Angelo Mozilo, slated to step down as chief executive of Countrywide Financial Corp. on Tuesday, is departing with a devalued reputation partly because he stayed too long and at times ran the publicly traded mortgage lender as if it were his own company.

Bank of America Corp. plans to complete its acquisition of Countrywide on Tuesday, and the 69-year-old Mr. Mozilo will retire. Bank of America will become the nation's biggest home-mortgage lender, using Countrywide's loan-processing technology and nationwide presence -- but not its brand, which is scheduled to vanish after a transition period.

Associated Press

Until about a year ago, Mr. Mozilo was little known outside his industry. In the mortgage world, he was considered a visionary. He helped found Countrywide in 1969 and built it into the nation's biggest and most efficient mortgage lender. Then came an abrupt fall as defaults surged and investors lost confidence.

Countrywide's reaction to the crisis was to push for more market share in the first half of 2007, aiming to benefit from the collapse of rivals. That backfired when Countrywide could no longer find buyers for many of the loans it had originated, leaving the company stuck with billions of dollars of high-risk mortgages. Former executives say Countrywide, which still accounts for about one in every seven home loans made in the U.S., was so focused on increasing volume that it neglected quality control.

Mr. Mozilo made things worse for himself by postponing his retirement and by making frequent, heavy sales of Countrywide stock. He offered discounts on loans to friends so frequently that FOA -- for Friends of Angelo -- became a familiar loan type among employees. He was quick to dismiss criticism from analysts and shareholders.

"I've built this company over 40 years," he said in October, responding to a Wall Street Journal article listing the company's errors. "I'm not a hired hand who's come in the past couple of years." Mr. Mozilo and other company officials didn't respond to requests for comment for this article.

Company founders can make excellent CEOs, says Andrew Ward, a management professor at the University of Georgia in Athens. But some believe that "what they want is automatically what's best for the company." Focused on their legacy, they sometimes cling to power too long and ruin that legacy, Dr. Ward says.

Mr. Mozilo, whose father was a butcher in New York's Bronx borough, speaks bluntly in an era when most executives sound like press releases. When asked last year about proposals to give shareholders a nonbinding vote on compensation, he said: "The shareholders have no clue" how much Countrywide needed to pay to attract talent.

When an analyst fretted in 2004 about Mr. Mozilo's sales of Countrywide stock, he snapped that those who had construed his share sales as bearish were "losers." Mr. Mozilo stepped up those sales in late 2006 and unloaded more than $130 million of stock in the first half of 2007. That undermined confidence in the company, demoralized some of his own employees and drew a continuing investigation by the Securities and Exchange Commission. He also faces a rash of lawsuits from investors, borrowers and state regulators.

Mr. Mozilo has said his stock sales were lawful and defended his right to dispose of what he regards as well-earned compensation. The problem in America, he said in an interview last year, is that "people are reviled if they make what people think is too much." In Mr. Mozilo's view, "if anybody makes a billion dollars, that's America. That's terrific!"

Several of Mr. Mozilo's family members have worked at the company, including his brother Ralph, a son and a son-in-law. He once threatened to quit if the company stopped reimbursing him for the tax liability that arose when his wife rode the corporate jet.

A power struggle with his longtime No. 2 executive, Stanford Kurland, torpedoed a plan for Mr. Mozilo to hand over the CEO post to Mr. Kurland at the end of 2006 while remaining chairman. Among other things, the two argued over who would be the public spokesman for the company, according to people familiar with those discussions. They say Mr. Mozilo wanted to keep doing the CNBC interviews, but Mr. Kurland believed that would undermine him. Mr. Kurland negotiated an exit package, and Mr. Mozilo remained CEO.

Reached by telephone, Mr. Mozilo's son Eric, who manages a Countrywide branch in Pasadena, Calif., blamed the media for wrecking his father's reputation and depicting the company as "evil."

"All we try to do is put people in homes," the younger Mr. Mozilo said.

Write to James R. Hagerty at bob.hagerty@wsj.com

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