Fallout from the controversy has been swift and promises to spread. The Senate Ethics Committee is reportedly probing Countrywide’s loans to Dodd and Conrad, and two Republican members of Congress urged the House Oversight and Government Reform Committee to investigate as well. As Dodd shepherded a sweeping housing-reform package through Congress, his credibility was damaged, with newspaper editorials questioning whether his personal ties to Countrywide colored provisions giving relief to lenders. Senators John Cornyn and Barbara Boxer introduced an amendment requiring their colleagues to disclose detailed information about their mortgages. As housing values drop and foreclosures multiply, the Countrywide V.I.P. program has emerged as the latest business scandal to fuel a sense that insiders benefited disproportionately from the housing frenzy—and everyday consumers are paying the price.

According to Feinberg and company documents, V.I.P.’s nearly always received better deals than those available to most borrowers. Countrywide often waived up to two points and eliminated fees amounting to hundreds of dollars for underwriting, processing, and document preparation. Internal company emails often referred to these fees as “junk” or “garbage.” If interest rates fell while a V.I.P. loan was pending, Countrywide provided a free float-down to the lower rate, eschewing its usual charge of half a point. Some V.I.P.’s who bought or refinanced investment properties were given the lower interest rate reserved for primary residences. Because Mozilo informally preapproved his F.O.A.’s, many of them barely bothered to document their assets and enjoyed exceptions to normal procedures or shortcuts around them.

After the scandal erupted in June, several V.I.P.’s said they hadn’t realized that they received discounts. While Feinberg says he didn’t tell borrowers exactly how many points were waived on their loans, he says he told them that their fees were waived and usually assured them that they were getting special treatment or the Friends of Angelo discount. He also contends that he or other Countrywide employees almost always let borrowers know when they received a free float-down to a lower interest rate.

In 2002, Mozilo tried to snag a senator he anticipated might become the biggest V.I.P. of all: a U.S. president. On December 11, Peter Segal, a Washington real estate lawyer who worked closely with Countrywide, alerted Mozilo by email that he represented the seller of a $3.8 million Georgetown home that North Carolina Senator John Edwards was buying. Segal told Mozilo that he had encouraged Edwards to contact Stephen Brandt, who oversaw Countrywide’s V.I.P. loans. There was just one problem: The senator needed to close by December 23. “The timetable is ambitious, but he is a future presidential candidate and I think we [ought] to stretch for him,” Segal wrote.

Mozilo pounced. “Edwards will probably be either the vice pres or pres candidate for the Democrats for 2004,” he informed Brandt via email. “Do whatever it takes to get it closed by the 23rd and call me for the pricing.”

At Brandt’s behest, Feinberg immediately called Edwards’ assistant to convey Countrywide’s eagerness to help, but she fended him off. Oblivious to the behind-the-scenes maneuvers, the senator borrowed from a North Carolina bank.

Among mortgage companies, Countrywide’s visibility in Washington has increased dramatically in recent years. In 2005, it spent $1.5 million lobbying the federal government, more than five times its 2000 level and about the same as mortgage and banking giant Wells Fargo. At the time, Countrywide was backing legislation for national lending standards and opposing a plan to shrink its federally sponsored business partners Fannie Mae and Freddie Mac.

To gain access and “keep their edge,” says retired managing director Sidney Lenz, who oversaw government relations for Countrywide, the company’s lobbyists identified potential customers on Capitol Hill and in federal agencies and directed them to the V.I.P. program. The company’s lobbyists were “incredibly receptive” to loan requests from officials, she says, and it paid off. “Countrywide had an incredibly good relationship with Congress. It was not unusual for us to get a call saying, ‘A bill’s being introduced. It’s a little technical, and there are parts we don’t understand. Can you help educate us on this?’ ”

Federal rules prohibit members of Congress and their staff from accepting preferential loans, and many officials and employees elsewhere in government face similar restrictions. Senate rules bar members and staff from knowingly accepting gifts of $100 or more in a given year or any gifts from companies that, like Countrywide, employ registered lobbyists; gifts include loans on terms that are not available to the general public. Countrywide’s ethics code bars directors, officers, and employees from “improperly influencing the decisions of government employees or contractors by offering or promising to give money, gifts, loans, rewards, favors, or anything else of value.”

Nevertheless, Jimmie Williams, a Countrywide lobbyist in Washington, was remarkably candid in emails about the purpose of V.I.P. loans. In November 2002, for instance, Williams urged Feinberg’s boss, Doug Perry, to give “specialized handling” to an application from a staff lawyer for the House subcommittee that monitors the Department of Housing and Urban Development. HUD regulates real estate settlements and closing costs and runs the Federal Housing Administration, the agency that guarantees mortgages. Williams pointed out that Clinton Jones III, senior counsel of the House Financial Services Subcommittee on Housing and Community Opportunity, was “also an adviser to ranking Republican members of Congress responsible for legislation of interest to the financial services industry and of importance to Countrywide.”

Perry then emailed Feinberg: “Can you please handle this? .5 off. No garbage fees.”