Angelo Mozilo, who made news this week with his startlingly candid assessment of the nation’s housing market, is a self-made man.
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To pay tuition when he attended Catholic high school, he got a job with a mortgage company during the week and continued to work in his father’s Bronx butcher shop on the weekends, according to his biography with The Horatio Alger Association.
More than 50 years later, Mozilo is still in the mortgage business, running Countrywide Financial, the largest U.S. lender. He co-founded the company in 1969.
Given Mozilo’s background, it’s not surprising to find a couple of other self-made people on Countrywide’s board of directors.
NBA legend Oscar Robertson, “The Big O,” was raised in an Indianapolis
housing project. Henry Cisneros is from a middle-class Texas family and attended Catholic schools, like Mozilo. Cisneros is a former mayor of San Antonio and former U.S. secretary of housing.
Mozilo’s board also has elements of privilege. Kathleen Brown, for example, is the daughter of one California governor (Pat) and sister
of another (Jerry). She’s married to Van Gordon Sauter, former president of CBS.
Mozilo’s pay, which has to be approved by his board, has come under attack by shareholder advocates. He has received more than $380 million in salary and through the exercise of stock options in the past five years, according to Reuters. He still has millions of in-the-money stock options that he continues to exercise.
This week, in a remarkable three-hour conference call with analysts and reporters discussing Countrywide’s declining profitability and rising mortgage defaults, Mozilo said the market is “experiencing home price depreciation almost like never before, with the exception of the Great Depression.”
He said the problem of mortgage defaults has extended beyond the weakest borrowers, the so-called sub-prime market, to the strongest borrowers. “Nobody saw this coming,” he said of the mortgage industry.
He likened Countrywide to a huge battleship headed in the wrong direction and said it would take a long time to turn it around, perhaps not until 2009.
All of that was pretty well reported in the media and led to a sharp drop in Countrywide’s shares as well as broader stock market concerns. A review of the transcript of the conference calls reveals a more sobering observation.
Mozila, who helped create the modern mortgage industry, said the delinquencies so far among the company’s prime borrowers have been “to a great extent” for normal reasons ñ loss of job, divorce, illness. They haven’t resulted from so-called resets, when low, initial mortgage interest rates adjust after two or three years to market rates.
The reset tsunami won’t be as large as many expect, Mozila said. But if his observations are correct, it hasn’t even begun to hit the prime borrowers yet.
Also, keep in mind that this mortgage turmoil is occurring in an overall strong job market. If unemployment grows significantly, all bets are off.
Countrywide Financial Q2 2007 Earnings Call Transcript - Seeking Alpha
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#1. The tragedy of Countrywide Financial and Angelo Mozilo | Muckety.com - See the news 06.26.2008
[…] the current mortgage mess. He has been vilified as the symbol of greedy corporate leaders. He made hundreds of millions of dollars at Countrywide and continued to sell company shares as the stock price […]
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