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Mortgage Discounts for VIPs

POSTED: 05:03 PM ET, 06/13/2008 by Derek Kravitz

Alphonso Jackson
Former Housing and Urban Development Secretary Alphonso Jackson in New Orleans. (Bill Haber, Associated Press).

An investigation by Conde Nast Portfolio magazine has turned up two senators, two former Cabinet members and a former United Nations ambassador who received "V.I.P." discounts on their loans from Countrywide Financial Corp., a lender seeking to curry political favor.

The little-known program first came under scrutiny earlier this week after The Wall Street Journal revealed James A. Johnson, the vice presidential search consultant for Sen. Barack Obama (D-Ill.), had received more than $2 million in Countrywide loans potentially at below-market rates.

Among the high-profile names included in the new investigative report about loans given by Countrywide Financial and its CEO Angelo Mozilo is Alphonso Jackson, the embattled former Housing and Urban Development secretary.

Jackson resigned in March amid a criminal probe into how the agency awarded some contracts.

According to the Portfolio report, Jackson borrowed $346,331 from Countrywide in June 2003 to refinance his Alexandria townhouse and in December of that year applied for a $308,000 mortgage to buy a vacation home on a golf course in Hilton Head Island, S.C. A former unnamed employee told the magazine that Jackson received discounts on both loans.

Jackson and his wife, Marcia, purchased their four-story brick townhome in Alexandria for $435,000 in December 2002. The couple purchased the 3,800-square-foot home in Hilton Head Island for $390,000 In January 2004, according to property records.

Jackson, 62, denied the charges to the magazine, saying he was a Countrywide borrower long before he met Mozilo or worked for HUD and that he wasn't told about any preferential treatment.

Jackson is remembered by critics as a Cabinet secretary so committed to carrying out President Bush's goal of increasing homeownership that he encouraged policies that threatened to exacerbate the mortgage crisis. One of his chief proposals was to allow FHA lenders to offer relatively high-risk loans to low- and moderate-income homebuyers. The proposal was criticized by the department's inspector general, who noted its potential for fraud and abuse.

By Derek Kravitz |  June 13, 2008; 5:03 PM ET
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