Mozilo on distressed borrower's appeal for help: "disgusting"

In an e-mail inadvertently sent to a distressed homeowner trying to avoid foreclosure, embattled Countrywide Financial Chairman Angelo Mozilo lashed out at an online counseling service for distressed borrowers, calling the website's efforts "unbelievable" and "disgusting."

"This is unbelievable," Mozilo wrote in the e-mail, which was posted on a forum on the website LoanSafe.org. "Most of these letters now have the same wording. Obviously they are being counseled by some other person or by the internet. Disgusting."

Read full coverage of the e-mail flap from the Los  Angeles Times here.

Mozilo was responding to an e-mail from Daniel Bailey, who wrote a "hardship letter" to Mozilo and 16 other Countrywide employees. Bailey acknowledged he wrote the letter using a format provided by the website LoanSafe.org.

In his original e-mail, Bailey requested a loan modification, saying he was unable to make rising payments on his adjustable rate mortgage. "The main reason that caused me to have a hardship and to be late is my misunderstanding of the original loan," Daniel wrote in his e-mail to Countrywide. "I was told that after the first year of payments, I would be able to refinance to a better fixed rate -- then the bottom fell out of the industry. My payments for that first year were on time. I also lost my second income due to physical conditions in a very physically demanding industry."

At least two other housing blogs wrote about the exchange Tuesday. On Tuesday evening, Countrywide issued the following statement: "Countrywide and Mr. Mozilo regret any misunderstanding caused by his inadvertent response to an e-mail by Mr. Bailey. Countrywide is actively working to help borrowers, like Mr. Bailey, keep their homes."

After receiving the "disgusting" e-mail comment from Mozilo, Bailey wrote a second e-mail to Countrywide, acknowledging he had consulted an online forum for advice in drafting a hardship letter to Countrywide: "In attempting to come to some way to save my home, I took the advice on forming my hardship letter from a forum. Why? Not all of us have been to a university to study business and we need some help in dealing with these matters. (perhaps, if we had, we would not have fallen for what we did, to start with).

"To have recieved the e-mail that I did, stating by one of your employees, that what I did was 'disgusting' and 'unbelievable' has been just about the final straw. I am trying to do the right thing, I am trying with every ounce of what I have left in me not to blow my brains out over losing the home I have been in for 16 years. The only hope I had left was that perhaps the countrywide company did want to help the people it is servicing ... then I receive that responce to my letter. Just great. Now I know, that it is all a nice fat laughing matter to those who are supposed to help."

Mozilo has been heavily criticized for reaping huge gains by selling Countrywide stock while the company's value was collapsing and the mortgage industry was in crisis. The Times reported he was paid $48 million in compensation in 2006, and cashed in stock options worth $140 million in 2006 and 2007.

LoanSafe founder Moe Bedard said he founded the website to help homeowners find information about working with their lenders to avoid foreclosure. "I knew there was nothing on the Internet to help people work out their mortgage loans," he told L.A. Land. Among other resources, the website gives borrowers e-mail addresses and phone numbers for bank executives who handle loan modifications. It also provides sample "hardship letters" to help borrowers make a written appeal for a loan modification. Bedard says his advice has helped 80 homeowners avoid foreclosure.

Bedard's sample loan letter begins: "I am writing this letter to explain my unfortunate set of circumstances that have caused us to become delinquent on our mortgage. We have done everything in our power to make ends meet but unfortunately we have fallen short and would like you to consider working with us to modify our loan. Our number one goal is to keep our home and we would really appreciate the opportunity to do that."

Bedard said he encourages distressed borrowers to use the format of the letter and then to "make it your own, and don't be too lengthy."

Bailey's e-mailed hardship letter to Countrywide, which he posted online, begins: "I am writing this letter to explain my unfortunate set of circumstances that have caused me to become delinquent on my mortgage. I have done everything in my power to make ends meet but unfortunately I have fallen short and would like you to consider working with me to modify my loan. My number one goal is to keep my home that I have lived in for sixteen years, remodeled with my own sweat equity and I would really appreciate the opportunity to do that. My home is not large or in an upscale neighborhood, it is a “shotgun” bungalow style of only 900 sq. ft. built in 1921. I moved into this home in May of 1992 … this was the same year I got clean and sober from drugs and alcohol, and have been ever since, this home means the world to me."

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com
Photo Credit: Getty Images

Comments

[KH]

I know we should feel sorry for this unfortunate situation, but shouldn't people take responsibility for their actions. Like the article stated, shouldn't people understand what they are doing when they borrow hundreds of thousands of dollars. Why are the banks the bad guys all of a sudden. They were just trying to make money for their shareholders. The speculators are the ones who made the decision to borrow at a low rate and hopefully sell at a profit. These people speculated and loss. It's amazing how nobody felt sorry for them when they were making gobs of money. Now the tide has turned and they want sympathy or forgiveness. I just don't buy it. People need to be responsible for there actions.

[perks]

At last the truth comes out that we all already knew: Angelo is a bad, bad man. Bad man. Bad. Bad. Let me say that one more time. Bad.

I at least hope he had a shred more respect for his customers when he was reaping millions upon millions of dollars from them. Somehow I doubt that.

Speaking of "disgusting"...I made the mistake of viewing that photo in full-size mode. Yecch.

[david]

Whoops!!!!

How do you get to be Chairman and not even know how to work your email? Oh, I remember now, you have people for that. And they wonder why they are seen as out of touch.

That said, Mozilo's right, actually. Just inexcusably sloppy.

[greg]

When is Angelo's perp walk?

[Pat]

Talk about bad PR at the worst time for Countrywide...but seriously, encouraging homeowners in distress to spam top management at the company with form letters that are emotionally appealing but completely devoid of content is hardly responsible advice. Don't expect Angelo to bail you out between his 11am tee time and 4pm tanning salon appointment. Talk to the appropriate asset manager, and negotiate a solution. There are people who actually care (somewhat) at these companies, but approach the problem in a level-headed way; explain how their working with you would benefit both parties, since otherwise they'd just have another foreclosure on their hands. They don't want this. They're up to their eyeballs in them as it is, so they'll work with you.

Bad advice, but that's what gets you in the papers, I guess.

[bkl]

He bought the house in 1992. He doesn't mention any refinancing. So what were loan rates in 1992 and why would it take 16 years for a reset? Something seems wrong about the email.

[Arti]

Much as we must admit (1) that Mozillo is a profiteer who was at the very top of the ponzi scheme, and (2) that his characterization of that website's services is curiously over the top, how exactly does that exonerate the greedy or reckless (take your pick) home buyer? Mozillo was at the top of the ponzi scheme, the buyer was at the bottom of it; they're still part of the same scam, one was just far cleverer about getting his dough.

[E]

So how much cash did this guy pull out of his house?

Need more details.

Wouldn't ever expect any kindness from Mozilo...he's laughing all the way to the bank.

[RG]

I agree that we all need to be personally responsible for our actions. That said, such people as Mozilo ought to be held personally responsible for what they have put others through. The mortgage industry has been rife with lies and misrepresentation, preying on others with less knowledge than they have. That misfortune happens to people is fact. That people like Mozilo, credit card companies, and other predators take advantage of others' troubles and ignorance is also fact. The ignorance of the borrower does not excuse the actions of the predator, or vice versa.

Which is why we need laws (with teeth) that will regulate the credit industry. An unregulated market will always tend to excess, with people getting hurt by the actions of others. Banks will make unwise loans to people who can't afford it, borrowers will borrow too heavily at seemingly generous terms which can become predatory in an instant, and speculators will do what they can to cause -- and cash in on -- human misery.

Yes, we should all be responsible for our actions. But even God regulated the market for ancient Israel, laying down laws that mitigated the harsh character of a perfectly free market.

Not a bad example to follow.

[The Duke of Moral Hazard]

Isn't it a wonderful life after all? Dan Bailey writes a note to Angelo Potter who cc's Steve Bailey, the "Senior Managing Director and Chief Executive Officer of Loan Administration."

There was a story a while back about how borrowers in another state were counselled to harrass CW execs at their homes -- and the harrassment worked. Bad advice that got results. Moral Hazard at its finest.

[Jenna]

I feel sorry for the guy, but remind me again why Countrywide is "supposed" to help homeowners get out of contracts that they voluntarily entered into? If you don't understand something, then you either don't sign it or hire someone to explain it to you.

[shell]

There are many other borrower types in this mix who are not getting through to the decision makers. I.E. People with things like unexpected medical hardships, or property damage, etc.. I imagine this borrower emailed the top brass, because no one individual gets assigned to your case and they are using call centers in India who tell you that you have qualified for work-out and even tell you your new payment. Three weeks later you call because you didn't get the expected package, only to discover there was no work-out. They tell you they are addressing this recurring problem with the India call center which is giving out bad info. Documents keep disappearing and your previous conversations are not logged. BTW- hardship letters are asked for by Countrywide, so most people feel this is their one shot at being heard. It's understandable that they would turn to someone's advice on writing it.

What's truly "disgusting" is how Mr. Mozilo's testimony in March before the Committee on Oversight and Gov. Reform compares to his email response.

[I CAN READ THE FINE PRINT]

I have to ask the question. Why did I work hard and go to college?

I can't feel sorry for someone like that.

As a previous statement stated:
"That said, Mozilo's right, actually. Just inexcusably sloppy."

[arroyogrande]

"He bought the house in 1992. He doesn't mention any refinancing."

Hmmm...

"...so he wouldn't lose his home of 16 years. Bailey said he took out the adjustable-rate mortgage without realizing how it worked and had been told incorrectly that he could refinance after a year."

Sounds like a cash-out refi...he should have been at most 15 years away from paying off his house...and considering inflation, his monthly payment must have been WAY low. Looks like he might have "fallen victim" to the Liberate Your Equity disease that that been going around. What happened to the money? What did he spend it on?

I feel sad that someone in the mortgage biz as much as promised him that he'd be able to refinance in a year, and he didn't supposedly know much about the terms of his loan, but as KH said, when you borrow HUNDREDS OF THOUSANDS OF DOLLARS, should you read and understand what you are signing. I'm sorry, but "everyone else was doing it", "I trusted my loan officer", and "I was just so excited/emotional that I signed it anyway" just don't cut it for borrowing that much money, for a cash-out refi or for a home purchase.

I know that some of you have been numbed by the past 4 years of house prices in LA, but hundreds of thousands of dollars is still a lot of money for most people. I don't understand signing a loan for amounts like that when you don't understand or read the loan terms. "Everyone else is doing it" doesn't work when my kids want to stay up late. I don't understand how it can work as an excuse for borrowing hundreds of thousands of dollars you cannot pay back.

"received the e-mail that I did...has been just about the final straw...I am trying with every ounce of what I have left in me not to blow my brains out over losing the home I have been in for 16 years."

For those that have strong emotional attachments to your current house...would you resort to blowing your brains out if you were to lose your current house? I hope the guy does OK; however, that bit seemed over dramatic. Is a house worth 'blowing your brains out', especially if the reason it was in jeopardy was the result of a (presumed) cash out refinance that netted you $$$?

- arroyogrande

[Habib]

This is disgusting – that anyone would side with this borrower.

Yes Mozillo makes a lot of money but he is just a professional manager of a bank – he has a job just like most of you – it just happens to pay a lot more. He is not at the top of a “ponzi scheme” like some earlier miss-informed poster mentioned.

The bank itself and its shareholders have gotten killed on loans just like this – hard to figure out how they are the winner when billions of dollars or write downs and shareholder wealth are evaporating – not to mention the layoffs.

It looks to me like this bozo took some equity money out thinking he could do a quickie refi later….and …..we are supposed to feel sorry for this guy? If you ask me, he has made out great effectively stealing money from the bank. Yes CW was dumb to make the loan {HELOC?} in the first place but they are taking the loss now while this guy took his cash and bought boats / vacations / SUVs and whatnot and now wants “relief.”

The last time I bought a house – I had to sign stacks of documents line by line and then another stack saying that I understood what I was signing and then another saying that I was voluntarily signing the documents of my own volition……………… I am not sure how you could dumb this process down (ie “Regulate”) any more without including some sort of IQ or reading comprehension test.

I have yet to see a case of home foreclosure where the borrower was not totally responsible for the situation they were in. I am sure I will get sick later today reading all the “banks are evil”, “they preyed on people”, “we have to hold the industry accountable”, “we need regulation” posts on this blog. I will still probably read them anyway.

Just makes me sick.

[Moe Bedard]

This email is an inside look at inter office communications that was not supposed to be read or reported on. An email sent by a gentleman that was just trying to explain his hardship and set of circumstances that are causing him pain and suffering.

Yes, pain and suffering.

Dan, just like millions of homeowners across the country are suffering in their homes. Many can't sleep or eat right. Their performances at work are severely impaired by stress, lack of sleep and hope. Dan is human just like you and I and so are the millions that have suffered a foreclosure or are suffering.

People who just need a little help with their mortgage to save their sliver of the American Pie that they call home.

To many of you it is just a contract and a business deal. Dan signed the paperwork, so Dan should suffer his fate you say. OK, fair enough.

But who wins there. Who, YOU?!!!!!!! Let me clue you all in on something. There are millions and millions of Dan's out there and if we let them all suffer their fates, then you can kiss what is left of our economy good bye and that does not address the social devastation that will result from this.

The sociological impact on families and communities from this is just devastating. That's what it really all comes down to in the end, the impact on our society as a whole, not just with Dan and the Mozilo's of the world.

[ProfessorShays]

Frankly, while we all understand that the importance of being responsible for our actions, all one has to do is to view a few Countrywide commercials to understand that the sort of lending they promote suggests ignoring the financial realities associated with borrowing. The term "equity stripping" and "Countrywide Financial" are synonymous. Under Mr. Mozilo's leadership the business plan of this Company has gone from prudent lending practices to reckless loan shark tactics.

In a few months Countrywide will either disappear as the result of a poorly planned BofA acquisition, or through a liquidation proceeding. Unfortunately as a direct result of poor business practices.

Daniel

[gina r.]

I spent close to 30 years working for Countrywide. From my perspective Countrywide always attempted to do the right thing. We all worked hard to lower the barriers of entry into homeownership for lower income and minority first time homebuyers. Systems were employed to assure against disparate treatment and discrimination in underwriting. The company spent hundreds of millions of dollars in developing foreclosure prevention protocols and was the year in and year out leader in lowering the cost to borrowers in the mortgage process. I feel that throughout our 40 years we have always been guided by our desire to make a positive difference in the lives of the American people, our employees and our shareholders.

[normanpheeny]

Yes, there are lot's of disgusting things about this. Loanworkout.org titled this article - "Email Below Calls Homeowner Disgusting". Hmmm, not very correct. Mozilo is calling site's like Moe's disgusting - to be more truthful. Moe is in the loan modification business/industry - just to give everyone full disclosure and a path to "follow the money".

[Kevin]

Honestly, the customer is retarded. He didn't understand the loan he got? Perhaps all the alcohol and drugs he used burned out the brain cells. If he didn't understand the documents, he had the right to an attorney like every other customer. No one forced the pen into his hands to take out a bad loan.

[Sharon Burton]

At the risk of getting yelled at here, when I bought my house 15 years ago, I didn't understand the paperwork I was signing, either, And I'm highly educated. But I'd never seen this sort of document and had to have each paragraph explained to me. And hope that the explanation was correct.

Remember that normal people simply don't understand legal-ese generally. So they should ask what each paragraph means, But they may not get it explained to them correctly. Or they may not understand what is being said to them. And everyone is looking at them as tho this should make sense. Few people want to look stupid at that point so they sign.

I know several educated people who had their refi paperwork explained to them at signing and it wasn't what they were told the deal was going to be. Or they explanation didn't make sense to them. But they signed because everyone was looking at them as tho this was perfectly reasonable.

I can see how people signed docs they didn't understand. Does that get them off the hook? Well, no, but I easily see how it happens.

[lil_gaucha]

When we were shopping for loans in Vegas a year ago we had a hell of a time getting anyone to take seriously our desire for a 30 year fixed with 30 percent down.

With the exception of Wells Fargo, every single lender tried to get us into a nothing down, adjustable rate mortgage and "use the cash for a pool."

I kid not.

And the paperwork on these things is confusing even for two well educated first time buyers like ourselves. At some point you just have to stop re-reading and trust your loan agent.

We were lucky that all the legalese in our contracts said what we wanted it to say. But many others who are less educated with less scrupulous real estate agents and title officers and loan officers have been hornswaggled and duped.

Some unscrupulous lenders took advantage of people they knew couldn't understand the implications of what they were doing. And now we call those people who lost their homes greedy.

[Ann]

"especially if the reason it was in jeopardy was the result of a (presumed) cash out refinance that netted you $$$?

- arroyogrande"

It looks to me like this bozo took some equity money out thinking he could do a quickie refi

-habib

Why are ALL of you presuming that there was a refi or cashout for frivilous reasons?

The letter says that the house was built in 1921 which means it is 87 years old.

Perhaps it needed a new roof or the foundation needed repair or the wiring and plumbing upgraded or the windows replaced.......

Perhaps he had some massive medical bills - not everyone has health insurance that pays all but $500 of medical expenses and not everyone has helath insurance at all! A trip to the emergency room for a broken wrist can easily run from $10,000 (no complications and simple followup) to over $35,000 (complications and intensive followup.)

Perhaps it was a job loss so he needed money to hang on until he found another job. (And yes, while one should have 1 years living expenses in the bank, the people who make your meals in restaurants, repair your car, install your cable and do a host of similar jobs are barely getting by and forget saving.)

Perhaps it was a divorce and he had to refinance to buy out the ex-wife.

The sanctimonious rush to judgement is a rather over the top.

[Willie]

I think both of them are disgusting and pathetic, unless the borrower never used his home as an ATM to finance a lavish and unnatainable lifestyle, then he deserves the help, otherwise he is disguting and pathetic. I need not to say anything about "Orange Glow", he is pathetic, disgusting, and ORANGE!.

[Ragnar]

Unfortunately, Countrywide is not under any obligation to treat their customers well, even if staving off forclosures is mutually benefical. Too the observer, Mozilo has gained a lot of wealth, but from his perspective he has probably lost a lot of wealth. It's understandable that he is grumpy, but that it no excuse to take it out on a customer.

We do need more information about Bailey Bedard's story. Even if he did take a cash-out HELOC, that does not mean that he blew it on cars and vacations and stuff. He could have had some serious medical bills to pay, as evidenced by his comment about a physical injury that has kept him from working his second job. Still doesn't excuse him from not knowing what he is signing, but tough times sometimes necessitate taking risks to stay afloat.