When Angelo R. Mozilo co-founded Countrywide Financial Corp. nearly 40 years ago, the idea of a national home lender seemed far-fetched.
Yet Countrywide has lived up to its name and survived the mortgage industry's boom-bust cycles to become the largest home lender - notably, without any major acquisitions.
Few executives are as closely linked to their companies' success as Mr. Mozilo, Countrywide's chairman and chief executive. Even fewer people have had such a big impact on an entire sector.
Perceptive and driven, Mr. Mozilo, 67, has transformed the mortgage business and is the 2006 winner of American Banker's Lifetime Achievement Award.
"Angelo is without question the quintessential godfather of mortgage banking," said David Stevens, the head of affiliated businesses for the realty brokerage Long & Foster Cos. and a veteran of Wells Fargo & Co. and Freddie Mac.
And Countrywide is the "competitive nemesis of all the large lenders in the country."
Anthony T. Meola, the head of loan production at New Century Financial Corp. and a former top mortgage executive at Washington Mutual Inc., likewise describes Mr. Mozilo as a "very fierce competitor."
"And through that competitiveness he truly is someone who has shaped home lending across the industry," Mr. Meola said.
Mr. Mozilo's drive cuts across most everything he does.
"Once he knows what he has to do, he's like a dog that's not going to let go of the bone," said David A. Hurt 3rd, the senior vice president of business development at First American Corp.'s LoanPerformance unit.
Howard Levine, a longtime friend and the head of Arcs Commercial Mortgage Co., one of the country's largest apartment lenders, said, "Whatever Angelo does, he does to be a winner."
Colleagues, competitors, and other observers attribute Mr. Mozilo's success to an ability to identify trends and then adjust tactics and strategy as business demands.
He "has the unique ability to see the evolution of the business before most others," said William Nutt Jr., the head of American International Group Inc.'s United Guaranty mortgage-insurance unit.
Countrywide, which is based in Calabasas, Calif., pioneered automated underwriting, captive mortgage reinsurance, low-documentation programs for prime quality borrowers, and owning all the third-party services (such as appraisals and title work) and insurance products needed to make home loans.
"He was really the first that successfully brought all the different pieces in," said John Courson, the head of Central Pacific Mortgage Co.
S.A. Ibrahim, the CEO of mortgage insurer Radian Group Inc. and the former head of GreenPoint Mortgage, credited Mr. Mozilo with recognizing the importance of using the downtime after a refinancing boom to prepare for the next one - a strategy followed by many large lenders today.
"While everybody else was cutting left and right … he was cutting but also investing for the long term," Mr. Ibrahim said.
"IT'S WHO I AM"
Mr. Mozilo's colorful personality - his wit, outspokenness, and self-confidence - is part of the equation, too. Few financial services executives speak so candidly, so often.
Jonathan Gray, a retired equity analyst who covered the company for years, said Mr. Mozilo's nature has helped win loyalty from both employees and investors.
"He basically talks the same, whether you see him in a little coffee shop somewhere, or standing in front of an audience," Mr. Gray said.
In an interview, Mr. Mozilo admitted that his outspokenness has gotten him in trouble occasionally, but he added, "I'm not ashamed of it, or proud of it. It's who I am."
Asked what motivates him to compete, he said, "If you look at the people I go after, the Wells of the world, the Chases of the world, the Goldman Sachs of the world - the guys I pick as the adversaries - they're huge. Until I get on top of them, I'll always feel deprived."
It is often hard to tell where facts end and myth begins with Mr. Mozilo, but he conceded that he did stand at the entrance of Countrywide's building for years to see which employees arrived on time.
Success has not dulled Mr. Mozilo's well-known edge.
"I never totally feel comfortable," he said in an interview. "I wake up scared every day. I think it's an essential ingredient to being successful."
For instance, he worries whether his contributions to the housing market will be overshadowed, or even tainted, by Countrywide's role in making option adjustable-rate mortgages a mass-market product. "Only history will tell," he said.
And Mr. Mozilo said he still believes Countrywide took a big risk a few years ago when it began building a retail mortgage sales force paid on commission - after more than 20 years of bucking the conventional wisdom by not having one.
Finally, Mr. Mozilo is not convinced it was wise to add banking to Countrywide's product line, especially considering federal bank regulators' recent interest in clamping down on riskier home lending.
53 YEARS LATER
Mr. Mozilo joined the mortgage business at the age of 14 - as a messenger for Lawyers Mortgage & Title Co., later known as United Mortgagee Servicing Corp., in New York. He said the industry attracted him because the only white-collar member of his family - an uncle - bought mortgages for an insurer's portfolio though, over time, he recognized the power of homeownership to change lives.
"I don't know why I hired him, because now when I see 14-year-olds I can't believe I hired one for the job," said Edmund Katz, now 97, who used to run United Mortgagee.
But "he had good organizing talent, Angelo," Mr. Katz recalled. "He was a quick learner. … I felt he had all the attributes of being an important person in any mortgage company," including from an early age an understandstanding of macroeconomic issues and real estate markets.
After working at United Mortgagee through high school and college (where he majored in philosophy), Mr. Mozilo, at 21, was sent to Virginia Beach and put in charge of integrating a company the lender had bought: Lomas Realty Securities, founded by his future partner, David Loeb.
Several years later, a conglomerate bought United Mortgagee and told Mr. Mozilo, who was on track to head the lending business, to make changes that he believed to be "not how things get done." He quit. In 1969, at the age of 29, he founded Countrywide with Mr. Loeb.
For at least 10 years, the company - originally named Countrywide Credit Industries - struggled. Mr. Mozilo now acknowledges, "We were bankrupt for about a day, only nobody knew it but us."
Mr. Mozilo said he suffered along with the company, taking very little pay. "It's only in the last 10 years I made any money." (Of course, the money recently has been quite good: With total compensation of about $70 million, he was the 10th-highest-paid CEO last year, according to Forbes magazine.)
In 1974, Countrywide fired its commissioned loan officers, and plowed the savings into offering low-cost loans, defining the company for a long time as a discount house. By the early 1980s, its finances had stabilized.
Mr. Mozilo said he only really knew Countrywide was a success when he was nominated to become chairman of the Mortgage Bankers Association in 1991, a post he credits with helping him develop a web of relationships and respect.
Only a few years earlier, Countrywide had fought off a hostile takeover attempt by the Belzberg family. The bid failed, he said, because unlike the managements of most takeover targets, he and Mr. Loeb (who died in 2003) were looking to preserve more than their jobs. They had bigger interests in the company and were not about to give it up for less than it was worth, especially because so many employees had similarly taken stakes in Countrywide's success over pay, he said.
Throughout the 1990s and this decade so far, Countrywide grew and refined itself, all the while keeping home lending at its core. Since a historic refinancing boom peaked in mid-2003, it has managed to be much more profitable than most observers expected. Loan production totaled $491 billion last year, a record for the company.
Countrywide has become a banking powerhouse, too, with nearly $90 billion of assets, nearly all of which it has gathered in the last three years. (It was the 9th-largest bank holding company by assets at midyear, at $195 billion.)
The company also is now a clear capital-markets leader, thanks to its success in marrying the primary and secondary mortgage markets in a way Wall Street is now rushing to imitate. Countrywide added "Financial" to its name in 2002 to reflect its diversification.
TURNS OF FATE
Mr. Mozilo, who is working on his memoirs, attributed some fortunate career turns to happenstance or luck.
For instance Countrywide went national, he said, only because it had to expand outside California in the early 1970s when a surge in interest rates put it at risk of violating the state's usury law. And in building a commissioned retail sales force in recent years, Mr. Mozilo said, Countrywide owes a lot to Washington Mutual's purchase of Dime Savings. Countrywide picked up a slew of defectors from Dime's North American Mortgage unit, and the Seattle thrift also let Countrywide take over the leases of branches where the managers wanted to leave.
Mr. Mozilo not only decided to return to a traditional retail sales force but also spent years holding Countrywide back from lending through mortgage brokers, only to quickly turn the company into a force in the wholesale channel.
He dropped Countrywide's first bank charter in the mid-1980s out of frustration with regulators. But in the early part of this decade, when he realized his chief rivals were no longer mortgage banks but commercial banks, he decided to fight back by buying one and making it big. (Even with a tough yield curve, the banking unit's profits grew 58% from a year earlier, to $341 million in the first quarter, and the business generated 30% of the company's pretax earnings, up from 19%. Mr. Mozilo aims to expand the bank to $250 billion of assets by 2010.)
And in recent years, Countrywide has dabbled in offshoring - something Mr. Mozilo once called unpatriotic.
"I think I'm fallible," he said. "I have certain beliefs, and much of those beliefs are based on history. But things change."
Five years ago, Mr. Mozilo signed a contract with Countrywide's board that would have had him step down from the CEO post at the end of this year but remain chairman.
The plan changed in recent months, he said, when CEO-designate Stanford Kurland, his long-time No. 2, insisted on terms the company's board could not accept. Mr. Kurland left the company in September, and Countrywide announced Oct. 20 that Mr. Mozilo would stay on as CEO through 2009. (Attempts to reach Mr. Kurland for this story were unsuccessful. David Sambol, formerly an executive managing director, is the new heir apparent as president and chief operating officer.)
Gerald L. Baker, a protégé of Mr. Mozilo's who is now chief operating officer of First Horizon National Corp., said his former boss is just as enthusiastic about the business as he was 45 years ago.
"He has always been committed and dedicated to his work. And worked tirelessly at it," Mr. Baker said. "He sort of lived it, breathed it, thought it. I don't think he's changed in that regard at all."
To some mortgage bankers, Mr. Mozilo's career is proof that hard work and smarts can overcome the advantages of larger companies, like brand recognition and greater resources.
"I'm sitting here saying, 'Gosh, if he can accomplish this, so can I,' " said Michael W. Perry, the CEO of IndyMac Bancorp., a Pasadena, Calif., company that Countrywide spawned in the 1980s and is now the seventh-largest originator.