Conrad and Dodd Got VIP Loans: Countrywide Official

Two influential Senate committee chairmen were told they were getting special VIP deals when they applied for mortgages, an official who handled their loans told Congress in closed-door testimony.

AP Sen. Christopher Dodd

Democratic Sens. Christopher Dodd and Kent Conrad had denied knowing they were getting discounts when they negotiated their loan terms.

Robert Feinberg, who worked in the VIP section of Countrywide Financial, testified about the loan terms before the Senate Ethics Committee, and provided the same information in an interview with Republican investigators of the House Oversight and Government Reform Committee. He could be prosecuted for making false statements.

Both senators have said that at the time the mortgages were being written they didn't know they were getting unique deals from Countrywide, a company that lost billions of dollars on bad loans and since has been purchased by Bank of America

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Dodd, D-Conn., who is chairman of the Senate Banking Committee, still maintains that he got no preferential treatment.  Conrad, D-N.D., who leads the Senate Budget Committee, took that position initially, but later acknowledged he did get a special deal.

Dodd got two Countrywide mortgages in 2003, refinancing his home in Connecticut and another residence in Washington. Conrad's two Countrywide mortgages in 2004 were for a beach house in Delaware and an eight-unit apartment building in Bismarck.

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The Associated Press obtained a transcript of Feinberg's House interview. An account of his Senate appearance was obtained from the attorney who accompanied him to Congress, Elana Goldstein. Both appearances were on successive days last month.

Asked by a House Oversight investigator whether Conrad, the North Dakota senator, "was aware that he was getting preferential treatment," Feinberg answered: "Yes, he was aware."

Referring to Dodd, the investigator asked:

"And do you know if during the course of your communications" with the senator or his wife "that you ever had an opportunity to share with them if they were getting special VIP treatment?"

"Yes, yes," Feinberg replied.

The senators were VIP borrowers in the program known as "friends of Angelo."

Angelo Mozilo was chief executive of Countrywide, which played a big part in the foreclosure crisis triggered by defaults on subprime loans. The Calabasas, Calif.-based company was bought last July by Bank of America for about $2.5 billion.

Bryan DeAngelis, Dodd's spokesman, said Feinberg has repeatedly made allegations of special treatment that were not true.

"As the Dodds have said from the beginning, they did not seek or expect any special rates or terms on their loans and they never received any. They were never offered special or sweetheart deals and if anyone had made such an offer, they would have severed that relationship immediately."

DeAngelis also repeated Dodd's statements from February that an independent report showed the terms received by the senator and his wife were widely available at the time.

Conrad's spokesman, Chris Gaddie, said Monday that the senator "never asked for, expected or was aware of loans on any preferential terms" and has "worked overtime to set the record straight."

"He went with Countrywide simply because they already had his financial information," Gaddie said.

He added that a Countrywide official had told Conrad that "it is not unusual for them to make exceptions for good customers if they could sell the loan in the secondary market. We now know that they did sell the apartment building loan in the secondary market."

Feinberg said in his House testimony that it was hard for "friends of Angelo" to fail to see their special treatment, because the loan officers identified themselves as part of the VIP unit.

"When the loan comes out of the VIP processing unit their business cards are stapled in loan packages," Feinberg said. "It says 'VIP Supervisor,' VIP underwriter.' "Everyone's VIP, so I'm just thinking human nature is to think, well, what am I getting?"

Q. So as I understand what you're saying is, it was the pattern and practice of the account executives that handled VIP loans?

A. Yes.

Q. To notify the borrower.

A. Right.

Q. Of the preferential treatment they were receiving.

A. Right.

At a Feb. 2 news conference, Dodd said he knew he was in a VIP program but insisted he was told by Countrywide, "It was nothing more than enhanced customer service ... being able to get a person on the phone instead of an automated operator."

The ethics committee determines whether senators violated standards of conduct. The outcome of the investigation could hinge on whether the mortgage violated strict limits on gifts to lawmakers or ran afoul of other Senate rules. The committee typically just issues a report. It could recommend a censure vote by the Senate, but that is rare.

Feinberg was questioned closely by three of the ethics committee's six senators: Democratic Chairman Barbara Boxer of California; the panel's senior Republican, Johnny Isakson of Georgia, and Republican Jim Risch of Idaho, according to Goldstein, the Feinberg attorney.

The ethics questioning was intense at times, and Boxer asked the bulk of the questions, Goldstein said. When Feinberg described a conversation he had with Dodd, Boxer demanded to know how he remembered it. Feinberg said he recalled Dodd saying he had to leave to make a speech.

Boxer asked whether Dodd and Conrad received VIP treatment because they were senators. Feinberg said that was not the case; they received breaks as other influential people in Countrywide's "friends of Angelo" VIP program.

Isakson, a onetime real estate executive, asked more detailed questions about the mortgage agreements' terms.

Countrywide VIPs, Feinberg told the committees, received discounts on rates, fees and points. Dodd received a break when Countrywide counted both his Connecticut and Washington homes as primary owner-occupied residences — a fraction, according to Feinberg.

Conrad received a type of commercial loan that he was told Countrywide didn't offer.

"The simple fact that Angelo Mozilo and other high-ranking executives at Countrywide were personally making sure Mr. Feinberg handled their loans right is proof in itself that the senators knew they were getting sweetheart deals," said Feinberg's principal attorney, Anthony Salerno.

Conrad initially said in June 2008, "If they did me a favor, they did it without my knowledge and without my requesting it."

The next day, Conrad changed course after reviewing documents showing he got special treatment and said he was donating $10,500 to charity and refinancing the loan on the apartment building with another lender.

He also said then it appeared Countrywide had waived 1 point at closing on the beach house.