Countrywide Financial Mozilo
Countrywide Financial
September 26, 2013
“Countrywide Financial,” cofounded by Angelo Mozilo, was known as one of the most successful financial companies in the beginning of the 21st century. The cofounder had a solid business philosophy; to help low-income individuals and minorities. “Countrywide Financial“ was the largest home loan provider in the United States, with one out of six loans provided by the company. Angelo Mozilo believed that every American had the right to own a home (Stewart, 2013). Financial institutions saw a great opportunity to create an investment after the government passed significant legislative acts from the 1970’s to the 1980s: Community Reinvestment act, Depository Institutions Deregulation and Monetary Control Act. This required banking institutions to loan money for low rates and low down payments (Avramenko, & Boyd, 2013). In 1995 President Bill Clinton revised the Community Reinvestment Act to prevent banking institutions from denying loans or increasing costs based on race. The revising of this act helped individuals with low to moderate income meet the standard …show more content…
The financial experts at Countrywide Financial, unethically, convinced potential borrowers that they would be able to afford the payments, even if they were to increase, because their homes would increase in value, which would provide them with more income. There are also accusations that home appraisers manipulated the system, by raising the value of homes to ensure that the loans would be approved (Freidrich et.al, ????). It is also believed that Mozilo knew that these loans were causing problems from an economic standpoint. In emails that were recovered by the SEC, Mozilo allegedly referred to their loans as “toxic product” and stated that he was concerned with the documentation within the company and the quality of their loans. (Freidrich et. al,
September 26, 2013
“Countrywide Financial,” cofounded by Angelo Mozilo, was known as one of the most successful financial companies in the beginning of the 21st century. The cofounder had a solid business philosophy; to help low-income individuals and minorities. “Countrywide Financial“ was the largest home loan provider in the United States, with one out of six loans provided by the company. Angelo Mozilo believed that every American had the right to own a home (Stewart, 2013). Financial institutions saw a great opportunity to create an investment after the government passed significant legislative acts from the 1970’s to the 1980s: Community Reinvestment act, Depository Institutions Deregulation and Monetary Control Act. This required banking institutions to loan money for low rates and low down payments (Avramenko, & Boyd, 2013). In 1995 President Bill Clinton revised the Community Reinvestment Act to prevent banking institutions from denying loans or increasing costs based on race. The revising of this act helped individuals with low to moderate income meet the standard …show more content…
The financial experts at Countrywide Financial, unethically, convinced potential borrowers that they would be able to afford the payments, even if they were to increase, because their homes would increase in value, which would provide them with more income. There are also accusations that home appraisers manipulated the system, by raising the value of homes to ensure that the loans would be approved (Freidrich et.al, ????). It is also believed that Mozilo knew that these loans were causing problems from an economic standpoint. In emails that were recovered by the SEC, Mozilo allegedly referred to their loans as “toxic product” and stated that he was concerned with the documentation within the company and the quality of their loans. (Freidrich et. al,