By signing last weeks 10-year employment deal, Angelo Mozilo, Countrywide Credit Industries Inc.s chairman and chief executive, has mapped out an end to his 32-year relationship with the company.
But the roadmap he has in mind focuses not only on his own role but also on such goals as reaching for No. 1 in all categories of the mortgage business, becoming more bank-like, and growing internationally.
In an interview with American Banker, Mr. Mozilo, 62, soberly explained the importance of a Fortune 500 company leaders having clearly laid out plans, both for worker morale and a positive business environment. At the same time, the idea of letting go of Countrywide, which he founded in 1969 with the now-retired David Loeb, left the normally eloquent entrepreneur stammering for the right words.
No matter what form the leadership team at Countrywide takes, Mr. Mozilo said, the company will operate in the same way as it always has: very aggressively and with the goal of dominating the mortgage industry.
Our goal in the next five years is very clear, he said. We want to reach $500 billion in servicing, 10% market share in originations, and a 20% return to our investors.
Though the mortgage giant has consistently been ranked in the industrys top five, reaching its goals will take some effort. At the end of last year, it was ranked third in originations, with $61.7 billion, and fourth in servicing, with $285 billion.
Though it was just $15 billion behind then-leader Chase Manhattan Mortgage Corp. in originations, it trailed then-No. 1 Wells Fargo Home Mortgage in servicing by almost $170 billion. (Washington Mutual Inc. has since captured the No. 1 spot in both categories by a few billion dollars.)
Mr. Mozilo, however, says his vision for his company goes well beyond mortgages. Its acquisition of Treasury Bank, a $111 million-asset commercial bank in Washington, which got federal approval on April 12, will serve as the foundation for propelling Countrywide from a mortgage bank to a full-service financial services company, he said.
He said he envisions Countrywide as a company that offers savings and checking accounts, automated teller machines, and other banking and insurance products through its 400 branches. In turn, the company will compete with the likes of Bank of America Corp., Wells Fargo, and Citigroup Inc., he said.
Through the Treasury Bank charter, Countrywide can bring back the $5.6 billion it has in escrow deposits in other depositories a capability its commercial bank competitors have long enjoyed.
Were going to grow the bank prudently but aggressively so that we can enjoy some of the benefits that our commercial banking competitors have, particularly in the leverage area, he said.
Further, Countrywide is one of the few mortgage-related companies making a push overseas.
Though its overseas operations are now based in England where it has a servicing joint venture with Woolwich PLC, now owned by Barclays PLC, called Global Home Loans; founded a mortgage technology company called UKValuation; and opened an office to buy and securitize mortgages it eventually plans to cross the English Channel in search of new markets.
Mr. Mozilo said he is looking to Germany, France, and perhaps Italy as the next countries to enter.
Back home, however, he described some of the current challenges facing the mortgage industry with critical words bordering on disdain.
Though he did not question the intentions behind efforts to stop predatory lending, Mr. Mozilo said he most definitely questions some of the federal and local bills that have been proposed or enacted.
Many of the new predatory lending regulations are irrational and irresponsible as well as unproductive and destructive to those people who really need to be helped, he said.
However, Mr. Mozilo said he would prefer a federal solution, which would let everyone operate under one set of rules, to having hundreds of different regulations at city, county, and state levels.
Im not an individual that likes a lot of federal intervention, but there are times when it is absolutely necessary, he said. This is when its necessary that we get a reasonable law that is designed to serve the people who are underserved and to punish those who abuse.
Class actions have also taken a toll on the industry, and the growing number of lawsuits threaten the prosperity of many mortgage lenders, he said. People sign a lot of papers in the mortgage process, and a lot of language in those papers can be construed in many ways to find a reason to sue, he said.
Its the class action du jour, and most of them are geared to benefit not the consumers but the attorneys bringing the plaintiffs cases, he said. He cited several suits that have been filed over prepayment penalties and late payment charges.
Just over a year ago Mr. Mozilo set off a six-month stock frenzy by hinting to American Banker that he would be willing to sell his beloved company an option previously akin to heresy in the companys hometown of Calabasas, Calif.
Though a deal never materialized, its stock rose 120% from last March to a high of about $51 a share in early January. Shares were trading at $42.46 Friday afternoon, up 2% from Thursdays close.
Mr. Mozilo said he remains extremely optimistic and enthusiastic about the future of Countrywide, and that he considers it by far the best mortgage provider in the world. Nonetheless, there were some issues mainly leverage that prevented it from being even bigger, more expansive, and able to offer services to more customers, he said.
Under my leadership, Countrywide will always look at opportunities that would permit [it] to achieve a strategic objective of total dominance, both domestically and internationally, he said. That was my statement then, and thats my statement now. Nothing has changed.
However, Mr. Mozilos reign wont last forever. Under the terms of the agreement announced last week, he will remain in his current position until 2006, then step back and work with Countrywide as a consultant for five years.
I felt it was very important since Im very emotionally and passionately attached to Countrywide that everybody, both inside and outside the company, know what my plans are, Mr. Mozilo said.
Workers at all levels are hungry for the opportunity to advance, he said. In my experience, if the CEO doesnt make it clear what his plans are, it can create problems for management.
But Mr. Mozilos idea of retiring may differ from that of many workers approaching their mid-60s. Though he said he has not given much thought to how he would spend his time after Countrywide, its hard for me believe that I wont be completely focused on the company.
Asked it will be hard to let go, he said: Absolutely. Im a human being. On one hand, Ive got to be a realist and realize things happen when you get older and priorities change, but it will be very, very difficult.
He said he plans to continue to work very actively with Countrywides management to help them expand the company. And whatever spare time he may have, he noted that he has five children and seven grandchildren and he hopes that last number will grow substantially by the time he retires.
Ive got lots to do, he said. Im a lucky guy.