Stock
16 years ago
FORMER COUNTRYWIDE HOME LOAN EMPLOYEE, SECOND MAN ARRESTED FOR
DOWNLOADING AND SELLING IDENTITIES OF COUNTRYWIDE HOME LOAN CUSTOMERS
For Immediate Release: August 1, 2008
Two men were arrested today on charges related to the illegal access of computers containing personal identification information of Countrywide Home Loan customers and the illegal sale of the data, announced Salvador Hernandez, Assistant Director in Charge of the FBI in Los Angeles, and United States Attorney Thomas P. O’Brien.
Rene L. Rebollo Jr., 36, of Pasadena, a former employee of Countrywide Home Loan, was arrested this morning without incident at his residence by special agents with the Federal Bureau of Investigation. Rebollo is scheduled to make his initial court appearance this afternoon in United States District Court in Los Angeles.
A second man charged in the case -- Wahid Siddiqi, 25, of Thousand Oaks – was arrested this afternoon by FBI agents, who received the assistance of the Simi Valley Police Department. Siddiqi allegedly purchased the identification data; he is expected to make his initial court appearance on Monday.
According to a criminal complaint filed last night, the FBI, as well as investigators with Countrywide Financial, discovered a security breach at the company and initiated a joint investigation.
The complaint alleges that Rebollo was employed as a senior financial analyst for Countrywide Home Loan's subprime mortgage division, Full Spectrum Lending in Pasadena. In his position, he had access to Countrywide computer databases, many of which contained sensitive information of Countrywide clients. Countrywide terminated Rebollo’s employment in July 2008.
According to the complaint, Rebollo was interviewed by FBI agents last month and acknowledged that he was responsible for giving out account information belonging to Countrywide customers to third parties over the course of two years.
Rebollo said he obtained the information from Countrywide computers at his workspace and saved the reports to personally owned flash drives, according to the complaint. After Rebollo saved the Countrywide Home Loan data on the flash drives, he left the Countrywide Home Loan premises with the intent to sell the data.
Rebollo opened a personal bank account specifically for the purpose of depositing and holding the illegal proceeds of the Countrywide data sales, and he estimated that he profited approximately $50,000 to $70,000 from the sale of the Countrywide-owned data, according to the complaint.
Rebollo was requested by other individuals to obtain specific types of data from Countrywide, and he was able to provide the information because of his access to many of Countrywide’s databases that contained information about clients from around the United States, according to the complaint.
Siddiqi was recorded by a confidential witness working for the FBI when he placed an order for personal profiles at a negotiated price, according to the complaint. Siddiqi subsequently met the confidential witness and delivered the data, in exchange for cash. Copies of the discs were provided to Countrywide investigators for verification and authentication. Countrywide investigators are currently analyzing evidence to determine if any of their customers’ identities may have been compromised so that they can be formally notified and assisted in the immediate future.
A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty.
Rebollo is charged with of exceeding authorized access to the computer of a financial institution, a charge that carries a statutory maximum penalty of five years in federal prison. Siddiqi is charged with fraud and related activity in connection with access devices, a crime that carries a statutory maximum penalty of 15 years in prison.
This case is a result of an investigation by the FBI. Investigators at Countrywide Financial provided considerable assistance and continue to fully cooperate with the FBI in this investigation.
###
CONTACTS:
FBI Press Office in Los Angeles: Laura Eimiller: 310 996-3343
United States Attorney’s Office: Thom Mrozek: 213 894-6947
Countrywide Financial: 800 796-8448
http://losangeles.fbi.gov/pressrel/2008/la080108.htm
Stock
16 years ago
Countrywide Financial Insider Breaches 2 Million
Posted by Arieanna | August 11, 2008 |
Related entries in Data Breach, Real Theft Reports, Security Breach
Who Breached: Countrywide Financial Corporation
Number Affected: 2,000,000
Information breached: Social Security Numbers
How: Insider theft
It’s not very often we hear about intentional insider breaches of information, particularly on this scale. The FBI arrested a former Countrywide Financial Corporation employee and another man in connection with the alleged theft and sale of the information of as many as 2 million mortgage applicants. The personal information of the mortgage applicants included Social Security Numbers.
The breach occurred over a two-year period until it was discovered this July. The insider arrested worked as a senior financial analyst at the lending division of Countrywide, Full Spectrum Lending. The second man arrested is the alleged reseller of the stolen data.
US Attorney spokesman Thom Mrozek says most, or all, of the names were being sold to people within the mortgage industry in order to make new pitches. The insider, who volunteered details to the FBI, would sell batches of about 20,000 customers as “leads” to outside loan agents at approximately 2.5 cents per name, a very low amount on the black market. It is unknown if any of the information was used for fraud or identity theft.
“It’s the potential for new-account fraud that arises when Social Security accounts are compromised,” said Beth Givens, director of the nonprofit Privacy Rights Clearinghouse. “That’s the most serious kind of financial identity theft,” because large amounts can be involved and the fraud is more difficult to detect than it is on preexisting accounts.
“This guy obviously didn’t do his homework. He doesn’t know the value of these on the black market,” she said.
The theft was perpetrated via an unsecured external hard drive. He was able to use one computer in the Spectrum Lending office that he knew to be insecure, missing the security feature that disabled the use of external drives. There was no process of detection in place that would prevent this unsecured computer from accessing network data, nor any procedure in place to prevent unauthorized copying of data.
To learn from this breach:
Audit user access to data, to ensure users have only necessary access to data
Monitor data access - what is accessed and by whom
Restrict copying of data
Add real-time detection - be able to detect unauthorized attempts to access data, insecure computer connections, and unusual user activity
http://blog.absolute.com/countrywide-financial-insider-breaches-2-million/
ukie
16 years ago
Courtesy of Mr. Bill:
Countrywide: Potential Short Squeeze in the Offing
by: H. Arguello posted on: June 22, 2008 | about stocks: BAC / CFC Font Size: PrintEmail Media reports that Bank of America (BAC) is targeting July 1, 2008 as the date for its acquisition of Countrywide Financial (CFC) have the potential to create a huge impact on the market if accurate. Reports that a letter sent to Countrywide branch managers specifying July 1st as the date are supported by SEC filings showing that Bank of America has shelved the appropriate number of BAC shares and CFC filings, placing a ban on Countrywide executives from trading between June 27th through July 2nd.
All of this is assuming that CFC shareholders approve the merger on June 25th, 2008.
As of June 19th, 2008 closing prices, CFC shares were trading at $4.83/share, a discount of $.29/share (fair value of the acquisition is $28.14/BAC share x .1822/shares offered per CFC share = $5.13/CFC share), or 6%.
Now where CFC really becomes interesting is in the fact that it currently has 583 million shares outstanding and short interest of over 114.8 million shares as of mid-June, according to the NYSE.
That's 19.69% of the outstanding float as short interest for a takeover that appears set to close on July 1st, 2008 - just 7 trading days away.
Given CFC's average daily volume of 22.7 million shares per day, that’s more than 5 days to cover, assuming no one else buys CFC shares in that time frame. As a result, we may see an unusual situation in which shorts are forced to cover, potentially at prices beyond the acquisition price, given the extreme amount of short interest outstanding relative to the share float and the time remaining prior to the acquisition by BAC. This could create strong upward pressure as a large numbers of shorts run to cover at the last minute, causing a classic short squeeze scenario.
makesumgravy
16 years ago
AP
Fed task force eyes lenders and Wall Street in subprime mess
Monday May 5, 2:52 pm ET
By Tom Hays, Associated Press Writer
NY authorities form fraud task force in response to subprime mortgage crisis
NEW YORK (AP) -- Federal authorities, responding to the subprime-mortgage crisis, have formed a task force to determine if lenders or Wall Street firms participated in fraud.
The task force will be headed by prosecutors in the Eastern District of New York, where one of the nation's top mortgage lenders went bankrupt last year.
Robert Nardoza, spokesman for the U.S. Attorney's office in Brooklyn, confirmed a report on Monday that a task force, comprised of federal, state and local agencies, would focus on the activities of mortgage lenders and Wall Street firms. He declined to give further details.
U.S. Attorney Benton Campbell told The Wall Street Journal that it was too early to say if actions that led to the subprime crisis rise to the level of a crime.
"There are market forces in play in that area, and that doesn't necessarily mean there is fraud," he said.
The task force includes representatives from the FBI, which announced earlier this year that it was investigating more than a dozen companies, from mortgage lenders to investment banks, for possible accounting fraud, insider trading and other potentially illegal actions related to subprime mortgage lending. One key question is whether Wall Street firms knew about the risks of mortgage securities backed by subprime loans, and if they hid risks from investors.
Officials said the Brooklyn task force also includes investigators from the U.S. Postal Inspection Service, the state Department of Banking and the city Department of Investigation.
Prosecutors in Brooklyn already had been eyeing Long Island-based American Home Mortgage Investment Corp. The company filed for bankruptcy protection last summer, only about one week removed from being one of the 10 largest mortgage lenders in the country.
Unlike New Century and most other bankrupt lenders, American Home Mortgage was not a subprime lender. Subprime lenders cater to home buyers with spotty credit. Almost none of American Home Mortgage's $58.9 billion in home loans in 2006 year were to subprime borrowers.
Yet as credit markets tightened, lenders came calling and American Home was suddenly unable to deliver as much as $800 million in promised loans. It laid off almost 90 percent of its 7,000 employees.
There was no immediate response to a message left Monday with the company.
makesumgravy
16 years ago
Not good news!!
Reuters
Analysts say BofA may lower Countrywide deal price
Monday May 5, 11:12 am ET
By Tenzin Pema
BANGALORE (Reuters) - At least two analysts said Bank of America Corp (NYSE:BAC - News) will likely lower its purchase price for Countrywide Financial Corp (NYSE:CFC - News), with Friedman, Billings Ramsey analyst saying the bank may bring down its deal price to the $0 to $2 level or completely walk away from the deal.
ADVERTISEMENT
Shares of Countrywide, the largest U.S. mortgage lender, fell nearly 12 percent to $5.29 in morning trade on the New York Stock Exchange, after Friedman downgraded Countrywide to "underperform" from "market perform."
Analysts at S&P Equity Research expect Bank of America to complete the buyout of Countrywide, but at a lower price due to the rapid deterioration of Countrywide's credit portfolio.
Friedman analyst Paul Miller, in a note to clients, said Countrywide's loan portfolio has deteriorated so rapidly that it currently has negative equity and the proposed takeover of the company will be a drag on Bank of America's earnings due to the elevated credit expenses at Countrywide,
Miller cut his target on Countrywide's stock to $2 from $7.
Bank of America, which in January agreed to buy Countrywide for $4 billion, said in a filing last week there was no assurance that any of the mortgage lender's outstanding debt would be redeemed, assumed or guaranteed.
"Bank of America announced that it might not guarantee Countrywide's debt, which is most likely the first step in renegotiating the entire deal," Miller said. "We estimate that if fair-value adjustments to the loan portfolio could exceed approximately $22 billion, this would increase the odds of Bank of America renegotiating the transaction or walking away."
He said Bank of America's current purchase price allows for some adjustments to loan values as it is below Countrywide's first-quarter net tangible equity of $11 billion.
Miller, however, added that given the rapid credit deterioration and weak secondary market demand, markdowns on Countrywide's loans could easily exceed Bank of America's estimates when the company performed due diligence and the cushion was built into the deal.
He expects markdowns on Countrywide's $95 billion loan portfolio -- which includes $28 billion of option adjustable rate mortgages (ARMs), $14 billion of home equity line of credits (HELOCs), $20 billion of fixed rate second lien mortgages, and $19 billion of Hybrid ARMs -- to be material.
"We believe Countrywide has significant credit risk on its balance sheet, not only in its loan portfolio, but in its subprime and HELOC securities and residuals, its representations and warranties on loans sold, and in loans held outside of banking operations," Miller said.
S&P Equity Research analysts also said they were "particularly wary of Countrywide's option ARM portfolio because we do not believe that it has yet been stress-tested."
"Indeed, one of our major concerns about Bank of America is the potential inheritance of Countrywide's option ARM portfolio," they added.
S&P Equity Research analysts maintained their "hold" rating on both Countrywide and Bank of America.
On Friday, Standard & Poor's cut the credit rating of Countrywide to junk status on concerns that Bank of America may not support as much as $24 billion of the mortgage lender's debt once it completes its proposed takeover.
Countrywide, in a February regulatory filing, had said a loss of its investment grade rating would result in the acceleration of some secured debt obligations and hurt its ability to manage and hedge its inventory of loans.
In addition to increasing Countrywide's financing costs and potentially hurting its ability to attract and retain bank deposits, up to $4.2 billion of its custodial deposits could be transferred to another bank if it were cut below investment grade, the company had said.
Bank of America shares were trading down more than 1 percent to $39.35 in morning trade on the New York Stock Exchange.
(Editing by Bernard Orr, Anil D'Silva)
up-down
17 years ago
Countrywide’s Debt Problem
Posted by David Gaffen May 2, 2008, 2:33 pm
Countrywide Financial Corp., which has taken plenty of shots to the gut during the credit crunch, was sucker-punched again today, causing investors to sell the shares and boost expectations of a potential default on its debt.
Ratings agency Standard & Poor’s downgraded the company’s credit rating to junk status at about 2 p.m. ET. The rating agency was reacting to a regulatory filing by Bank of America Inc., which plans on acquiring Countrywide, but suggested that it may not want to take on all of its debt obligations.
“Bank of America is currently evaluating alternatives for the disposition of the remaining Countrywide indebtedness, including the possibility of redeeming, assuming, or guaranteeing some or all of this debt, or allowing it to remain outstanding as obligations of Countrywide (and not Bank of America),” the bank said in its filing.
Well, ok then. Credit-default swap spreads, which measure protection against the potential for default on debt, have bounced sharply. Countrywide’s five-year swaps were lately traded at 250 basis points, which translates to a cost of $250,000 to insure $10 million in bonds for five years. Thursday, those swaps closed at $165,000, according to brokerage Phoenix Partners Group.
The stock, meanwhile, was lately down 3.6% to $5.83 a share, falling below break-even shortly after the news was announced, and there’s a fresh bout of pessimistic betting going on in the options market in contracts way, way down the road, according to Rebecca Engmann Darst of Interactive Brokers. A total of 9,800 contracts in the October puts at a $3 strike have traded today — compared with existing interest of 1,848 contracts prior to Friday trading — which suggests new bearish positions.
------------------
Comments
Report offensive comments to marketbeat@wsj.com
One will fall… and the rest are following… quickly now… it’s all how you define quickly… you think!
The OZ
Comment by I told everyone about this Pig in a Polk... last year! - May 2, 2008 at 2:44 pm
It’s a nice trick if you cn pull it off, mergering just the assets. But I think it is entirely contrary to public policy. If BAC doesn’t want a real merger let CFC go to bankruptcy, and offer to by the servicing at auction. That is what the SEC should b telling them right now.
Comment by Mike Powers - May 2, 2008 at 2:53 pm
2:44, did you take your Adderall today? Your posts are incomprehensible.
Comment by H95 - May 2, 2008 at 3:01 pm
Bondholders only have themselves to blame if they allowed Countrywide to borrow money from them without restricting its ability to sell its assets without paying them off.
Comment by ss - May 2, 2008 at 3:03 pm
So, all those bull clowns thought the problems were over? I wonder how JP Morgan is going to feel about assuming Bear Stearns bad paper?
Comment by Hank - May 2, 2008 at 3:03 pm
Retribution alright - butcher Mozillo belongs in prison for claiming all along last year that CFC was in great shape, while he sold out of his shares…
Comment by monkey fist - May 2, 2008 at 3:19 pm
Will the Fed bail CFC out the way it did to Bear Stearns?
Comment by Lay Person - May 2, 2008 at 3:27 pm
http://blogs.wsj.com/marketbeat/2008/05/02/countrywides-debt-problem/?mod=WSJBlog
flush bob
17 years ago
http://news.yahoo.com/s/ap/20080427/ap_on_bi_ge/federal_reserve_countrywide
By ALEX VEIGA, AP Business Writer
Sun Apr 27, 2:30 PM ET
LOS ANGELES - Consumer advocates nervous about Bank of America Corp.'s proposed takeover of troubled mortgage lender Countrywide Financial Corp. are pressuring the bank to provide assurances that Countrywide borrowers facing foreclosure won't lose their homes.
ADVERTISEMENT
The campaign is likely to intensify Monday as members of the Federal Reserve Board begin two days of public hearings on the proposed $4.1 billion stock deal.
The acquisition, which is expected to close in the third quarter, would make Charlotte, N.C.-based Bank of America the nation's largest mortgage lender in addition to the nation's largest consumer bank.
The Fed is required to consider whether the deal would harm consumers. It held its initial public hearing last week in Chicago.
In Los Angeles, four members of the Federal Reserve Board are scheduled to hear from officials with Bank of America and scores of speakers from state government, consumer and business groups, and labor unions, among others.
Calabasas, Calif.-based Countrywide said no one from the company was scheduled to testify.
Consumer advocates claim Countrywide has not been responsive enough to homeowners having trouble making their mortgage payments and say Bank of America needs to be more aggressive in helping borrowers.
"Our focus is not on killing the deal, but on making sure the deal works, not just for the corporations but for people in neighborhoods and borrowers," said Alan Fisher, executive director of the California Reinvestment Coalition, one of the advocacy groups set to testify.
Fisher's group wants Bank of America to give assurances that, if the deal goes through, it would modify mortgages into affordable fixed-rate loans and help borrowers who can't afford new loan terms unload their homes without hurting their credit.
Consumer groups have also sought assurances from Bank of America that it won't slash Countrywide's work force, something they say would slow efforts to help borrowers.
Among those who testified at that hearing in Chicago was the Rev. Jesse Jackson, who called on Bank of America to "make whole" Countrywide borrowers who contend they were harmed by unfair lending practices.
Bank of America said in Chicago that it would tighten mortgage lending standards once it completes the Countrywide acquisition and that it would cease making option adjustable-rate mortgages.
Such loans give borrowers the option to make a lower payment but can result in the unpaid portion being added to the principal balance.
___
yafu
17 years ago
"what's wrong in today's economy and a political culture dominated by corporate lobbyists."
Interesting thought to consider.
Do lobbyists write the law?
Surprisingly sometimes they do. Congress is too busy raising funds to get reelected and working out in the gym and lunching with, who else "constituents" aka lobbyists. But, what has Congress, Bush, Clinton, Obama done in the past to change any of that, ,,,,,? The status quo is a difficult thing to change.
Maybe Term Limits would help. Imagine if somehow the withholding tax could be repealed. Everyone had to pay up 1X in April. Maybe people would care how their tax dollars were spent.
Now That! I Would Pay To See. lol
up-down
17 years ago
Obama Blasts Countrywide Financial Over Bonuses, Housing Crisis
By Kim Chipman
March 31 (Bloomberg) -- Democratic presidential candidate Barack Obama called Countrywide Financial Corp., the biggest U.S. mortgage company, an example of what's wrong in today's economy and a political culture dominated by corporate lobbyists.
Obama, campaigning in Pennsylvania, criticized Countrywide for its role in the subprime mortgage crisis and denounced the millions of dollars the company's top executives will receive even as workers lose pensions and homeowners are forced to sell.
``What's wrong with this picture?'' Obama asked a crowd today in Lancaster, Pennsylvania. ``These are the folks who are responsible for infecting the economy and helping to create a home foreclosure crisis -- 2 million people may end up losing their homes.''
Obama, seeking to woo economically strapped voters away from rival Hillary Clinton in Pennsylvania, is the latest politician to take on Countrywide. The company in January agreed to sell itself to Bank of America Corp. for stock valued at about $4 billion after it couldn't overcome record losses and a cash shortage.
$28 Million
Bank of America, the second-biggest U.S. bank by assets, drew new ire from Senator Charles Schumer last week after agreeing to give Countrywide President David Sambol $28 million to stay when the companies merge and run the combined mortgage unit.
Schumer, a New York Democrat, asked Bank of America last month to reconsider Sambol's appointment. He renewed his criticism on March 28, calling the pay package excessive. Defaults and foreclosures are running at record highs, and lawmakers have blamed mortgage companies including Calabasas, California-based Countrywide for lending to people who couldn't repay and then not doing enough to help them avoid losing their homes.
Obama, in the midst of a six-day bus tour across Pennsylvania before its April 22 primary, is stressing his disdain for Washington lobbyists and depicting Clinton as beholden to special interests.
Clinton, a New York senator, ``thinks that Washington works the way it should, except it's Republicans'' in charge instead of Democrats, Obama said at a town hall meeting last night in Harrisburg. Clinton last month also criticized Countrywide's role in the mortgage crisis.
Lobbying Lawmakers
Obama today pointed out that mortgage companies have spent almost $200 million lobbying lawmakers to oppose tighter regulations on their industry.
He said financial meltdowns amid lax federal oversight have almost come to be expected ``because no one in Washington seems to be outraged about it.''
The Illinois senator also commented on the Bush administration's proposal to overhaul U.S. financial regulation, saying the plan doesn't go far enough.
``George Bush finally figured out that we need to maybe have some oversight of the financial markets,'' Obama said. ``But he's not making regulations any tighter. He's not preventing the predatory lending that's responsible for so many of these problems.''
Obama has received $168,584 from the mortgage industry, which includes Fannie Mae and Freddie Mac. That is more than any other 2008 presidential or congressional candidate except Clinton, who took in $199,315, according to the Center for Responsive Politics, a Washington-based research group that tracks political giving.
http://www.bloomberg.com/apps/news?pid=20601103&sid=a6JqHzxw9SzU&refer=us
makesumgravy
17 years ago
Don't be fooled..........this will assure the price is coming back down. Lots of money for employee pay outs from the market. Instead of paying salaries from generated revenues they want the market to pay them.
As filed with the Securities and Exchange Commission on March 24, 2008
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
COUNTRYWIDE FINANCIAL COPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization) 13-2641992
(I.R.S. Employer
Identification No.)
4500 Park Granada
Calabasas, CA
(Address of Principal Executive Offices)
91302
(Zip Code)
Countrywide Financial Corporation
401(k) Savings and Investment Plan
(as amended and restated effective January 1, 2007)
(Full title of the plan)
Sandor E. Samuels, Executive Managing Director and Chief Legal Officer
4500 Park Granada
Calabasas, CA 91302
(Name and Address of Agent For Service)
(818) 225-3505
(Telephone number, including area code, of agent for service)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x Accelerated filer o
Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o
CALCULATION OF REGISTRATION FEE
Proposed Maximum Proposed
Title of Securities Number of Shares to Offering Price Per Maximum Aggregate Amount of
to be Registered be Registered Share2 Offering Price3 Registration Fee
Common Stock, par value $.05 per share 1 8,000,000 shares $4.23 $33,840,000 $1,330
1 Includes the rights associated with the Registrant’s Common Stock.
2/3 In accordance with Rule 457(h) under the Securities Act of 1933, the offering price has been calculated on the basis of the average of the high and low prices for the Registrant’s Common Stock as reported by the New York Stock Exchange on March 17, 2008.
Note: In addition, pursuant to Rule 416(c) of the Securities Act of 1933, the registration statement covers an indeterminate amount of interests to be offered or sold pursuant to the employee benefit plan described herein.
--------------------------------------------------------------------------------
Copyright © 2008 QuoteMedia. All rights reserved. Terms of Use.
Market Data powered by QuoteMedia, www.quotemedia
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17 years ago
F.B.I. Opens Criminal Inquiry Into Countrywide
By RAYMOND HERNANDEZ
Published: March 8, 2008
WASHINGTON — Federal agencies have opened a criminal inquiry into Countrywide Financial for suspected securities fraud as part of the continuing fallout over the mortgage crisis, government officials with knowledge of the case said on Saturday.
The Justice Department and the Federal Bureau of Investigation are looking at whether officials at Countrywide, the nation’s largest mortgage lender, misrepresented its financial condition and the soundness of its loans in security filings, the officials said.
The investigation — first reported on Saturday in The Wall Street Journal — is at an early stage, said the officials, who spoke on the condition of anonymity because they were not authorized to discuss ongoing criminal matters. It is unclear whether anyone will ultimately be charged with a crime.
Richard Kolko, a spokesman for the F.B.I., declined on Saturday to confirm whether the agency had started an investigation of Countrywide related to its securities filings.
A Countrywide spokeswoman, Susan Martin, said, “We are not aware of any such investigation.”
The inquiry comes as the F.B.I. investigates 14 companies as part of a wide-ranging review of business practices in the troubled mortgage industry.
In that broader investigation, the F.B.I. is looking into possible accounting fraud, insider trading or other violations in connection with loans made to borrowers with weak, or subprime, credit.
The inquiry into the companies began last spring. It involves companies across the financial industry, including mortgage lenders, loan brokers and Wall Street banks that packaged home loans into securities. It is unclear when charges, if any, might be filed.
As part of that investigation, the F.B.I. is cooperating with the Securities and Exchange Commission, which is conducting about three dozen civil investigations into how subprime loans were made and packaged and how securities backed by those loans were valued. Several state prosecutors are also investigating mortgage industry practices.
For years, the F.B.I. has been warning that mortgage fraud is a significant and growing problem. In the 2006 fiscal year, it documented 35,600 reports of suspected mortgage fraud, up from 22,000 the year before and 7,000 in 2003.
For the most part, the cases the F.B.I. has brought so far have focused on local or regional mortgage fraud rings that involve speculators, loan officers, brokers and other housing professionals.
State officials have been active in bringing mortgage cases.
The New York attorney general, Andrew M. Cuomo, is investigating whether Wall Street banks withheld damaging information about the loans they were packaging. Prosecutors in Connecticut, Illinois, Massachusetts and Ohio have also been looking into the industry.
Countrywide, beleaguered by bad home loans, is in the process of selling itself to Bank of America for about $4 billion. It reported a loss of $422 million for the fourth quarter of 2007.
The company was forced in August to draw down its entire $11.5 billion credit line from a consortium of banks because it could no longer sell or borrow against home loans it had made. It has laid off about 11,000 employees since last summer.
http://www.nytimes.com/2008/03/08/business/08cnd-lend.html?ex=1362718800&en=3682ff5b2979717a&ei=5088&partner=rssnyt&emc=rss
up-down
17 years ago
FBI probes Countrywide for possible fraud:
Proof of collusion could scuttle Bank of America deal
By Riley McDermid, MarketWatch
Last update: 10:25 a.m. EST March 8, 2008
NEW YORK (MarketWatch) -- Besieged subprime lender Countrywide Financial Corp. is being investigated
The Wall Street Journal report said the probe focuses on whether Countrywide's management misrepresented the quality of its mortgages in routine securities filings, which may have led investors to overvalue the loans it then securitized into more than $100 billion worth investment vehicles between 2004 and 2007.
Banks and lenders lost billions of dollars over bad bets on mortgage-backed securities and analysts estimate they will continue to stanch the bleeding well into 2008.
The FBI inquiry will also take a closer look at how common fraud was in Countrywide's origination process, the report quoted unnamed sources as saying. The agency is currently investigating more than a dozen subprime lenders about their origination and securitization processes and possible conflicts of interest between the lenders and Wall Street.
Countrywide (CFC) said it had not been informed of any ongoing inquiry.
"We are not aware of an investigation being conducted by the FBI," Countrywide spokeswoman Jumana Bauwens told the newspaper.
The Calabasas, Calif-based lender is already facing multiple lawsuits in several states regarding its origination and foreclosure policies. A separate class action lawsuit filed by a consortium of government pension funds has accused Countrywide of behavior similar to that reportedly being investigated by the FBI.
A filing in that lawsuit says the lender "misled investors by falsely representing that Countrywide had strict and selective underwriting and loan origination practices, ample liquidity that would not be jeopardized by negative changes in the credit and housing markets, and a conservative approach that set it apart from other mortgage lenders."
Countrywide was also being investigated by the Securities and Exchange Commission for allegedly improper accounting.
Problems would hit merger
If the FBI does find Countrywide misled investors, it could scuttle a planned $4 billion acquisition of the lender by Bank of America, slated to be completed in the third quarter.
Although Bank of America (BAC) has repeatedly said it has priced in the lender's financial woes and potential legal troubles, proof of a management plan to overstate the value of Countrywide could mean all bets are off.
Bank of America reiterated earlier this week that the deal was still on. The bank declined to comment to the Wall Street Journal.
http://www.marketwatch.com/news/story/fbi-probes-countrywide-possible-securities/story.aspx?guid=%7B4145FC3B-8CBC-4030-A8A8-FEE8B2C879F7%7D
This story was also on NBC nighty news 3-8-08
http://www.msnbc.msn.com/id/3032619/#23535686
up-down
17 years ago
Countrywide Sees Pay-Option Loan Risk
By ALEX VEIGA 03.03.08, 9:13 PM ET
LOS ANGELES - Countrywide Financial Corp. has seen mortgage defaults rise as the housing market went from boom to bust, but the nation's largest home loan provider says it could have more trouble ahead with a particularly risky slate of loans - pay-option adjustable rate mortgages.
Pay-option loans give borrowers the option to make a lower payment but can result in the unpaid portion being added to the principal balance. They also have the potential to provide high yields to investors who purchased the loans from lenders during the housing boom.
As of the end of December, Countrywide had nearly $29 billion in pay-option loans, with about $26 billion of the total having grown beyond their original loan amount, the company said in a filing late Friday with the Securities and Exchange Commission.
"Our borrowers' ability to defer portions of the interest accruing on their loans may expose us to increased credit risk," the company said. It added that its risk could be greater because the amount of deferred interest on pay-option loans was on the upswing.
The company noted some 81 percent of the loans were made out to borrowers who provided little or no documentation on their income. As of the end of December, 71 percent of borrowers with pay-option loans were electing to make less than full interest payments.
Even though borrowers with such loans had the option to just make interest payments, many were increasingly missing payments, the company said.
Some 5.71 percent of the loans based on unpaid principal balance were at least 90 days late as of Dec. 31, up from 0.65 percent a year earlier.
Like other lenders, Countrywide has since tightened its lending criteria and curtailed lending of so-called no documentation loans. It has also ramped up programs aimed at modifying loans for borrowers before their loans reset to higher rates.
At the close of last year, Countrywide's total loan servicing portfolio was valued at about $1.5 trillion.
Total delinquencies as a percentage of the number of loans was 6.96 percent, up from 5.02 percent at the end of the prior year. Some 1.04 percent of loans were facing foreclosure, up from 0.65 percent a year earlier.
California accounted for the highest portion of Countrywide loans, according to unpaid principal balance, of any state, the lender said.
The state had around $389 billion in loans, followed by Florida, with loans totaling around $113 billion.
Texas, New York and New Jersey rounded out the list.
The company's banking unit, which also funds some of Countrywide's home loans, had $87.1 billion loans held for investment on its books at the end of the year.
A large portion of that stemmed from loans made in California and Florida, once-hot housing markets that have now been battered by falling prices and rising mortgage defaults and foreclosures.
About $37 billion in loans were made to borrowers in California. Another roughly $6 billion pertained to loans in Florida.
Virginia accounted for about $3 billion of the total, the company said.
In January, Bank of America Corp. (nyse: BAC) agreed to purchase Countrywide for about $4 billion in stock. The transaction is projected to close in the third quarter.
Countrywide previously reported a loss of $422 million in 2007's fourth quarter and a loss of $1.2 billion in the third quarter, as higher defaults forced the lender to boost its provisions for anticipated losses.
Shares of Countrywide slipped 14 cents, or 2.2 percent, to $6.17 on Monday.
http://www.bloomberg.com/apps/news?pid=20601109&sid=aHV3_NAGObAQ&refer=news
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