AP source: House Republicans got discounted loans

January 14, 2012 - 4:52 AM

WASHINGTON (AP) — Two veteran House Republicans received discounted mortgage loans from the now-defunct Countrywide Financial Corp. under a VIP program, a congressional official said Friday.

The discounts went to Reps. Howard McKeon and Elton Gallegly of California, said the official, who was not authorized to speak publicly about the loans and requested anonymity. Their identities were first reported by The Wall Street Journal.

The House Oversight and Government Reform Committee has been investigating whether members of Congress received VIP discounts. The Associated Press reported previously that four House members had received the discounts. One of the four remains unidentified publicly.

Records show that Rep. Edolphus Towns, D-N.Y, also received discounts. Towns told the AP previously that he was not aware of receiving any discounts. McKeon and Gallegly told the Journal that they also were not aware of receiving discounted loans and did not know their mortgages were processed by the VIP unit.

The Journal said the 1998 loan to McKean, who is chairman of the Armed Services Committee, totaled $315,000. Gallegly's 2005 loan totaled $77,000 in 2005.

Rep. Darrell Issa, R-Calif., chairman of the oversight committee, informed both lawmakers that documents received from Bank of America — it bought Countrywide — showed they went through the special unit.

Issa has sent the information to the House Ethics Committee, which determines whether House members violated standards of conduct. A discounted loan could be considered a gift. Gifts are virtually banned under House rules.

None of the lawmakers has been accused by the ethics panel of any wrongdoing, and may never be if they convince investigators they had no knowledge of the discounts.

Countrywide was the nation's largest mortgage company and played a major role in the U.S. financial crisis by issuing subprime loans. The company also had its VIP program, with some of the favored customers known as "Friends of Angelo" — a reference to chief executive Angelo Mozilo.

Mozilo in 2010 agreed to more than $67 million in penalties in a settlement with the Securities and Exchange Commission.