August 27, 2007
NY Times: Countrywide Does Not Send 1099s to Mortgage Brokers
Inside the Countrywide Lending Spree, by Gretchen Morgenson:
Independent brokers who have worked with Countrywide also say the company does not provide records of their compensation to the IRS on a Form 1099, as the law requires. These brokers say that all other home lenders they have worked with submitted 1099s disclosing income earned from their associations. One broker who worked with Countrywide for seven years said she never got a 1099. “When I got ready to do my first year’s taxes I had received 1099s from everybody but Countrywide,” she said. “I called my rep and he said, ‘We’re too big. There’s too many. We don’t do it.’" A different broker supplied an e-mail message from a Countrywide official stating that it was not company practice to submit 1099s. It is unclear why Countrywide apparently chooses not to provide the documents.
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Presumably Bank of America, via its due diligence, factored Countrywide's alleged noncompliance with Form 1099 reporting regulations into the pricing for the $2 billion stake that BofA is taking in Countrywide. If not, then oops!
Posted by: Jake | Aug 27, 2007 11:48:19 PM
This practice provides one answer to the question, "How can Countrywide attract and retain broker business without increasing commissions by 28%?"
Posted by: Paul | Aug 28, 2007 3:01:10 PM