I recently read an article by Sharon Smith on the Socialist Worker website. It contained the following information:
- A dozen former executives from mortgage lender Countrywide (which is also now owned by BoA), whose predatory lending practices played a key role in precipitating the sub-prime mortgage crisis, have launched a new corporate entity, the Private National Mortgage Acceptance Company–with a strategy to make exorbitant profits from individuals unable to keep up with their monthly mortgage payments.
Known as PennyMac, the company buys overdue mortgages at steep discounts from the federal government, which took them over from distressed banks. PennyMac then contacts the homeowners to negotiate new terms–and either pushes them into foreclosure or negotiates lower interest rates. It’s a win-win equation for PennyMac.
One of PennyMac’s leaders, Stanley L. Kurland, is a former president at Countrywide and an architect of the classic sub-prime mortgage formula–mortgages with low “teaser” interest rates that later rose sharply. During the six years before Kurland left Countrywide in late 2006, Countrywide’s portfolio increased from $62 billion to $463 billion. Kurland sold $200 million in stocks shortly before leaving Countrywide. Now he stands to make many millions more reaping profits from the same category of people whose lives he helped to destroy.
Federal banking officials nevertheless defend recruiting executives like Kurland to rebuild the financial system. As the New York Times explained: “[Federal officials] said that it was important to do business with experienced mortgage operators like Mr. Kurland, who know how to creatively renegotiate delinquent loans.”
It so happens that I once had a temp job working for Countrywide. (I didn’t last long, I’m proud to say.) I worked at an office they had in L.A. It was located at the foot of the beautiful Santa Suzannah mountains, where a small nuclear reactor melted down in 1959 (but that’s another story). I was hired along with about thirty other temps. We had to go through a week-long training course before we could start work. At one of the these training classes, a high-level executive came to talk to us. She told us quite frankly that Countrywide got all of its income from charging fees for late mortgage payments. (I will never forget the look of glee on this woman’s face as she explained this to us.) Perhaps I was in a state of denial, but it was only after I left this job that I began to put two and two together. If this was their sole source of income, then they had to be luring people into buying mortgages that they couldn’t really afford. People who have difficulty making their payments are likely to default sooner or later. What Countrywide was doing was unsustainable, just as a Ponzi scheme is unsustainable.
Countrywide was a purely parasitical organization. In my opinion, what they did was on the same level as what Bernie Madoff did. The only difference is that what Countrywide did was legal, while what Bernie Madoff did isn’t. Stanley L. Kurland deserves to be in prison just as much as Madoff does. Instead, the Obama administration is looking to him, and others like him, to help revive the economy.
The Spanish Prisoner 
March 14, 2009 at 10:03 am |
Good point.
April 10, 2009 at 6:12 pm |
Angelo, you gave your WORD ! ! !
By praetorian5
After the murder of our oldest son and the subsequent financial firestorm that ended in us losing our home to foreclosure,(and this was AFTER, a plan was worked out with C-wide to come current), I spoke with Mr. Mozilo, PERSONALLY, on the phone, at his office…..and the man assured me that although they sold my home illegally, he would personally see to it that we got our home back. Yeah, right! In a pig’s eye. They assigned us a supposed in-house attorney? (somewhere in Santa Monica), who then in turn immediately sent us an unlawful detainer. I immediately filed suit against C-wide and the U/D was rescinded. We asked where to send the pmts and how much until the modification was complete. The attorney told us to hold onto the funds for the initial pmt on the mod, so we did. The mod was introduced in Sep,’08 and was tiered, putting us in a worse situation than we could imagine. Needless to say, we rejected it. Hell, The numbers weren’t even consistent from one page to the next. Anyway, They sought a demurer on the complaint, seven months after it was filed, (isn’t that kind of LATE?), citing non-payment, AFTER they told us to hold the payment until the ink was dry on the modification, and the #@%K&%* judge granted it, without allowing me to speak because although I have been married to my wife for 31 years and the home was purchased with my G.I. bill, and the fact that the title is in her name, I am not a lawyer. Now I have to refile. We are tired. This is the end of our American dream. My question is this….and it is for Mr. Mozilo…….were you just blowing me off when you PROMISED my family we would get our home back, that was taken unethically, and illegally from us? Or were you just passing the buck to the mysterious Dan Whitehead? OR……did you really mean what you said, and this is just some rogue attorney out to put another feather in his cap? My father always told his sons that a MAN’S word is his bond and right now your word is about as good as waterbased mucilage. Mr Mozilo……….WHY?