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Sept. 2, 2014 SIGN IN | REGISTER
Roll Call

Mortgage Probe Ensnares GOP

Tom Williams/CQ Roll Call File Photo
House Oversight and Government Reform Chairman Darrell Issa is treading on politically perilous ground as he vows to continue a probe that has now identified three House Republicans.

When Rep. Darrell Issa (R-Calif.) started his investigation into a controversial "VIP" mortgage program, he struck partisan gold by tying two powerful Senate Democratic chairmen to mortgage giant Countrywide's alleged attempts to give preferential treatment to influential policymakers.

But after more than three years of blasting the loan program as "public corruption" and "bribery," the House Oversight and Government Reform chairman is treading on politically perilous ground as he vows to continue the probe, which has now identified three House Republicans, including the party's campaign chief and a fellow committee chairman, as VIP members.

"The Oversight Committee continues to press forward with its now more than three-year-long probe of the Countrywide VIP program. Even as the investigation yields new developments, numerous questions about the VIP program remain unanswered. Critics of the investigation have not and will not deter Chairman Issa's commitment to exposing what occurred," Issa spokesman Frederick Hill said in a statement.

The turn in the investigation had Rep. Elijah Cummings (Md.), the top Democrat on the Oversight panel, gleefully pointing to Issa's previous statements. And Issa's office did not make a statement about his intentions until after Cummings wrote the chairman a letter asking for clarification on how the probe would proceed.

Two California Republicans, Armed Services Chairman Buck McKeon and retiring Rep. Elton Gallegly, were named Friday by the Wall Street Journal as having been referred by Issa to the House Ethics Committee for involvement in a Countrywide "Friends of Angelo" program named for the now-defunct company's former CEO Angelo Mozilo.

The Associated Press reported Tuesday that Issa also referred National Republican Congressional Committee Chairman Pete Sessions (Texas) to the Ethics Committee because he received a loan under the VIP program. Issa also referred a fourth Member, Rep. Edolphus Towns (D-N.Y.), to the Ethics panel; Towns has previously denied any impropriety.

Sessions spokeswoman Torrie Miller said the Congressman "specifically requested" that he not receive preferential treatment "out of an abundance of caution in managing his personal finances."

Miller added: "Everything about his experience suggests that his simple request was honored and that he was treated like every other customer. Congressman Sessions welcomes providing any details requested by any House Committee about this loan, which no longer exists."

A spokeswoman for McKeon also said he is "committed to transparency on this he believes that the actions of Countrywide should be looked into and wants to get to the bottom of what Countrywide did to his loan 13 years ago."

A spokesman for Gallegly said the California Republican received one loan from Countrywide for $77,000 at 5.75 percent interest in 2004, which he paid off in 2005. The spokesman said Gallegly denies any wrongdoing.

Issa has aggressively probed the Countrywide program, which allegedly offered Members discounts on mortgages as a way to curry favor, since his time as ranking member of the panel in the last Congress.

Previously, Towns, Senate Budget Chairman Kent Conrad (D-N.D.) and former Senate Banking Chairman Chris Dodd (D-Conn.) insisted they did not receive preferential treatment or were not aware of such treatment if they did. The Senate Ethics Committee in August 2009 concluded that there was "no credible evidence" that Conrad and Dodd had knowingly participated in a loan program not available to the public.

Still, Issa has blasted the Countrywide program as "influence buying" and "public corruption."

On Jan. 4, 2011, Issa said, "Countrywide has basically bribed, through their VIP program, they bribed huge amounts of people" in an interview on Fox News, according to a timeline of his statements on the issue provided by Democrats.

At a September 2009 hearing, Issa said the matter was important enough to require investigation by the Oversight Committee beyond any reviews by the House and Senate ethics panels.

Before Issa vowed Tuesday to keep investigating, Cummings sent a letter to the chairman asking how he planned to proceed, given the reports about McKeon and Gallegly. In the letter, Cummings asked whether Issa planned to publicly identify the lawmakers in question and how he intended to proceed with scheduled interviews of Countrywide officials because he also asked the House Ethics Committee to open its own inquiry in December.

Cummings opposed a subpoena issued by Issa that revealed the four Members received VIP loans, questioning in a Feb. 24, 2011, letter whether the committee was "targeting Members of Congress" in its investigation.

Though McKeon and Gallegly have denied any knowledge of being in the program, Cummings referenced subpoenaed documents that contain correspondence between McKeon and Countrywide employees that directly mention the VIP program.

"A follow-up letter sent to Chairman McKeon provided forms for him to sign and stated: 'Thank you for allowing COUNTRYWIDE's VIP TEAM to assist you with your financing needs on the above referenced property,'" Cummings wrote.

Other documents indicated McKeon was referred to the mortgage discount program by Michael J. Ferrell, who was then the head lobbyist at the Mortgage Bankers Association of America and had orchestrated the group's effort to block higher fees on mortgage lenders.

McKeon appears to have received a Countrywide mortgage for $315,000, and Mozilo instructed the individual handling his loan to "take off 1 point, no garbage fees, approve the loan and make it a no doc," according to documents reviewed by Cummings.

Issa has two interviews scheduled this week with the Countrywide employees who processed McKeon's loan.

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