.

Today, the SEC released a statement regarding its move to file fraud charges against Angelo Mozilo, the former CEO of Countrywide.  He’s been accused of “deliberately misleading investors about significant credit risks that were taken in an effort to maintain the company’s market share”.  He’s also been charged with insider trading.

This is the first high level executive to face the consequences of and possibly be forced to take financial responsibility for his role in the current mortgage crisis.  He doesn’t stand alone in these charges, though.  Standing next to him will be the former COO and former Countrywide president, David Sambol and former CFO Eric Sieracki.  Their charges are similar to Mozilo’s.  In part, they’re accused of providing false assurances that Countrywide primarily held prime mortgages and weren’t as much at risk as other lenders that specialized in subprime mortgages.  This is surprising since any mortgage loan officer in this country can attest to Countrywide’s B-C side that specialized in…you guessed it: subprime mortgages.

Mozilo’s lawyer, David Siegel, told The Wall Street Journal that there was no fair basis for any of these charges and reiterated his client’s insistence that all sales were both legal and ethical.  Despite an email that was discovered, written by Mozilo to Sambo and other high level officers, he still claims his actions were ethical:

                … The 100% loan-to-value subprime product is “the most dangerous product in existence and there can be nothing more toxic and therefore requires that no deviation from guidelines be permitted irrespective of the
circumstances.”

Of course, we know those guidelines he speaks of were widely ignored and 100% LTV loans continued, even when potential homeowners had FICO scores in the 400-600 range.  What this boils down to is people were buying homes, with absolutely no money up front aside from the costs of the appraisals and possibly closing costs (which in total, probably amounted to less than $5,000 - if that much).  They could have been considered poor credit risks (any FICO score below 550 is considered poor by most lenders) and still could have purchased a house that they might not could have afforded.

For now, the SEC seems to be content with its big fish.  Whether or not further charges for other head honchos will surface remains to be seen.