The former Countrywide Financial Corp., whose subprime loans helped start the nation's foreclosure crisis, made hundreds of discount loans to buy influence with members of Congress, congressional staff, top government officials and executives of troubled mortgage giant Fannie Mae, according to a House report.
While the basics of Countrywide's "VIP loan program" had already been known, the report Thursday gave new detail about its extent and influence.
The discounts -- from January 1996 to June 2008 -- were not only aimed at gaining influence for the company but also to help mortgage giant Fannie Mae, the report said. Countrywide's business depended largely on Fannie, which at the time was trying to fend off more government regulation. Eventually Fannie came under government control.
Fannie was responsible for purchasing a large volume of Countrywide's subprime mortgages. Countrywide was taken over by Bank of America in January 2008.
The report from the House Oversight and Government Reform Committee named six current and former members of Congress who received discount loans, but all of their names had surfaced previously. Other previously mentioned names included former top executive branch officials and three chief executives of Fannie Mae.
"Documents and testimony obtained by the committee show the VIP loan program was a tool used by Countrywide to build goodwill with lawmakers and other individuals positioned to benefit the company," the report said. "In the years that led up to the 2007 housing market decline, Countrywide VIPs were positioned to affect dozens of pieces of legislation that would have reformed Fannie" and its rival Freddie Mac, the committee said.
Had the preferential treatment been prohibited, the report said, "it is possible that efforts to reform (Fannie and Freddie) would have been met with less resistance."