Senate, could save $75,000 over the life of the loans he obtained from Countrywide for two homes.
Dodd denied receiving any special favors from Countrywide, calling such a suggestion "outrageous."
"As a United States senator, I would never ask or expect to be treated differently than anyone else refinancing their home. This suggestion is outrageous and contrary to my entire career in public service," Dodd said in a statement.
"When my wife and I refinanced our loans in 2003, we did not seek or expect any favorable treatment. Just like millions of other Americans, we shopped around and received competitive rates."
A Dodd spokesman declined to provide details about the mortgages.
Countrywide, one of several mortgage companies under federal investigation, did not return a telephone call seeking comment. The lender has been targeted by consumer advocates, politicians and regulators who say its risky loans to people with poor credit histories helped fuel the crisis in the U.S. housing market.
News of Dodd's mortgages with Countrywide surfaced as he prepares for a Senate vote on his housing rescue legislation that would create a $300 billion mortgage insurance fund to save an estimated 500,000 borrowers from foreclosure. Similar legislation has been approved by the House of Representatives, and Dodd has said he wants to send a final bill to President George W. Bush by July 4.
Earlier this week, Jim Johnson, who was chief of Democrat Barack Obama's search for a vice presidential running mate stepped down from that role over questions about loans he received from Countrywide.
According to a source familiar with the Obama campaign, speaking two weeks ago, Dodd and Federal Reserve Bank of New York President Timothy Geithner, who helped engineer the rescue of Bear Stearns, were among those being considered to head the Treasury Department if Obama were to win the presidential election.
It was not immediately clear how the controversy involving Dodd would affect the Senate bill, which passed the committee with overwhelming support from Democrats and Republicans.
But one industry executive said if Dodd's effectiveness were to be diminished, the Democratic leadership would likely step in to finish work on the bill.
"It does create some level of uncertainty depending on what comes out of this," the executive said, speaking on condition of anonymity. "It's not a positive development if this gains traction, but there are lots of other people who can pick up the slack if necessary."
"FRIENDS OF ANGELO"
Citing company documents and e-mails as well as a former employee familiar with the loans, Portfolio.com reported that Dodd refinanced his properties through a little-known "VIP" program in 2003 and 2004. Dodd borrowed $506,000 to refinance his Washington townhouse and $275,042 to refinance a home in East Haddam, Connecticut, it said.
Borrowers in the program were known as "FOAs," an abbreviation for "friends of Angelo" Mozilo, Countrywide's chief executive.
"For VIPs, Countrywide often waived at least half a point (half a percent) and eliminated fees amounting to hundreds of dollars for underwriting, processing and document preparation," Portfolio.com wrote.
Another Democrat, Kent Conrad, chairman of the Senate Budget Committee, also refinanced a property through Countrywide's VIP program, according to the website.
"I have done nothing wrong," Conrad of North Dakota told Reuters. Conrad described speaking briefly with Mozilo after being referred by Johnson, whom he described as a friend of 38 years. During that call Mozilo did not offer any preferential treatment, Conrad said.
Mozilo said the company would "'be glad to look at your loan. Either call this number or I'll have somebody call you,'" Conrad recounted.
Conrad said he would welcome a congressional investigation to set the record straight. "I would love the chance to lay this out exactly what occurred with me. I approached this in a totally straight forward way, and any assertion to the contrary is absolutely false," he said.
Mozilo, one of corporate America's top-paid executives, has been criticized by House Financial Services Chairman Barney Frank, who earlier this year urged Mozilo to donate some of his millions to help customers facing foreclosure.
Bank of America Corp (BAC.N) agreed in January to pay about $4 billion to acquire Countrywide. (Additional reporting by Thomas Ferraro, editing by Mark Porter, Gary Hill, Toni Reinhold)
