Issa Letter to FHFA Re Countrywide (PDF)

Countrywide VIP Loans To Fannie Mae Execs Are Under Investigation
...The number of loans to borrowers who worked at Fannie Mae spiked at two points during the lifetime of Countryside’s VIP program. The first spike came in 1998, as Countrywide was negotiating a volume discount with Fannie Mae, the second spike came in 2001-03, on the leading edge of a “mortgage boom that occurred from late 2002 through 2004" and an expansion of the VIP loan unit....

...While negotiating the volume discount,“Countrywide CEO Angelo Mozilo leveraged his company’s position as the nation’s largest residential housing lender to extract a lower “guarantee fee” from Fannie Mae CEO Jim Jonson, who himself receive several Countrywide VIP loans.” (More than $10 Million worth of loans)...

Fannie, Freddie, and the Subprime Mortgage Market
...At the market’s peak in 2005, only 10 lenders made up two-thirds of Fannie Mae’s business, and 10 lenders also made up over three-fourths of Freddie Mac’s business. Near the top for both was Countrywide Mortgage, one of the nation’s largest subprime lenders. In 2005, one out of every four loans purchased by Fannie Mae was from Countrywide. One of out every 10 for Freddie Mac was also from Countrywide. Apparently the affection was mutual, for as much as the GSEs depended on Countrywide, Countrywide also depended on them.

According to the Fannie Mae Foundation, almost half of Countrywide’s production was sold to Fannie Mae. Additionally, Countrywide used Ginnie Mae to guarantee another third of their production. Close to 90 percent of Countrywide’s loan originations were bought or guaranteed by some arm of the federal government. Far from being a product of the free market, Countrywide could have only existed and prospered in an atmosphere of government guarantees....

...We have made, and continue to make, significant adjustments to our mortgage loan sourcing and purchase strategies in an effort to meet these increased housing goals and the sub-goals. These strategies include entering into some purchase and securitization transactions with lower expected economic returns than our typical transactions. We have also relaxed some of our underwriting criteria to obtain goals-qualifying mortgage loans and increased our investments in higher-risk mortgages that are more likely to serve the borrowers targeted by HUD’s goals and subgoals, which could increase our credit losses.
—Fannie Mae 10-K, May 2, 2007...