ACG 6658 Florida Atlantic University Response to Countrywide & New Century Discussion reply to the thread with a though out answer not just yes or no agree

ACG 6658 Florida Atlantic University Response to Countrywide & New Century Discussion reply to the thread with a though out answer not just yes or no agreeing with the postCountrywide was founded in New York by Angelo R.Mozilo and David Loeb. Just like New Century, Countrywide was a lending company in the mortgage industry. It came to be known as one of the titan industries to dominate that market, followed closely by New Century, Wells Fargo, and HSBC. Countrywide was responsible for countless of subprime mortgages given to millions of individuals over the period of 2000-2007. During the crisis of 2008 Countrywide lost billions of dollars and was later acquired by Bank of America. Once Countrywide was acquired for only $2.8 billion, the company’s CEO Angelo R. Mozilo left. This acquisition value was so low due to the drop in the share price of the company and all the money it had lost during this time. In June 2009, the Securities Exchange Commission filed civil fraud and insider trading charges against Angelo R. Mozilo and two former executives: David Sambol, the company’s former president, and Eric Sieracki, the former chief financial officer. These lawsuits brought with them a heavy toll to pay. Mozilo agreed to repay $45 million received from speculative sources and $22.5 million in civil penalties as part of the settlement with the SEC, David paid $5 million in disgorgement, a $520,000 penalty, and a three-year officer and director bar. Eric paid $130,000 in penalties and a one-year bar from practicing before the SEC. Both Countrywide and New Century, in my opinion, as a company, differed very little. The actions these two companies took during the period of 2000-2007 mortgage bubble, were driven with the sole purpose to gain and increase capital. The decisions issued by the company’s officials of Countrywide were around this idea of, “more is better.” And just like New Century, Countrywide did little in really assessing the ability of each applicant to repay the loan they were applying for. The lax rules and requirements that were implemented during this time were exploited to a point where the very employees of the companies were no longer assessing each applicant thoroughly, but would plug in the income reported without properly verifying the accuracy. The more these lenders processed in loans the bigger the bonus checks the executives of these companies would receive. In June 2010, Countrywide Home Loans and its mortgage servicing unit, which was now part of Bank of America, agreed to pay $108 million to settle federal charges, because the company was overcharging customers who were struggling to hang onto their homes (New York Times, p.1). That money only helped 400,000 people nationwide. The other millions of homeowners that weren’t fortunate to receive this aid, defaulted on their home payments, causing them to lose their homes. Between Countrywide and New Century, you could say one of these companies met a better ending. Countrywide, as mentioned earlier, was acquired by Bank of America during 2008. This acquisition was a saving grace to the company because it assured the company of a longer lifeline within the mortgage industry. In my opinion, Countrywide paid many fines and lawsuits brought to the company by the SEC and investors of the company. During this time, Countrywide did not fight any lawsuit brought against the company or by investors and instead decided to pay whatever needed to be paid. This along with the $600 million to settle shareholder lawsuits and $108 million to aid those homeowners that were in need, gave the company some breathing room.