The Mortgage Insider

I don’t know if Angelo Mozilo knows the difference between a curve ball and a split-finger, but given that his 40-year reign as the head of Countrywide Financial is coming to an end, it seems appropriate to reflect on his career as well as his legacy.

While the Mortgage Banker’s Association doesn’t have a Hall of Fame for lenders, two years ago, Mozilo would have been a shoe-in as a first-round inductee if such a distinction existed.

By now, we all know the story: a Brooklyn-born son of a butcher who devoted his professional career to building the largest and most influential mortgage lending company in America. To those of us who’ve watched him operate over the years, it was hard not to feel a certain amount of envy. He always seemed to be one step ahead of the curve, instinctively knowing where to go next. Regardless of what you thought of his business style, you had to respect his foresight.

To be clear, I don’t personally know Mozilo. Aside from meeting him at several industry functions, I know him like many of you as the man with the really killer tan. But my 15 years in the industry have provided numerous glimpses at the leader who took the industry on his back and carried it up the hill, whether it wanted to go with him or not.

Years ago, he recognized the advantage of building a wholesale platform long before others entered the mix. Even when his partner, David Loeb, expressed reservations about using independent mortgage brokers to drive business, Mozilo saw a huge opportunity. While Countrywide built a stronghold at all three levels of the food chain — retail, wholesale, and correspondent — they were a force early on at the broker level.

One of my first jobs in the industry was working for a mortgage broker in southern California. The company recruited hundreds of loan officers throughout the west, and Countrywide positioned itself to capture a lion’s share of their business. Whip-smart and driven to be #1, his work ethic became legendary.

In some respects it almost doesn’t seem fair. Why should anyone who led the industry in every category possible, including admirable distinctions like minority-based lending, become the whipping boy for a crisis that no one person or group is responsible for? In his defense, Mozilo is no more responsible for this mess than the head of every major investment bank that wanted to rule their corner of the securitization market. Of course, he’s clearly not without some blame, but more on that in a moment.

To be fair, I am biased when it comes to this discussion: I’ve been a Countrywide customer on and off during my 15-year lending career and was largely under-whelmed by the experience. Having come out of the ranks of a mid-western company that understood the value of a partnership mentality, I found Countrywide to be a difficult vendor. They were the proverbial 800 lb. gorilla, and whether it’s a fair distinction or not, the experience starts with the tone set by the leaders at the very top. I also know that for every customer like me, there were others who relished their experience.

But, putting bias and personal preference aside for just a moment, if mortgage lending was a sport, would Angelo Mozilo get voted into the Hall of Fame? Or would he go down in history as the Pete Rose of mortgage finance?

Its not a completely fair comparison but there are some similarities when comparing the two: not only were they the best at what they did, but their drive to succeed was monumental. Whether Rose was running to first base every time he was walked or Mozilo was on the StairMaster at 4am, plotting his next move, there will to win was second to none. In some respects, however, their downfalls also share a commonality. While Rose committed the ultimate taboo and bet on his own sport, Mozilo forgot the single edict by which all lenders should be judged – effective risk management. In his defense, when you run the largest publicly-held mortgage company in America and the industry begins to spiral out of control, it’s difficult to turn the Titanic on a dime. Yes, he could have developed more rational guidelines but it would’ve cost him relative to market share. And as anyone who was playing in the mortgage space at the time understood, you couldn’t compete (in wholesale and correspondent) if you weren’t matching the guidelines of the dumbest lender in the sandbox. This point will certainly be argued for years to come.

What frustrates me most, however, is his arrogance. Admittedly, few leaders achieve a #1 status in any financial field without a certain degree of bravado. That doesn’t bother me. In fact, I’ve come to expect it. Where Rose and Mozilo share a common flaw was their inability to take responsibility. I’ve never expected Mozilo to stand up and say “it was my fault” — his ego would never allow for it, at least not publicly. But maybe just a hint of remorse would’ve been nice.

You can’t run the biggest lending shop in America, boast about your ability and desire to push the credit envelope as he did countless times and then point the finger at Wall Street and then say “it’s all your fault. You made us do it.” The last I checked, it was still Mozilo’s decision to pull the trigger on whether or not to lend borrowers money. At some level, I think you have to man up as the leader of America’s #1 Home Lender and take some responsibility for leading the charge into mortgage Armageddon.

Perhaps my expectations are unrealistic, too. Apologizing might open him and his company to further litigation. Maybe, deep down, he has a desire to say, “you know what, we really screwed this thing up. We saw it coming, my risk people warned me and we tried to figure out how to stop the train while still providing investor return, etc. but couldn’t get it done.” I want to think that’s the case. At the same time, given what I’ve learned about his persona over the years, I’m not holding my breath.

So, does Angelo Mozilo get voted into the Hall of Fame and receive recognition for his 40 years of housing America or he will wind up in lending purgatory, forever remembered as the poster child for the greatest housing crisis in modern history?

For my money, nobody played the game better than Rose and nobody did more to impact the mortgage lending industry than Mozilo. Based on the sole criteria of lifetime achievement to the industry, then Mozilo gets the call.

The only question left is whether or not they put an asterisk next to his name.