Mozilo Calls for Government Reform

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Countrywide Financial Corp. is forming a housing and mortgage industry coalition that will try to spur government reform of the residential lending business to ease the current credit crunch.


Angelo Mozilo, chairman and chief executive of the embattled Calabasas lender, told an audience at Milken Institute’s annual conference Monday that his company will host a meeting Wednesday of industry executives.


“The government has left it up to the lenders to deal with the credit crunch,” said Mozilo, during his remarks at the Beverly Hilton Hotel. “The purpose of the meeting is to offer solutions to the credit crunch.”


A key priority of the coalition would be to lobby the government to raise the value of loans that can receive loan guarantees by government-sponsored entities Fannie Mae and Freddie Mac, Mozilo said.


Currently, that limit is set at $417,000, with any loans bigger than that so-called “jumbo” loans unable to qualify for the guarantee. That raises the cost of such loans and also has limited their availability amid the collapse of the subprime mortgage market. The lack of jumbo financing is a particular problem throughout California where median real estate prices are well above the $417,000 limit, requiring many home buyers to seek jumbo financing.


The announcement of initiative comes days after Countrywide announced a record third quarter loss of $1.2 billion. It also comes after the mortgage lending giant launched an initiative to refinance or modify up to $16 billion in loans to borrowers who are facing adjustable-rate mortgage resets through the end of 2008.


Mozilo himself is under investigation from the Securities and Exchange Commission for $145 million in stock sales in the months before Countrywide’s stock nosedived earlier this year as the subprime and credit crises mushroomed.


Shares of Countrywide closed Monday at $16.83 in trading on the New York Stock Exchange. They are up sharply from a 52-week low of $12.07 that they hit on Oct. 25.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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