Tick tock, tick tock. Angelo Mozilo’s day is drawing near.
And not even yesterday’s agreement to give up some $37.5 million in compensation from the merger with Bank of America can save him.
That’s because not even a give back that large can buy him out of his looming date with a The House Oversight & Government Affairs Committee slated now for February 28th.
There, along with Chuck Prince ,Stan O’Neal and others, Mozilo will be called upon to answer questions on the severance packages paid to subprime executives.
In particular, to Mr. Mozilo, the Henry A. Waxman led committee is asking for the Countrywide founder’s perspective on whether his own severance package is justified "in light of his company’s recent performance and its role in the national mortgage crisis."
In short, it’s nothing less than must-see TV as Mr. Mozilo is sworn in and called on to answer the questions of some irate government types in an election year.
And needless to say–for Mr., Mozilo–at least, the questioning will be much harder than any of those softballs tossed at him lately by Maria Bartiromo.
Meanwhile, Mr. Mozilo’s company has become the target of yet another lawsuit, this one for the unjust firing of an employee that apparently "refused to go along."
Countrywide currently faces subpoenas from the attorneys general of California and Illinois, an investigation by the United States Trustee Program, and a securities fraud lawsuit filed by various entities in the State of New York.
Its latest invitation to the bench was reported on today in the Houston Chronicle by Purva Patel in a story entitled: Fired VP files suit against lender: He says he was terminated after questioning its loan practices.
"A former vice president in Houston for Countrywide KB Home Loans was fired because he complained about its lending practices, according to a lawsuit he has filed against the lender.
Countrywide KB Home Loans, a joint venture between Countrywide Financial Corp. and KB Home, approved loans for unqualified borrowers just so KB could continue to build homes, Mark Zachary, who worked for the company between August 2006 and mid-2007, claims in his lawsuit filed in a Houston federal district court.
The U.S. Department of Labor is also investigating a complaint filed by Zachary, the lawsuit claims. The Labor Department would not confirm or deny an investigation.
"We do not believe the case has merit, and we will defend it vigorously," Countrywide spokeswoman Jumana Bauwens said in an e-mail.
A spokesman for KB Home said he could not comment on ongoing litigation.
Zachary attorney Philip Hilder declined to comment on the specifics of the lawsuit. But he did say it was filed to put Bank of America, which is acquiring Countrywide, on notice of a potential liability.
Zachary began having concerns about the lending practices when he discovered, a month after he started with the company, that Countrywide used only one appraiser for KB Home, the lawsuit claims.
"The appraiser, as known to Countrywide executives, was being strongly encouraged to inflate the homes’ appraised value by as much as 6 percent … ," according to the lawsuit.
The lawsuit also claims that Countrywide KB Home Loans converted loan applications that required full documentation to those that didn’t require much.
Some loan officers also coached applicants on the income they would need to state in order to qualify for a loan when it was sent to the company’s subprime operations center in Plano, the lawsuit alleges.
Zachary claims he was fired when he refused to approve loans for unqualified borrowers.
That, in turn, meant he couldn’t meet a company requirement to approve 10 percent of backlogged loan applications each day, which was needed so "a green light could be given to KB Home to start building the homes under contract," the suit said.
In mid-2007, he was given a written warning by his supervisor for performance issues, despite an excellent review three months earlier, the suit says.
Countrywide KB Home Loans has yet to file a response to the lawsuit at the federal courthouse."
Nonetheless, Bank of America CEO Ken Lewis said today that he remains committed to the deal brokered last month that would put Countrywide’s continuing morass in squarely in his lap.
"At this point, everything is a go to complete this transaction," Lewis said today at an investor conference in New York.
Countrywide, by the way, continues to bleed.
The Calabasas, Calif.-based company said today that it had a fourth-quarter loss of $422 million, or 79 cents per diluted share. In the year-ago period, the mortgage company had a net income of $622 million, or $1.01 per diluted share.
Additionally, the lender announced that 33.64 percent of its subprime loans were delinquent by the end of 2007, up from 22.22 percent in 2006.
And to think it could all be yours for the bargain price of $4.1 billion.
