Finance · Profile from Finance Research Companion
Countrywide Financial Corporation
The mortgage company Angelo Mozilo and David Loeb started in 1969 with two people and a small office, which grew into the largest home lender in the United States. It was a low-cost, high-volume machine that originated, sold and serviced loans through retail branches, brokers and correspondents. In the 2000s housing boom it chased market share into subprime, stated-income, piggyback and pay-option loans under a policy of matching any product a competitor offered. It ran a "VIP" programme that gave discounted loans to politicians and Fannie Mae officials, and in 2007 it moved its bank under the lighter-touch Office of Thrift Supervision. When the private mortgage-securities market froze in August 2007, it drew down ~$11.5bn of credit lines and took $2bn from Bank of America. Bank of America then bought the whole company in stock: announced January 11, 2008 at ~$4bn and completed July 1, 2008. The liabilities attached to loans Countrywide had already sold cost the buyer tens of billions of dollars. Mozilo paid a record $22.5m SEC penalty in 2010 and was never criminally charged. He died in 2023.
At a glance
- Founded
- 1969, New York, by Angelo R. Mozilo and David S. Loeb, as Countrywide Credit Industries; moved its base to Southern California soon after (Pasadena, later Calabasas)
- Founders
- Angelo Mozilo (1938–2023), son of a Bronx butcher, a mortgage banker since his teens; David Loeb (died 2003), a mortgage-industry veteran who chaired the company until 2000 (reported)
- Headquarters
- Calabasas, California
- Ownership / structure
- Public company (NYSE: CFC). Holding company owning Countrywide Home Loans (non-bank originator and servicer), Countrywide Bank (a national bank that became a federal savings bank supervised by the OTS in March 2007), Countrywide Securities (broker-dealer), Balboa insurance and a capital-markets arm. Wholly owned subsidiary of Bank of America from July 1, 2008
- Leadership
- Angelo Mozilo (co-founder; CEO and chairman until the 2008 sale); David Loeb (chairman until 2000); Stanford Kurland (president and COO until 2006, reported); David Sambol (president and COO from 2006); Eric Sieracki (CFO)
- Segment and clients
- Mortgage lender and servicer: prime conforming, jumbo, FHA/VA, subprime ("Full Spectrum Lending"), Alt-A, home equity and pay-option ARMs; servicing for Fannie Mae, Freddie Mac, Ginnie Mae and private-label trusts; a deposit-funded thrift that held loans on its balance sheet
- Scale at peak
- Funded roughly $450–490bn of mortgages in 2006 (reported, verify), about one in six US home loans (share estimates ~16–17%, verify); servicing portfolio ~$1.3–1.5tn (2006–07, reported); total assets ~$200bn (end-2006, verify); ~60,000 employees (reported, verify)
- Profit
- Net income ~$2.5bn in 2005 and 2006 (reported, verify); 2007 net loss ~$704m, its first annual loss in about 30 years (reported)
- Failure
- Liquidity crisis August 2007; sold to Bank of America in an all-stock deal announced January 11, 2008 (~$4bn, $7.16 a share at 0.1822 BofA shares) and completed July 1, 2008; rebranded Bank of America Home Loans (2009)
- Signature moves (incl. failures)
- Founding (1969); the retail-branch and wholesale build that made it the largest originator (1980s–1992); the market-share push and "matching" strategy into nontraditional loans (2003–06); the VIP "Friends of Angelo" programme (exposed 2008); switching to a thrift charter (2007); the August 2007 liquidity crisis and BofA's $2bn investment; the 2008 sale to BofA; the SEC fraud case against Mozilo (2009–10); the legacy legal tail (Hustle, fair-lending and investor cases, 2011–16)
9 strategic moves analysed
Each one gets a full strategy file in the companion: context, the decision, the financing, what happened, and the lesson.
1969
Founding by Mozilo and Loeb
Founding
1992
Becoming the Largest US Mortgage Originator
Launch / scale-up (multi-channel distribution, servicing build, technology)
2003
Market Share Push and Nontraditional Loans
Pivot / failure (product expansion into subprime, Alt-A, stated-income, piggyback and pay-option loans)
2003
VIP Friends of Angelo Loans
Conduct failure (influence programme)
2007
Liquidity Crisis and BofA 2bn Investment
Funding round / failure (emergency liquidity and strategic investment)
2007
Thrift Charter Switch to OTS
Regulatory restructuring (charter conversion)
2008
Sale to Bank of America
Acquisition (as target) / failure
2009
SEC Fraud Case and Mozilo Settlement
Regulatory settlement (SEC civil fraud and insider-trading case)
2011
Legacy Liabilities and the Hustle Case
Regulatory settlement / litigation (investor, fair-lending, False Claims-style and FIRREA cases)