Report: Countrywide OK'd politico loans

WASHINGTON, June 7 (UPI) -- The head of U.S. mortgage lender Countrywide Financial Corp. allegedly approved special loans to politically connected borrowers, a report said.

Among the borrowers were two former chief executives of Fannie Mae, which is Countywide's biggest buyer of mortgage services, including James Johnson, a close adviser to presumptive Democratic presidential nominee Barack Obama, The Wall Street Journal reported Saturday.

The loans were made at preferential terms by Countrywide Chief Executive Officer Angelo Mozilo and their recipients were known as "Friends of Angelo," or FOAs, the Journal said. While nothing about the loans is illegal, they could represent a conflict of interest and create a political program for Fannie Mae, a government-sponsored entity that has been rocked by accounting scandals.

Johnson, who is serving on a committee to help Obama pick a vice presidential running mate, served at Fannie Mae's CEO from 1991 to 1998 and worked closely with Mozilo to streamline the credit approval process, which, the Journal reported, led to a huge boom in mortgage lending that has come crashing to an end with the current mortgage crisis.

An attorney for Johnson told the newspaper the terms of his personal home loan from Countrywide were well within industry limits.