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Conrad says he got nothing special from Countrywide

BISMARCK -- Sen. Kent Conrad, D-N.D., said he never asked for VIP treatment from Countrywide Financial when he was shopping for mortgages in 2002-04 and, as far as he knew, he received no special treatment.

He said his research Friday shows his mortgage terms were not exceptional for someone with his stellar credit.

Conrad spent the day responding to a story published Friday morning on the Portfolio magazine Web site that alleges Conrad, Sen. Chris Dodd, D-Conn., and other Washington, D.C. officials--both Republican and Democrat--received preferential treatment from the troubled mortgage company whose business practices are alleged to have stoked this year's subprime lending crisis and resulting recession.

A watchdog group, Citizens for Responsibility and Ethics in Washington, responded to the Portfolio story by calling for Senate and House ethics committees to start investigations into Conrad, Dodd and any other members of Congress who may have received loans in violation of bans on gifts to lawmakers.

But Conrad said he received no special treatment that he knows of.

"The suggestion that's left in that story, that I did something wrong, is just not true. I have done nothing wrong. I didn't ask for special preferences," Conrad said. "I didn't expect any. As far as I know I didn't get any."

Portfolio quotes company e-mails and former employees who say Countrywide had a VIP program for prominent people, referred to as F.O.A's, or "Friends of Angelo (Mozilo)," Countrywide's founder and CEO.

For VIPs, the company waived fees, points and some normal loan practices, according to Portfolio.

Portfolio reported Countrywide had a policy of not writing mortgages on rental property of more than four units, but that Conrad received a Countrywide mortgage on an eight-unit apartment building. Conrad said the company told him it often made exceptions to that rule.

Conrad said Countrywide did not waive points for him and "for all I know, I paid thousands and thousands of dollars of fees on these loans."

After researching Friday what the prevailing loan practices were at the time he got the Countrywide loans, Conrad said, "I got rates that, near as we can tell, were close to the prevailing rates. In addition, at the time of his first Countrywide loan, he had received a competing, comparable offer from another company.

Furthermore, he said, at least one financial official his office talked to on Friday chided the senator for being a poor negotiator and paying too much for one loan, on an apartment building in Bismarck.

Conrad admits he talked to Mozilo on the phone when a longtime friend, Jim Johnson, recommended it, but thought nothing of it because he talks to heads of banks and other loan institutions in North Dakota regularly. Johnson is a former head of Fannie Mae, the quasi-governmental mortgage lender. The two men have been friends since 1970.

Johnson himself made the news several days ago, when he was cut from Sen. Barack Obama's vice presidential vetting committee after Johnson's favorable loan packages with Countrywide were revealed.

Conrad got a series of mortgages from Countrywide beginning in 2002, when he and his wife, Lucy Calautti, bought a million-dollar vacation home at Bethany Beach, Del., an area he said he has been vacationing in since he was 18. They had paid off their Washington, D.C., house and started shopping for a mortgage for the Delaware property, he said. After paying 20 percent down, they needed a mortgage of $1.16 million.

"So I went to (Johnson) because he'd run the largest mortgage company in the United States. He'd probably have a pretty good idea where I could go. He'd retired three years before but he knows the mortgage business," Conrad said.

The senator also asked his then chief of staff, Bob Van Heuvelen, who had just refinanced a mortgage, for a recommendation. Van Heuvelen recommended a local Washington, D.C., broker and Johnson recommended Countrywide, telling Conrad to talk to Mozilo himself.

Van Heuvelen's broker, Glenn Schwartz, confirmed Friday that he came up with a mortgage option for Conrad and that Conrad decided on Countrywide instead. Schwartz said Conrad liked the Countrywide offer better because Schwartz's package consisted of a first and second mortgage instead of a single loan.

According to Conrad's office, the prevailing rate on a jumbo mortgage in late 2002 was 6.37 percent and he received 6.125 from Countrywide on a 30-year mortgage.

Mortgage rates dropped and, in May 2003, Conrad refinanced the Delaware property at 5.625 percent. The prevailing rate at the time for a similar mortgage was 5.65 percent, his staff said Friday. Conrad said the refinanced mortgage totaled $259 more than the original mortgage because of high fees that he paid to refinance the loan.

Conrad refinanced the vacation home again in April 2004, this time for 15 years at 4.875 percent, when the going rate for a similar loan was 4.83 percent, he said.

In July 2004, Conrad sought a mortgage to buy out his brothers' share of an eight-unit apartment building in Bismarck that they owned together. The building is where Conrad keeps his North Dakota residence. He borrowed $96,000; the property was worth $260,000. Countrywide wrote him a 30-year mortgage with a five-year 5.75 percent adjustable rate.

On Friday, at Conrad's request, a Bismarck bank president, Greg Vetter of American BankCenter, said his bank would have also offered 5.75 percent on a similar loan to someone with Conrad's upstanding credit rating.

Conrad said Friday that it's possible Johnson put in a good word for him with Mozilo, but that would be expected "because we're close friends and I think I was a pretty good customer. I had impeccable credit. I had, you know, 20 percent down. I had no other mortgage. I was a pretty good person to loan money to and the proof is in the pudding."

By that Conrad means that he has not only made every payment due Countrywide, but has paid both mortgages down faster than required; he now owes $784,000 on the Delaware house and $32,000 on the Bismarck apartment building.

Conrad said Friday, he understands now that Mozilo may have told the "young loan officer" for Countrywide to give Conrad special treatment.

"He probably did. I don't know. I never thought for a moment that that meant I got a better rate. And I never thought for a moment that I paid less fees. I really didn't. And when I try to reconstruct things, I doesn't look to me like I did."

Conrad said there is another reason for him to believe that his Countrywide loans are not exceptional. The Countrywide loan officer now works for a different company. After he left Countrywide, the loan officer e-mailed Conrad and said he could write Conrad a better loan than the one he is carrying with Countrywide.

Janell Cole works for Forum Communications Co., which owns The Dickinson Press.