Monday, June 08, 2009

Countrywide Memories

Back in the late '80's I worked a year and a half as a lower class drudge at the headquarters of the nefarious and defunct Countrywide. In fact, I was even in the Secondary Marketing Department where we bought mortgages from little banks and "pooled" them so they could be sold as investments. My job was to call up midwestern banks in the morning and see if they had any loans to sell. The rest of the day I would "Fund" them -- make sure they had all their paperwork.

Already we were doing untenable balloon mortgages based on the fantasy that, when your payment shot up in 5 years, you'd surely be earning enough money to pay for it. After all, you're a capable young man/woman, aren't you? Sure you are! Don't worry, a go-getter like you won't have any problem handling the increased payment by then. It's 5 whole years from now!

Underwriters were still allowed to do some of thier jobs and interest rates weren't that low so the days of rampant sub-prime lending wasn't quite here yet. But granting loans to people that had no business with one? You bet! As we used to say: We make our money on the servicing! Making it by collecting interest for 15 for 30 years from someone you're pretty sure can afford it -- who does that anymore?

We did plenty of other interesting things at Countrywide too, like forging customer signatures and taking files home with us, but that was petty stuff. Looking back You might think we were considered vermin by the mortgage banking industry, slimy, cheating opportunists who would eventually get what was coming to us. Actually the opposite was true: Countrywide had the reputation of being an extremely well-run company. This was in part because we paid as little as possible and didn't hesitate to cut staff to the bone at the first hint that the market might be slowing. But it was also because we had an innovative system that utilized sparkly new 286 computers, electronic networks, and "modems" to monitor interest rates, which were changed several times a day and instantly transmitted to all Countrywide offices.

Every so often I would see Angelo Mozilo, the Kingpin of Countrywide. Once I rode in an elevator with him and some of his muscle. He was a burly guy, dressed in the finest blue pinstripe suit imaginable, with the look in his eyes barracudas have. And yes, he was orange. I never could figure out if he actually spent that much time by the pool or if he just had it sprayed on, but he was one of the most tan humans I've ever seen, even for Southern California.

Last week Angelo was indicted for fraud. My only question is: What took them so long?

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