Countrywide Accounting Fraud
In the year 1969, David Loeb moved to NY from Virginia to begin a home loan and advance organization named as "United Mortgage Servicing." He was joined by his trusted aide Angelo Mozilo. Both shared common dreams of big money and making their presence felt across the nation. The sole owner of the firm, David Loeb had to, under pressure of work, circumstances and colleagues part with half of the ownership. David Loeb and Angelo Mozilo became equal partners of the new firm that they formed, "Countrywide." They began their operations from and opened their new office in California. Angelo Mozilo was a very forceful and opportunistic marketer, and began pushing for contracts in the market aggressively. The organization was chipping away at two fundamental boards; David's NY-based credit exercises and Mozilo's home loan plot trades in the city of California. After they attempted to present open share by coasting a stock in stock trade, David needed to move to Los Angeles. For about two years, the two carried on this formation and had a rather localized presence. By the year 1974 organization had begun an alternate eight business locales yet it was still a neighborhood player and much expansion and work needed to be done before their dream of being known across as "Countrywide" would be realized. (Chomsisengphet, & Pennington-Cross, 2006)
Before long, it was David Loeb who understood that some extraordinary measures ought to be taken to make organization to realize the inner desires. He chose to change whole staff and enroll new, highly skilled one with high pay. Mozilo was hesitant to such an extreme move however was persuaded to the imagination of the future possibilities wit a similar depiction of dreams that had brought them to the present from the modest past and upbringing. With, fresh recruits implanted, organization soon made huge benefits with the new thoughts put and actualized by new group. In the year 1978, organization was making astounding profits. It was not sheer hard work. Key to their prosperity was foresight in understanding and anticipating changes in investment rates before it happened accompanied by institutionalizing strategies (Chomsisengphet, & Pennington-Cross, n.d.).
Mozilo effectively snatched the opportunity with refinancing of homes as investment rates fell. Before long numerous property holders began to contribute with Countrywide for refinancing and by mid 1980s within 26 states it had 104 work places. 1984 to 1986 turned out to be the most happening for the organization as it topped a landmark figure of $3.2 billion. For initial 20 years, Countrywide registered development relentlessly and financial analysts were looking forward as the industry was hit by numerous money related and capital embarrassments. Countrywide, because of its clean image and considerable trust component, was favored by many investors and got a cushion of additional funds of over four hundred million dollars in late eighties & early nineties. The organization was sufficiently shrewd to peruse the technologically advancing times and immediately acquainted itself with new technical skills with minimum expense and application handling time for the clients. For 1990, as a matter of example, the association displayed its own state- of-the- art workmanship development start-up organization, EDGE, through which it was proposed to decrease the dangers of deficient credits and affirmation evaluating (Chomsisengphet, & Pennington-Cross, n.d.).
The system had limited, by and large lessened expense by taking care of costs, while stimulating financing time to a period of less than 30 days on standard home loans, by engaging development specialists to enter customer information simply once. Typical information could then be copied to diverse records hence; figures, for instance, credit rates and refund centers could be downloaded similarly. EDGE then printed out completed genuine copies of all chronicles on a laser printer, discarding the prerequisite for preprinted development structures and saving the association $1 million a year (Chomsisengphet, & Pennington-Cross, n.d.).
Countrywide upheld its dedication to this industry by promising to offer $5 billion in House-America kind of credits to the country's two biggest home loan banks, the Federal National Mortgage Association, "Fannie Mae," and the Federal Home Loan Mortgage Corp., "Freddie Mac," both of which were made by Congress to guarantee that moneylenders have a consistent wellspring of cash for home loans. Plans to enter into money market funds, stocks, no-load mutual funds, annuities and in 1996 also contributed to the company's prediction of yearly earnings of more than $300 million by the end of the decade. (Chomsisengphet, & Pennington-Cross, 2006).
The Transgressions and the transgressors
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