SEC says ex-Countrywide CEO approved special loans

WASHINGTON - Federal regulators say former Countrywide CEO Angelo Mozilo personally approved mortgages for favored borrowers that violated the company's policies and lending standards.

The Securities and Exchange Commission had previously accused Mozilo of civil fraud and illegal insider trading. Now, the agency says Mozilo played a direct role in a program for preferential borrowers that has been the focus of congressional ethics inquiries.

Mozilo criticized Countrywide's chief risk officer for trying to block one of the loans, telling the officer that the company could well afford to approve the special mortgages, the SEC said in a filing last Wednesday in a Los Angeles federal court.

California-based Countrywide Financial Corp. was a major player in the market for high-risk subprime mortgages, the collapse of which touched off the financial crisis. The company became the biggest U.S. mortgage lender overall before the meltdown. It was bought by Bank of America Corp. in July 2008.

Last year the SEC accused Mozilo and two other former Countrywide executives of deliberately misleading investors about the risks the company took when the market was booming. Mozilo is the most high-profile individual to face federal charges stemming from the financial crisis. He and the other former executives have denied any wrongdoing.

- AP