By Moe

The honorable Senator Charles Schumer has a bone to pick with Angelo Mozilo and Countrywide Financial. It appears that he isn’t buying these BS press releases that have been coming out over the last couple months or so and he isn’t going to roll over and play Mr. nice senator–especially when this company was a HUGE contributor to the mortgage and housing crisis that we are seeing now.

What I am gathering based on the recent comments from the Senator is that he likens Countrywide to the mob and Mozilo as the crime lord. He might not be so far off.

Monday, Schumer was again on Mozilo’s a$$ for another shady deal involving the the Federal Home Loan Bank (FHLB) system for cash advances to stay afloat as other liquidity sources shun the company and the credit markets tank in general. Countrywide’s advances from the Atlanta-based FHLB bank had soared 81 percent, to a total of $51 billion. That represents nearly 40 percent of FHLB Atlanta’s total advances, according to the bank’s latest SEC filing—a potentially dangerous level of exposure considering Countrywide’s track record in poor underwriting and predatory lending practices in recent years.

To secure its advances from FHLB Atlanta, Countrywide has posted $62 billion worth of loans as collateral. Schumer pointed out that there is adequate reason for worry that Countrywide’s collateral poses a higher risk than other banks.

Wow! I didn’t know that you could use “crap” as collateral! $62 billion of seriously questionable loans and the bank bought it? The due diligence that I have seen on behalf of our entire banking system has been a joke so far, and the comedy routine continues as Mr. Mozilo plays “hide the peanut” with our entire country.

Apparently, Schumer plans to shine a spot light on that peanut and rightfully so. I think he may be reading my blog.

“Countrywide is treating the Federal Home Loan Bank system like its personal ATM,” Schumer said. “When Congress created these banks, it never intended for them to be used to prop up mortgage lenders that specialized in deceiving borrowers. At a time when Countrywide’s mortgage portfolio is deteriorating drastically, FHLB’s exposure to Countrywide poses an unreasonable risk.”

Last week I reported that Schumer sent a letter to Mozillo asking the CEO of the largest lender some serious questions about how they have operate. The response from my readers was great, and I wanted to highlight some of these comments here.

Submitted by Joe ex-Countrywide Employee :

The questions from Senator Schumer will most likely be met by broad stroke figures that do not accurately reflect what is happening on the front lines.

I am surprised that Congress cannot get their hands on the “real” story.

Everyone in the mortgage banking business knows what a Yield Spread Premium is versus an “Overage” on the Retail lending side. Having worked for Countrywide in the past, I too was paid a “commission” on increasing the rate to the borrower above and beyond what Countrywide told me I had to charge someone.

Loan Officers in Countrywide branches were paid 50% commission on any “overage” at that time. They were also paid another commission as a percentage of the loan amount commonly referred to as “basis points”. These basis points averaged about one-half to three-quarter percent of a loan amount.

As far as FHA, once again, EVERYONE in the mortgage business knows that FHA pays HUGE! The proof is right on evryone’s rate sheets. All Congress has to do is get some rate sheets and they can see this is true. The bottom line is that lenders such as Countrywide, Bank of America, Wells Fargo, Chase, Citi, etc. get to HIDE their revenue made from loans due to a loop hole in the system that essentially states that since they are FDIC labeled they need not disclose compensation earned.

As if that isn’t crazy enough, NO ONE HAS EVEN MENTIONED SERVICING RELEASED PREMIUMS! What’s this you may wonder? This is whereby lenders like Countrywide earn even more money on loans when they sell the loan in the secondary market known as Wall Street. This compensation can add up quick.

And finally, how about the servicing dollars earned each year on the overall portfolio? This tacks add even more profits. Ladies and Gentlemen, this industry is awash with nothing other than semantics and greed. Everyone is pretending they don’t know a thing when all they need to do is ask. You know why they don’t?

Here’s why – THEY CAN’T HANDLE THE TRUTH! Jack Nicholsan would be proud.

Tom ex-Countrywide employee:

Up until recently, a 4506 was not required by Countryfried retail. Nothing was required except borrowers proof of identy and a signed 1003.Every borrower with a 680 score got 95% financing with 1 day on the job and any “reasonable income” was accepted no questions asked.

As a Retail LO I took the app on Fri and we drew docs on monday and closed on Tuesday.Fast and Easy Pleasy..

and oh by the way FNMA’s famous line of “risk based pricing” became the biggest lie of all because I closed that loan at FNMA full doc pricing with no add ons for No Income Verrification…No Asset Verification..and a telephone verification that the borrower worked where he said he did.As long as Countrywide’s Clues UW system said OK the UW rubber stamps the deal,,wham bam thank you mam,easy pleasy fast and easy..with no add ons to full doc pricing..

Subitted by Whizkid ex-Countrywide Employee:

Great points today made about YPS and overage. I worked as a PA/originator for a regional officer and branch manager in the past at CW retail division. The bottom line I believe is the politicians and the media do not want to ask or disclose banks profit (overage) on certain loan product because the consumer won’t trust the bank if they really knew the playing field.

I was hired by CW because I had a DRE license and off the hook computer skills. When CW came out with their “ADVANTAGE” origination system I was the first to crack the software program before it was mandatory for all retail loan officers to use. I’m sure some of you ex or existing employees can identify with the software origination system used today that shows the overage.

Quick story: Early in my employment phase I mentioned YSP and the branch manager pulled me to the side and said “please use the term overage or shortage because we do not want any loan officer knowing about YSP.” Keep in mind CW likes to higher inexperience loan officers to keep the power in their hands.

For the AE’s in the industry dealing with loan officers in wholesale! You know when you went to most of the brokers place of employment you pushed the most profitable products that paid you the most basis points. Only a true professional seen through this tactic and served the clients needs not your interest for aligning your pockets!

My point: From what I have seen in this industry it sickens me the problem is so bad a politician can’t fix it because the politician is just taken the temperature on this issue with their finger!

I have been to all areas at CW and most of the employees have never seen all levels of the corporation to know how it all works when a file is funded and closed, then sold…I have. Also, I knew what the branch made on the products all loan officers sold to consumer working with regional and the branch manager. If I told you what they made you’d realize not only that you are the small fish, but you’ve been pimped to the fullest with no vaseline!

Kidz be nice to each other.

So there you have it. It appears based on the comments above, that the fast and sleazy (Fast & Easy) was a key ingredient in Kernel Mozilo’s top not so secret toxic loan recipe. Don’t forget, you read it here Mr. Schumer.

Any other questions sir?