WASHINGTON, D.C. – Earlier today, Allied Progress launched two six-figure TV ad buys calling on Senators Jeff Flake (R-AZ) and Dean Heller (R-NV) to oppose the confirmation of Steven Mnuchin, President-elect Trump’s nominee for Treasury Secretary, due to his abysmal record running OneWest bank where he made an estimated $200 million systematically foreclosing on the homes of tens of thousands of American families.
In response to the ads, Mnuchin spokesperson Tara Bradshaw told the Wall Street Journal that Trump’s Treasury nominee, “tirelessly worked to help families stay in their homes.” According to Bradshaw, Mnuchin’s bank was a “modification machine,” not a “foreclosure machine.” Responding to this clearly desperate and inaccurate spin, Allied Progress released the following statement and accompanying fact check:
“Steven Mnuchin wasn’t a modification machine, he was a running a foreclosure mill,” said Allied Progress executive director Karl Frisch. “Mnuchin personally made an estimated $200 million while his bank foreclosed on tens of thousands of hard-working Americans. Most Americans think that Wall Street profiteers like Mnuchin should be facing a jury of his peers to answer for his actions – but Donald Trump thinks he should run the economy. It’s up to Senators like Jeff Flake and Dean Heller to stand up for their constituents – some of the hardest hit during the foreclosure crisis – and oppose Steven Mnuchin’s nomination.”
FACT CHECK: Debunking Mnuchin Camp’s Bogus Claim He Helped Families During Foreclosure Crisis
Before the foreclosure crisis, Donald Trump said he “sort of [hoped]” that the real estate market crashes so he could buy more at lower prices. Mnuchin did just that. Trump said, “if there’s a bubble burst, as they call it, you know you can make a lot of money.” According to a Bloomberg calculation, Mnuchin may have personally made $380 Million from OneWest, his bank with a troubling record of foreclosing on thousands of homeowners. [Zachary Mider, “Nominating Mnuchin for Treasury Will Dredge Up Mortgage Meltdown Controversies,” Bloomberg, November 22, 2016; Zachary Mider and Saleha Mohsin, “Trump’s Treasury Pick Has a $230 Million Blemish on His Record,” Bloomberg, December 13, 2016]*
OneWest “came under fire for its foreclosure practices.” It “foreclosed on over 35,000 homeowners in California, including seniors and surviving spouses who had reverse mortgages with a subsidiary of OneWest.” The high number of foreclosures is “not surprising, since nonprofit housing counselors consistently ranked OneWest as one of the most difficult servicers to work with in helping homeowners avoid foreclosure.” A judge in a foreclosure case said OneWest committed “‘harsh, repugnant, shocking and repulsive’ acts,” and called the “bank’s conduct ‘inequitable, unconscionable, vexatious and opprobrious.’” In another case, OneWest foreclosed on a 90-year-old woman over 27 cents. [Kiernan Crowley, “Judge Blasts Bad Bank, Erases 525G Debt,” New York Post, November 25, 2009; Kevin Stein and Daniel Rodriguez, “Is the FDIC Subsidizing a ‘Too Big to Fail’ Merger?” American Banker, November 20, 2014; David Lawder, “Trump Expected to Name Former Goldman Banker Mnuchin for Treasury,” Reuters, November 29, 2016; and Lorraine Woellert, “Trump Treasury Pick Made Millions after His Bank Foreclosed on Homeowners,” Politico, December 1, 2016.]
OneWest has foreclosed on numerous elderly people, including some who lived in their homes for decades and could have stayed in their homes with the help of government-assisted loan modifications. Some of these people were deceived by OneWest employees and had their homes sold out from under them without their knowledge.
For example, “Rex Schaffer, 86, and his wife Rose were among those who lost their homes, in a OneWest foreclosure. After living nearly 50 years in their home in La Puente, Calif., the Schaffers took a home equity loan but struggled to make the payments. They say they qualified three times for a government assisted modification, but OneWest failed to modify the loan. ‘It was a disaster dealing with those people,’ Rex Shaffer says. ‘We’d have a different person every time we called in.’ He counted 33 OneWest employees, in all, and each one would give him ‘a different story.’ Facing threats that their home would be auctioned off, the Schaffers finally got through to a OneWest vice president. According to Rex Shaffer, the VP said, ‘I’m going to get you a 60-day extension on the sale date, so we can work this thing out.’ That was on Feb. 17, 2011. But the next day, the Schaffers’ house was sold without their knowledge. ‘We didn’t even know it–didn’t have the faintest idea,’ Rex Shaffer says.” [John Ydstie, “Trump’s Potential Treasury Secretary Headed A ‘Foreclosure Machine’” National Public Radio, November 29, 2016.]
“In Texas, OneWest started to foreclose on” Myrtle Lewis, “a 103-year-old senior woman because she had allowed her insurance to lapse. Despite buying her force-placed insurance, OneWest . . . tried to foreclose on her. Well, they tried until the media reported it. Then, magically, the bank filed a motion to dismiss the foreclosure case.” [Jack Douglas Jr., “103-Year-Old North Texas Woman Fights To Keep Her House,” CBS DFW, November 21, 2014; and Kevin Stein, “This Is Why Reverse Mortgage Servicers Need a Foreclosure Moratoria,” Housing Wire, December 11, 2014.]
OneWest even foreclosed on an elderly widow despite court orders telling the bank to stop. More specifically, in 2009 OneWest repeatedly tried “to foreclose on an elderly widow’s house despite two court orders telling them to stop.” Irene Jones, 89, said stress from the repeated threats of foreclosure “made her husband depressed and may have contributed to his death.” [Maria Dinzeo, “Bank Won’t Quit Demands on Elderly Widow,” Courthouse News Service, November 23, 2009.]
In the past, OneWest has foreclosed on people who followed their often contradictory directions. For example, Katrina Perkins Steinberger sued OneWest in Arizona, claiming she followed the bank’s directions to have her mortgage modified, but the bank proceeded to foreclose on her for following their directions. Making matters worse, the bank regularly mishandled her applications and other paperwork. In another example, Teena Colebrook of Hawthorne, CA, spent five years unsuccessfully trying to adjust her OneWest loan through the Home Affordable Modification Program, but OneWest “lost” the paperwork, gave “conflicting statements about ownership of the loans and fees, and submitted charges that were unverified and caused her loan balance to balloon.” When OneWest foreclosed in 2015 she owed $517,662 on her $248,000 house. [Steinberger v. McVey, 234 Ariz. 125; and Josh Boak and Jeff Horwitz, “Trump Voter Lost Home, Blames Incoming Treasury Secretary,” Associated Press, December 5, 2016.]
At a Federal Reserve Board hearing in 2015, “visibly shaken borrowers, some of them on the verge of tears, described trying to get a response from OneWest Bank about home loan modifications and reverse mortgages.” In one example, “Helen Kelly, a former Minnesota prosecutor who lives in Pleasanton, Calif.,” described OneWest as “criminals” who “should be in jail.” Kelly “alleged that OneWest refused to offer her a loan modification, and tried to foreclose on her home until she contacted the Office of the Comptroller of the Currency and ultimately got relief in 2011.” [Kate Berry, “The Big Surprise at CIT-OneWest Merger Hearing: Lots of Support,” American Banker, March 2, 2015.]
“‘Dual tracking’–negotiating with a homeowner while pursuing foreclosure–violates federal servicing statutes,” yet OneWest has been caught doing it to customers, such as Leslie Parks in Minneapolis, MN. [David Dayen, “Donald Trump’s Finance Chair Is the Anti-Populist from Hell,” New Republic, May 9, 2016.]
OneWest foreclosed “on 36,000 households in California alone, plus an unknown number around the country, according to the California Reinvestment Coalition, a housing advocacy group that . . . dubbed OneWest a ‘foreclosure machine.’” Many of these foreclosures were questionable. “OneWest was involved in a string of lawsuits over questionable foreclosures, and settled several cases for millions of dollars.” [Andrew Ross Sorkin, “Donald Trump’s Pick for Fund-Raiser Is Rife With Contradictions,” New York Times, May 9, 2016: and Victoria McGrane, “Democrats Say They’ll Take Aim at Trump’s Treasury Pick,” Boston Globe, December 1, 2016.]
“OneWest accomplished these foreclosures through fraud. Erica Johnson-Seck, a vice president of foreclosure and bankruptcy for OneWest, explained in a July 2009 deposition that she ‘robo-signed’ 6,000 foreclosure-related documents per week, spending just thirty seconds on each sworn affidavit that attested to the veracity of all relevant information in the case. Johnson-Seck admitted to not reading the documents before signing them, to not knowing how the records were generated, and to not signing in the presence of a notary, all of which made the affidavits she signed false evidence in court.” [David Dayen, “Donald Trump’s Finance Chair Is the Anti-Populist from Hell,” New Republic, May 9, 2016.]
OneWest employees claimed that OneWest executives had instructed them “to reject as many loan modification applications as possible and created an environment that encouraged loan modification staff to misinform borrowers about their eligibility status, routinely shred loan modification applications, and inappropriately deny loan modifications.” [FDIC Office of Inspector General, “Audit of OneWest Bank’s Loan Modification Program,” Report No. EVAL-11-004, July 2011.]
In 2011 the Office of Thrift Supervision [OTS] found that OneWest “failed to devote sufficient financial, staffing and managerial resources to ensure proper administration of its foreclosure processes” and “failed to devote to its foreclosure processes adequate oversight, internal controls, policies, and procedures, compliance risk management, internal audit, third party management, and training.” It also found that OneWest filed improper affidavits in court in foreclosure cases and improper foreclosure-related documents with local governments. [In the Matter of One West Bank, FSB, Consent Order, Order No. WN-11-011, OTS Docket No. 18129, April 13, 2011.]
“The HUD Office of Inspector General investigation into Financial Freedom and reverse mortgage servicing appears to be ongoing.” [“CIT Group’s Delayed 10-Q Contains Important Information,” The Troubled OneWest and CIT Group Merger website, August 15, 2016.]
OneWest Bank “discriminated against blacks, Hispanics, and Asians”; made very few loans to minorities; and “avoided putting branches in minority communities, according to a federal complaint.” [Lorraine Woellert, “Mnuchin-Founded Company Accused of Housing Discrimination,” Politico, November 17, 2016.]
OneWest’s foreclosures “are disproportionately in communities of color, which IndyMac targeted with its high-risk, predatory loans and where OneWest . . . aggressively pursued its eviction strategy.” Of the 36,000 families in California that OneWest foreclosed on, “two-thirds of these foreclosures occurred in majority minority communities.” [Peter Dreier, “Janet Yellen Should Halt Merger until Banks Make Good: Guest Commentary,” Los Angeles Daily News, June 7, 2015; and California Reinvestment Coalition, “California Reinvestment Coalition Responds to Steve Mnuchin’s Likely Nomination for Treasury Secretary,” news release, November 29, 2016.]
“Housing counselors from California serving thousands of homeowners in distress have rated [OneWest Bank] among the worst servicers, according to surveys conducted . . . over the years.” In 2010 “thirty housing counselors cited OWB as the worst offender for not offering affordable loan modifications, more than all fifteen of the other servicers surveyed.” Then, “later that year, only two servicers received more votes than OWB from housing counselors for being the most difficult servicer to work with in trying to help homeowners avoid foreclosure.” In 2012 “95% of responding counselors said OWB was ‘terrible’ or ‘bad.’” [California Reinvestment Coalition to Janet Yellen, et al., Letter in Opposition to CIT Group Application to Acquire IMB and OneWest Bank, October 10, 2014.]
* An earlier version of this post incorrectly attributed a quote made by Donald Trump to Steven Mnuchin. It also underestimated the amount of money ($380 million instead of $200 million) Mnuchin may have received from his sale of OneWest, the bank he ran that was notorious for its unscrupulous foreclosure practices. Allied Progress regrets the error.