California settles with Countrywide executives
California has reached a $6.5-million settlement with two former Countrywide Financial Corp. executives that the state had accused of predatory lending. The state will create a foreclosure relief fund for troubled borrowers with part of the money, Attorney General Kamala D. Harris said Wednesday.
The $5.2-million fund will be used to combat foreclosure, educate homeowners and assist other agencies statewide in prosecuting mortgage fraud. The intent of the settlement was, in part, to “restore justice” to homeowners who had been harmed by the foreclosure crisis, Harris said.
“There are a lot of people out there who are still struggling and don’t know how to get back on their feet,” Harris said.
An additional $1.35 million of the settlement, reached with Angelo R. Mozilo, Countrywide's former chief executive, and David Sambol, the company's former president, will be paid to the attorney general’s office as costs for the investigation and attorney’s fees.
The agreement augments an October 2008 settlement with the company to provide loan modifications and other foreclosure relief valued at $8.68 billion nationally, including $3.5 billion in California.
Countrywide, which was bought by Bank of America that year, will repay its former executives in full, according to the latest agreement.
Preeti Vissa, community reinvestment director of the Berkeley-based consumer advocacy group Greenlining Institute criticized the settlement amount as too small.
“It is almost a token amount,” she said. “We really applaud Attorney General Harris for holding Mozilo and his counterpart accountable, but clearly much more needs to be done if we want to make a meaningful difference in the lives of the people who have been affected by these loans.”
Neither of the former executives admitted wrongdoing as part of the settlement.
“We believe the weakness of the claims against Mr. Mozilo was underscored as discovery progressed and we expected to prevail in court,” David Siegel, Mozilo’s attorney, said in a statement.
Sambol’s attorney, Walter Brown, said: “Mr. Sambol wholly denies the claims and agreed to settle only to put this matter behind him and his family, and because Countrywide wanted to do so.”
Mozilo last year agreed to pay a $22.5-million fine to settle a Securities and Exchange Commission lawsuit -- one of a series of suits alleging that Countrywide misled borrowers and investors about the risks of its lending -- a penalty the SEC said was the largest ever for an individual in a case involving alleged misrepresentations to shareholders.
-- Alejandro Lazo [follow]
Photo: Former Countrywide CEO Angelo Mozilo. Credit: Irfan Khan / Los Angeles Times