GreenPoint Mortgage, the latest casualty of the mortgage meltdown, was once overseen by a director of Freddie Mac, the giant public company chartered by Congress to bolster home lending.
Thomas S. Johnson was elected to Freddie Mac’s board in 2004 when he was CEO of GreenPoint Financial, then parent of GreenPoint Mortgage. That year, GreenPoint Financial was acquired by North Fork Bancorp for $6.3 billion. Capital One acquired North Fork last year for $13.2 billion.
After the markets closed Monday, Capital One said it would shut down GreenPoint Mortgage, eliminating 1,900 jobs by the end of the year.
Johnson became CEO of Greenpoint in 1993. Before that he was president of Chemical Banking Corporation and Manufacturers Hanover. In 2003, the year before he became a Freddie Mac director, GreenPoint sold $3.3 billion worth of mortgages to Freddie Mac, according to the press release about his appointment.
The company specialized in making loans to those with slightly better credit than subprime borrowers – often referred to as the Alt-A market – but the results were the same: a rise in defaults and foreclosures that has rocked the mortgage industry.
Some in Congress think Freddie Mac should be allowed to buy larger mortgages and more of them from firms like GreenPoint to inject liquidity into the market.
On the web
Capital One to Close Mortgage Unit – New York Times
Capital One Closes GreenPoint Mortgage, Idling 1,900 – Bloomberg