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Wednesday, July 21, 2010

Congressional probe reveals Fannie Mae and Freddie Mac employees received more than 170 cut rate loans from Countrywide Financial

Employees at Fannie Mae and Freddie Mac — including top executives — received more than 170 cut rate loans from Countrywide Financial, according to a congressional probe, the latest accusation that the lender tried to curry influence with people in power.

The investigation revealed that Fannie Mae employees — including an assistant to the CEO, a government relations lobbyist and a vice president for sales — received 153 favorable loans, while 20 VIP loans were issued to employees at Freddie Mac. Countrywide Financial collapsed in the 2008 housing meltdown and was swallowed by Bank of America, but its connections to powerful political figures continue to reverberate in Washington.

These are the same type of special loans that created an ethics controversy for Sens. Kent Conrad (D-N.D.) and Chris Dodd (D-Conn.). The senators were accused of getting VIP mortgages because of their political positions — but were later cleared by the Senate Ethics Committee.

The investigation has also uncovered what Republicans believe is evidence that Countrywide was offering loans to influential people at a loss to the company. An e-mail, obtained by POLITICO, shows Countrywide employees discussing a refinance of former Fannie Mae Chief Operating Officer Daniel Mudd’s loan, acknowledging the sensitivity and potential for financial loss.

“Make sure the branch, and RVP, understand the sensitivity of this deal,” the e-mail to a former Countrywide Vice President Daniel Rector reads. “We are already taking a loss, it would be horrible to add a service complaint on top and lose any benefit we generate.”

Any special rate loans may violate Fannie Mae’s code of conduct, which prohibit discounted loans, according to a letter that summarized the investigation’s results.

Most of the names of these employees were redacted in the report, obtained by POLITICO ahead of its planned afternoon release. (Continues here)

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