Countrywide founder agrees to give up $37.5m pay-off deal

Angelo Mozilo, whose chairmanship of the ailing mortgage lender Countrywide Financial has made him the face of the US foreclosure crisis, has agreed to forfeit a $37.5m (£18.9m) severance package that had sparked political fury.

The 69-year-old, who founded Countrywide in 1969, is due to be hauled before a congressional committee next week to defend his pay, his perks and a string of share sales that netted him millions of dollars in the run-up to the company's fall from grace.

The severance package would have been triggered by Countrywide's sale to Bank of America, which is under negotiation at the moment and would avert the collapse of a company that was the most prolific lender of the long sub-prime mortgage boom that finally turned to bust last year.

Mr Mozilo will give up a cash bonus, advisory fees and a perks deal that entitles him to the continued use of the corporate jet and a country club membership for another seven years. He will, however, retain a pension fund that totalled $24m at the end of 2006, as well as deferred pay of a similar amount.

Before his move yesterday, enraged unions had calculated he could walk away with up to $115m, although Countrywide insisted that was an overestimate. Presidential candidate Hillary Clinton called the severance package "outrageous" and other Democrats suggested Mr Mozilo make a multimillion-dollar donation to an organisation helping borrowers forced from their homes.

"My primary focus today, as it has been for the past 40 years, is to do what is in the best interests of Countrywide's employees, customers and shareholders," he said in a statement yesterday.

Bank of America has made an offer of $4bn to take over Countrywide, which has been struggling to stay afloat since the credit crisis began in the summer and effectively shut off its traditional sources of funding. Countrywide reports financial results today that could make or break that deal, although Ken Lewis, the Bank of America chief executive, insisted last month he had already carried out "the mother of all due diligences" on the financial state of the company.

Mr Mozilo is slated to appear before a hearing of the House of Representatives oversight committee next Thursday alongside Wall Street executives who have also been criticised for taking outsize pay packages while the credit crisis built up.