US JUSTICE DEPARTMENT MORTGAGE FRAUD CASE AGAINST FORMER COUNTRYWIDE CEO, ANGELO MOZILO IS DROPPED
Eight years after the great recession began and Countrywide was acquired by Bank of America, the civil case against co-Founder and Former Countrywide CEO, Angelo Mozilo, has been dropped.
The US Justice Department civil case alleged defrauding of investors in mortgage-backed securities. Last week, a letter from the Justice Department informed Mozilo of the decision not to proceed with the civil fraud case against him. That means the man who headed the number one mortgage lender in United States, which grew to that size in large part, because of its increasingly risky lending policies, will no longer have to defend himself against the US Justice Department lawsuit.
Bank of America, after acquiring Countrywide in 2008 for $2.5 billion, (less than a tenth of the 2007 valuation), dropped the countrywide name from its mortgage operations. At one point, early in 2008, Countrywide acknowledged it had over a 9% default rate overall, with a 33% default in subprime mortgage loans alone. At its zenith, in 2007, Countrywide originated more than $408 billion in loans, much of that sum going to poorly assessed and risky borrowers, or predatory lending mortgages. .
After the 2008 housing crash and the mortgage industry meltdown, the Justice Department opened widespread investigations into industry practices, including Mozilo’s stock sales in the months leading up to the mortgage bubble burst. Mozilo did pay a $67.5 million penalty in 2010 to the Securities and Exchange Commission, neither admitting nor denying wrongdoing. To put that number in perspective, in the decade leading up to the mortgage crisis, Mozilo earned over $500 million. .
In 2014, the Justice Department began trying to build their civil case against Mozilo based on anti-fraud laws. The Financial Institutions Reform, Recovery and Enforcement Act (FIRREA of 1989, following the Savings & Loan Crisis), allowed a low threshold for bringing civil suits and a long period of time to bring suit. In 2008, Lawmakers summoned Mozilo to Washington, DC, where he testified before a confrontational congressional committee about his pay, and again in 2010 by Financial Crisis Inquiry Commission, which was instituted by statute the Fraud Enforcement and Recovery act of 2009. Even with those allowances, the Justice Department brought NO CRIMINAL CASE against Angelo Mozilo, now notifying him by letter that the case is no longer being pursued. .
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