As Angelo R. Mozilo celebrates Countrywide Credit Industries' 30th anniversary, he finds himself guiding the big mortgage bank through unusually treacherous political waters.
Tensions have been mounting between his company's peers and Fannie Mae and Freddie Mac, putting the Countrywide chairman and chief executive officer in an awkward spot.
One the one hand, he shares lenders' frustrations with some of the government-sponsored enterprises' recent initiatives to expand their market. One the other, he considers the GSEs vital partners, without whom his company's success would have been impossible.
"I don't want a war. Nobody wins in a war," he said. "I am an ally of the GSEs, not a foe at all. Without them, there would be no Countrywide."
Fannie and Freddie have drawn fire from lenders for their recent forays into mortgage insurance. There is talk of a coalition being formed to fight any ventures by the two GSE's into mortgage insurance.
But Mr. Mozilo, who has come to personify the booming industry since 1969, when he founded what has become the nation's largest independent mortgage company, said he was reluctant to hop on such a bandwagon.
"The largest players want us to join with them in this battle," he said in an interview last week. "We don't really fit."
Unlike the other major lenders, which are all owned by banks, Countrywide relies solely on the secondary market created by Fannie and Freddie to place its loans, he noted.
Mortgage insurers and lenders have been particularly critical of the GSEs' foray into mortgage insurance programs. Critics say these are an attempt to capture some profits that would normally go to mortgage insurance companies or to lenders' captive reinsurance units.
Though Mr. Mozilo isn't about to make a big issue of mortgage insurance, the GSEs' aggressive pursuit of businesses that bring profits to lenders bothers him. "If it's a transfer of wealth from me to the GSEs, then I don't like that," Mr. Mozilo said. "It's abuse of power."
Mr. Mozilo was referring to an implied guarantee on the government- sponsored enterprises' debt that is often said to give them additional funding power. Mortgage banks and other lenders argue that it would be unfair to allow them to compete outside their congressionally mandated mission.
Fannie Mae's program, which lowers mortgage insurance coverage requirements for borrowers accepted by its automated underwriting system, Desktop Underwriter, was seen by some as a way of forcing lenders to use the system. That didn't sit well with lenders which, like Countrywide, have made significant investments in their own automated underwriting systems.
"Being forced to go through their underwriting engine creates a problem, certainly for us," Mr. Mozilo said. The GSEs' insistence that lenders use their underwriting software makes the loan process less efficient, he said, and more expensive.
Mr. Mozilo was also critical of a recent Fannie Mae initiative that lets brokers get a loan approved by Desktop Underwriter and then shop it around to lenders. That gives brokers leverage with lenders, Mr. Mozilo said, but consumers are unlikely to reap any rewards from the program.
In a perfect world, "I'd like the GSEs to realize that they have infinite power, and manage that power, not abuse it," he said.
A Freddie Mac spokeswoman said, "We certainly couldn't be successful if Countrywide decided they didn't want to work with us. Even with the leverage that we do have, we try very hard not to take advantage of that."
Mr. Mozilo stressed that his aim is to keep the relationship between mortgage bankers and the GSEs positive and constructive. Countrywide "has an opportunity to set the standard" for cooperation between mortgage bankers and the GSEs, he said.
He also hinted that Countrywide was trying to hammer out an agreement with at least one of the GSEs that would give the company favorable treatment because of the huge volume of loans it feeds to the GSEs. Countrywide, based in Calabasas, Calif., funded about $90 billion last year, making it the No. 2 originator, behind Wells Fargo & Co.'s Norwest Mortgage unit in Des Moines.
The Freddie Mac spokeswoman said that "certainly the large company has more leverage" when negotiating guarantee fees.
A Fannie Mae spokesman said, "Angelo is one of the great leaders of the mortgage industry in the postwar period. When he or anyone else in the industry of comparable stature says that there are ways in which we can improve our relations with lenders, we take it very seriously."
However, the spokesman added, "We also recognize that 35,000 loans a day are being underwritten through Desktop Originator and Desktop Underwriter, so clearly it is a tool that works well for many."
Mr. Mozilo has had other things on his mind aside from the industry tensions surrounding the GSEs. Last week Countrywide celebrated its 30th anniversary and increased its affordable housing commitment to $80 billion, from $50 billion.
Countrywide has long been an industry leader in lending to underserved low-income borrowers, and it is the biggest contributor of loans to Fannie Mae's $1 trillion housing commitment to low- and moderate-income underserved borrowers, who include minorities and new immigrants.
Mr. Mozilo reiterated his desire to eliminate the 3% down payment that Fannie and Freddie require for these loans.
"That 3% means everything to the buyer. They can't afford that. But it's meaningless to the integrity of the loan. They should clearly take that barrier away." He noted that VA loans, which require no down payment, have a lower delinquency rate than FHA loans.
And after 30 years, what surprises Mr. Mozilo the most? "That we're not bigger."