LOS ANGELES (Reuters) - In two years, Angelo Mozilo, the son of a Bronx butcher and a rags-to-riches icon, went from the charismatic helmsman of America’s top mortgage lender to the badly burned face of the nation’s housing meltdown.
Known for a rich tan, flamboyant wardrobe and aggressive risk-taking, the man who built Countrywide Financial into the nation’s top home lender now stands as a colorful poster boy of the dangers of unchecked real estate lending.
On Thursday, securities regulators filed charges accusing the 70-year-old Mozilo of insider trading and securities fraud.
The man dubbed “Tangelo” by business media is the biggest name yet to be accused of wrongdoing by U.S. investigators probing the subprime mortgage crisis and housing market collapse.
Born in 1938 to Italian immigrants and raised in The Bronx borough of New York City, Mozilo evangelized home ownership for everyone.
A golfing enthusiast whose home is said to abut the Sherwood Country Club in Ventura County, California, Mozilo built his company and his own prominence by riding the property boom. In 2006, at the height of its success, Countrywide originated $461 billion worth of loans — close to $41 billion of which were subprime.
But his glory days were marked. Subprime mortgages ultimately poisoned the U.S. mortgage market.
As Countrywide buckled under the weight of mortgage defaults and home foreclosures, its own lenders curtailed credit, forcing it to draw down an $11.5 billion credit line.
Last July, Bank of America Corp bought Countrywide for $2.5 billion, less than 10 percent of what the company was worth in early 2007. Ten months later, Bank of America scrapped the Countrywide name.
Even with the housing market disintegrating around Countrywide, Mozilo appeared confident about the company’s ability to survive.
Last year, with the housing market in a shambles, he told executives at a mortgage bankers’ conference, “You’ve got to be careful here about blaming ourselves too much.”
The real culprits, he argued, were the Federal Reserve raising interest rates for too long, crooked real estate speculators, falling housing prices and regulators’ attacks on interest-only and other risky subprime mortgages.
In 2007, Mozilo took in $121.5 million from exercising stock options and was awarded another $22.1 million of compensation, according to the industry-backed Leaders of the Center on Executive Compensation.
On Thursday, in a civil lawsuit filed by the U.S. Securities and Exchange Commission in Los Angeles federal court, regulators accused Mozilo of making more than $139 million in profits in 2006 and 2007 from exercising 5.1 million stock options and selling the underlying shares.
The sales were under four prearranged stock trading plans Mozilo prepared during the time period, the SEC said in the lawsuit.
Mozilo’s lawyer said the lawsuit “does not reflect a balanced or fair consideration of the facts or the law” and that the stock trades at issue were “entirely lawful.”
Writing by Edwin Chan; Editing by Jonathan Stempel