Former Countrywide Financial Corp. Chief Executive Officer Angelo Mozilo and ex-Chief Operating Officer David Sambol agreed to $6.5 million settlement to resolve a predatory lending lawsuit filed by California.
Money from the accord will be used for a relief fund to aid foreclosures and mortgage delinquencies, state Attorney General Kamala Harris said today in a statement.
Mozilo denied in court and continues to deny the fraud allegations against him, his lawyer, David Siegel, said in an e-mailed statement. Siegel said the settlement will be paid by Countrywide and requires no payment from Mozilo.
“Evidence and witnesses confirmed that Mr. Mozilo is a man of integrity who would not personally engage in or authorize any deceptive practice, and thus, the allegations made against him had no basis in fact,” Siegel said. “Nevertheless, Mr. Mozilo respected Countrywide’s decision to fund this settlement in order to end the on-going costs of litigation, and we are pleased to put this matter behind Mr. Mozilo.”
Countrywide, the mortgage lender acquired in 2008 by Charlotte, North Carolina-based Bank of America Corp., announced that year a settlement of fraud complaints filed by 11 states, including California, in which the company agreed to cut the amount borrowers owe and their interest rates at a cost of $8.4 billion.
“We will use the current settlement to help Californians affected by the mortgage crisis by providing grants to help homeowners facing foreclosure with relocation assistance and providing money to state and local agencies to prosecute mortgage fraud,” Harris said in her statement.
Last year, Mozilo paid $67.5 million to resolve U.S. Securities and Exchange Commission claims that he publicly reassured investors about the quality of Countrywide’s loans while knowing that the mortgage lender was fueling its growth at least since the beginning of 2005 by letting its underwriting guidelines deteriorate and originating an increasing number of risky subprime loans. Mozilo didn’t admit any wrongdoing.
The SEC said Mozilo sold $140 million in Countrywide shares from November 2006 through October 2007 at an inflated price because he hadn’t disclosed the increasing risk he knew the lender faced from defaulting mortgages.
The case is People of the State of California v. Countrywide Financial Corp., 08-cv-04861, U.S. District Court, Central District of California (Los Angeles).