Two more congressmen have been identified as receiving loans through a Countrywide Financial Corp. program that has prompted a House investigation into whether the fallen mortgage giant approved loans on favorable terms to win political favor.
Howard McKeon and Elton Gallegly — veteran Republicans from Southern California — acknowledged they are among the four whose names were recently sent to the House Ethics committee by Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform committee, which is probing Countrywide's so-called VIP program. Neither has been accused of any wrongdoing.
A spokeswoman for Mr. McKeon, chairman of the House Armed Services Committee, said he was "pretty shocked and angry" when Mr. Issa recently told him he was listed in Countrywide records as a VIP loan customer. Until then, Mr. McKeon had no inkling that his 1998 loan had gone through the program, she said. He had never asked for, and as far as he knew, never received any special favors on the home loan, according to the spokeswoman. Public documents show the loan was for $315,000. She said the congressman no longer owns the property.
Mr. Gallegly said in an interview that after being contacted by The Wall Street Journal about his 2004 Countrywide loan he talked with Issa staffers who told him that records showed his loan went through the VIP program. He said he hadn't previously heard of the program and would have "run away from" any offer that possibly carried special favors. Mr. Gallegly said he doesn't believe he received any special treatment on the $77,000 loan, which he said he paid off in 2005.
Both Mr. McKeon and Mr. Gallegly deny ever carrying out any favors for Countrywide.
The VIP program gave out loans to thousands of people, many of them Countrywide employees or their relatives and friends. VIP loans were often given at lower interest rates or with lower fees than available to the general public, according to congressional investigators.
Through a spokesman, Mr. Issa declined to comment, as did Dan Schwager, chief counsel for the House Ethics panel.
The only member of the House who had been connected publicly to the VIP program is Rep. Edolphus Towns, a New York Democrat. In 2009, The Wall Street Journal reported that Mr. Towns received VIP loans for properties in New York and Florida. He is believed to be among the four House members referred to in Mr. Issa's letter.
Mr. Towns acknowledged receiving the loans. Through representatives, he has repeatedly denied any wrongdoing and said he never sought or received special treatment on the loans.
The identity of the fourth House member isn't yet known.
Once the nation's largest mortgage lender under its longtime chief executive, Angelo Mozilo, Countrywide ran into serious financial problems several years ago tied to its subprime lending activities. Those problems helped spark the nationwide financial crisis in 2008.
In court filings, Mr. Mozilo denied any wrongdoing. In 2010, he and other defendants settled with the Securities and Exchange Commission. Mr. Mozilo agreed to $67.5 million in penalties without admitting or denying wrongdoing.
Bank of America Corp. purchased Countrywide in 2008. The bank ended the VIP Program, and has been providing information on it in response to subpoenas from Mr. Issa's committee, a bank spokesman said.
