Four years after Countrywide Financial became a symbol of the mortgage meltdown, the company and its questionable dealings have become a potent political issue in the Santa Clarita congressional district held by Republican Howard “Buck” McKeon.
Congressional investigators allege that McKeon and Rep. Elton Gallegly, a Republican colleague whose neighboring district includes much of Ventura County, got cut-rate home loans under a Countrywide VIP program known as “Friends of Angelo,” named for the now-defunct Calabasas lender’s former chief executive, Angelo Mozilo.
McKeon received a $315,000 mortgage refinance in 1998 as his family-owned business, Howard & Phil’s Western Wear, was going through a Chapter 11 bankruptcy, according to documents reviewed by The Times. McKeon was no longer involved in the daily operation of the business after his 1992 election to Congress, but he had retained a stake in it. He saw his income plummet in the years before refinancing his Stevenson Ranch home, financial disclosures and bankruptcy filings show.
In spite of that, McKeon received a favorable rate and wasn’t required to produce documentation proving he could repay the mortgage — terms ordered by Mozilo himself, according to documents subpoenaed for a House inquiry.
This looks pretty greasy as the Friends of Angelo program previously sunk the political careers of Connecticut Senator Chris Dodd and Senator Kent Conrad.
So, what did McKeon do? Did he and his wife, Patricia receive favorable treatment because he was a Member of Congress?
Did he receive a mortgage after fling for a bankruptcy and not be required to supply needed documents on order to qualify?
One email written by a Countrywide staffer included this instruction on McKeon’s loan: “Per Angelo — take off 1 point, no garbage fees, approve the loan and make it a no doc.” Another notation recorded by a Countrywide employee said McKeon seemed “edgy” and “wants to close ASAP,” according to documents obtained by Issa.
McKeon’s office said McKeon had never met or spoken to Mozilo and was “shocked and angry to hear this, as he had no knowledge of the Friends of Angelo designation.” In an interview in his Capitol Hill office last month, McKeon said he had paid the “garbage fees” and did not get a point off on the loan.
“In other words, I didn’t get a deal,” he said.
Some mortgage experts who reviewed loan documents provided to The Times by McKeon’s office disputed that. (None of the reviewers were told who the borrower was.)
In any case, McKeon is in a “safe” Republican district and his only real opponent was Rep. Elton Gallegly who was redistricted into McKeon’s Congressional District. Gallegly has already announced his retirement.
This scandal of sorts will probably have more of an effect on Patricia McKeon’s Assembly campaign since she benefited from the same mortgages.
The McKeons bought the Stevenson Ranch property, a foreclosed home, in August 1997 for $261,000, putting down 10% and getting a loan of $234,900, property records show. In January 1998, they took out a home equity loan of $31,500 through Valencia National Bank, where McKeon had previously sat on the board.
That October, Countrywide approved the $315,000 refinance loan. The loan paid off McKeon’s original mortgage loan and the home equity loan and gave him $46,894 in cash.
Five months later, the couple took out another home equity loan through Valencia, in the amount of $30,000.
Stay tuned as more details of the flap emerge.