The Company, Customers, History, Products, Services, and State
Countrywide Home Loans (Countrywide HL) primarily provide, service, and sell mortgage loans. Mortgage loan and after-loan servicing include service such as collections and payment processing. As a leader in the mortgage industry, they provide these products and services to homeowners through prime and subprime mortgage loans and subsequently resell these loans to investors. In 2009, the United States (US) Treasury Department (Treasury) invested (i.e., US taxpayer-based funding) in Countrywide HL under the Treasury’s 2009 Troubled Asset Relief Fund (aka TARP.) (Source 1)
In 1969, David S. Loeb (1924 - 2003) and Angelo Mozilo (1938 -) founded Countrywide with …show more content…
According to http://fortune.com/2010/12/23/how-the-roof-fell-in-on-countrywide/ article, Mozila’s leadership style changed from motivational and transformational to the use of fear and punishment to threaten employees into selling subprime mortgages. The focus for Mozila was remaining at the top of the industry and on staying rich. Aggression, delusion, and ruthlessness became his trademark style. These leadership changes affected employees and executives. Three notable effects of this leadership change are increasing employee unethical behavior, employee firings and resignations, and executive attrition. The change in focus, leadership and leadership style, personnel, and corporate philosophy are the reasons Countrywide HL was the primary cause of the 2008 US economic weakening. The Countrywide HL leadership did not accept responsibility for the weakening; albeit, Mozila warned others of the impending housing collapse due to too many subprime mortgages. …show more content…
By 2003, the mission was profit and win; make more money, bundle all loans in investor packages, and remain the biggest and best mortgage company worldwide. However, the Countrywide vision changed from growth through ethical business practices as a people-driven loan provider to remain the industry leader, with or without ethical business practices. Increased pressure to sell subprime mortgages and resell to investors became the order from leadership for employees and executives. Same for the ethical culture. Around 2003, a culture of respect for employees, executives, and customers changed to a pressurized sell, sell, sell atmosphere. From caring about the customer, Countrywide HL went to close the loan and sell the loan, whether or not a Customer could afford the loan. High fees and rates provided the profit on these loans. In addition, the push-to-close-loans approach led to an increase in subprime mortgages and subsequent inclusion in mortgage packages sold to investors. From a respected business, Countrywide HL became the subprime mortgage industry