Members Dig Into Mortgages

Countrywide Loans at Issue

Posted June 16, 2008 at 6:33pm

Clarification Appended

Newly released financial disclosure reports show at least a dozen House Members hold loans issued by Countrywide Financial, which last week was reported to have provided special treatment to two Senate Democrats.

In the wake of those allegations, Rep. Jeb Hensarling (R-Texas) on Monday called for a series of hearings to determine whether Members received similar perks.

“With all of the recent turmoil we have been experiencing in our mortgage market, I am concerned about allegations of preferential treatment afforded to some individuals in Congress regarding their mortgages,” Hensarling, who chairs the Republican Study Committee, wrote in a “Dear Colleague” letter released Monday.

“Although these reports are still merely allegations, it is disconcerting to think Members of Congress might be knowingly or unknowingly receiving preferential treatment while millions of hardworking Americans struggle to repay their mortgage debts and cope with $4/gallon gasoline and soaring foods prices,” he added.

Hensarling said he would request the hearings in a follow-up letter to Speaker Nancy Pelosi (D-Calif.) and “the appropriate chairmen,” but he did not specify which committees he would seek hearings from.

A Democratic leadership aide, who asked not to be identified, said no decisions had been made late Monday afternoon.

“If there is concern by the committees, they will inform the leadership,” the aide said.

As first reported by Portfolio.com last week, Countrywide officials allegedly conspired to provide special mortgages — including waiving fees and shaving thousands of dollars from loans for multiple properties — for a select group of “VIPs” that included both Sens. Kent Conrad (D-N.D.) and Chris Dodd (D-Conn.), who have denied any wrongdoing.

No other lawmakers were named in the article.

According to 2007 financial disclosures released Monday, at least a dozen House lawmakers — 66 Members had yet to file their financial documents — currently maintain loans from the lender.

Among those Members with loans, several noted that the mortgages were obtained prior to their election to the House, including Rep. Thelma Drake (R-Va.).

“She obtained the loan in 2000 before she was a Member of Congress, and she obtained it through a local broker,” Drake spokesman Travis Burk said. Drake listed a mortgage worth $15,001 to $50,000.

Rep. Connie Mack IV (R-Fla.), who has requested an extension on his 2008 filing, listed two mortgages with Countrywide in 2007 documents, both for a home in Alexandria, Va.

“Congressman Mack has never received any special treatment from [Countrywide] for any loans he’s received. He actually got the loans before he was a Member of Congress,” spokeswoman Stephanie DuBois said.

Other offices, including those of Reps. Peter DeFazio (D-Ore.) and James Langevin (D-R.I.), stated that the loans did not originate with Countrywide but were purchased by the bank at a later date.

Approximately five years ago, Domestic Bank provided Langevin with a mortgage worth $50,001 to $100,000 for a Warwick, R.I., property, according to financial disclosures forms. It was later sold to Countrywide Financial.

Rep. Tom Feeney (R-Fla.) holds a Countrywide mortgage worth $100,001 to $250,000 for an Orlando, Fla., property, which was also sold to the mortgage broker, according to spokeswoman Pepper Pennington.

“The lender at the time of the refinance and who Tom and Ellen borrowed from was Southern Security Mortgage Co., not Countrywide. Southern Security later sold the loan to Countrywide,” Pennington said. “Tom and Ellen Feeney have never called a CEO or official of a national lender to request special treatment and Tom believes it would be inappropriate to do so.”

An aide for Rep. Adam Putnam (R-Fla.) said the lawmaker intends to review his loans. “I’m sure he will double-check the terms,” spokesman Keith Rupp said.

“He did not receive any favorable treatment from Countrywide. … He had been a customer of Countrywide since before he came to Congress and he in fact received the mortgage by calling the 1-800 number,” Rupp added. Putnam has a mortgage worth $250,001 to $500,000 for a property in Southeast Washington, D.C.

Rep. Shelley Berkley (D-Nev.) lists two mortgages with Countrywide, including one valued at $15,001 to $50,000 for a Las Vegas property. According to a spokesman, Berkley received that mortgage, on a family home, before her election to Congress.

A second mortgage valued at $100,001 to $250,000 is listed solely in her husband’s name for another Las Vegas property. “The Congresswoman’s husband went through the normal process to qualify for the loan,” spokesman David Cherry said.

Conrad, who announced Saturday he will donate $10,500 to charity after reviewing internal Countrywide e-mails that revealed the company waived fees on one of his mortgages, has said he would welcome a Senate Ethics Committee investigation into the matter.

According to news reports, Conrad refinanced his Bethany Beach, Del., vacation home in 2004 with a $1.07 million loan, at which time Countrywide officials reduced fees by nearly $11,000. He said he was unaware of the discount until Portfolio.com’s report last week.

He also said he will refinance a second mortgage on an eight-unit apartment building in Bismarck, N.D., that he owns with his brothers, stating that the Countrywide- issued loan appears to violate the company’s rules that limit such loans to buildings of four units or fewer.

According to reports, Countrywide similarly waived about $2,700 in costs for two loans to Dodd, while also allowing the Banking, Housing and Urban Affairs chairman to procure lower interest rates than initially available without charging additional fees for the service. The lower rates reduced the overall costs of the loans by about $58,000 and $17,000, respectively.

Clarification: June 17, 2008

The article incorrectly described the timing of Rep. James Langevin’s (D-R.I.) mortgage. Approximately five years ago, Domestic Bank provided Langevin with a mortgage worth $50,001 to $100,000 for a Warwick, R.I., property, according to financial disclosures forms. It was later sold to Countrywide Financial.