Lies, Damn Lies, and Mnuchin
Further Proof Trump Treasury Nominee Steven Mnuchin Is “Robo-Misleading” the U.S. Senate
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Executive Summary
On February 1, the Senate Finance Committee suspended its rules “regarding quorum requirements for nomination votes” to advance President Trump’s nominee for Treasury Secretary, Steven Mnuchin, to the full Senate for a confirmation vote. The move allowed Republicans to avoid involving Democrats in the confirmation markup process since at least one member of that party would need to be present to reach a quorum and proceed.[1]
The Republican power play followed a boycott of the confirmation markup the day before by committee Democrats who were rightfully angry at Mnuchin for his lack of honesty with the committee following reports from both The Columbus Dispatch and The Intercept that revealed Mnuchin willfully misled senators about the foreclosure practices of his former bank: contrary to his repeated denials, OneWest did, in fact, “robo-sign” foreclosure documents.[2]
Hours after the procedural protest from committee Democrats, CNN reported that Mnuchin admitted during a private meeting with Senate Finance Committee staff that his responses to the committee had not been “true, accurate and complete.”[3]
Since the procedural fireworks in the Senate Finance Committee, several additional examples have been unearthed indicating Mnuchin was not honest with senators about OneWest’s history of robo-signing foreclosure documents. This report details those findings, including:
- In additional to Ohio and Texas cases reported by The Columbus Dispatch and The Intercept, OneWest also has been accused of “robo-signing” documents in numerous court cases, including cases in California, Massachusetts, and Rhode Island.[4]
- OneWest was temporarily barred from foreclosing in New Jersey after its involvement in a “robo-signing scandal.”[5]
- OneWest’s “‘outsourcing vendor,’” Lender Processing Services (LPS), was entangled in a “‘massive’ robo-signing scheme” in Nevada. OneWest was named in a class action lawsuit in which LPS was accused of robo-signing foreclosure documents.[6]
- Despite claiming his bank never “robo-signed” mortgages, Mnuchin signed a document in 2011 in which the United States Office of Thrift Supervision found that OneWest had “filed or caused to be filed” potentially false affidavits “not based . . . on personal knowledge or review of relevant books and records.” Mnuchin hired an “independent” consulting firm that wrote a report to support his claim that OneWest had never robo-signed documents, but just 2 percent of OneWest’s relevant mortgages were reviewed for that portion of the report. Furthermore, one of the co-owners of OneWest had a financial stake in the company that did the “independent” analysis.[7]
The Details: More Evidence Mnuchin Hasn’t Been Honest With Senators About Robo-Signing
Mnuchin’s OneWest Has Been Accused of “Robo-Signing” Documents in Numerous Court Cases in California, Massachusetts, Nevada, New Jersey, Ohio, Rhode Island, and Texas
- OneWest was accused of robo-signing after the bank foreclosed on Rhonda Mills’ Massachusetts home in 2011. Mills filed suit against OneWest, alleging that a “known robo-signer” employed by the bank had signed her documents in 2009.[8]
- Kevin Hughes sued OneWest Bank, alleging the bank had used “an admitted and known robo-signer to fabricate documents” in order to foreclose upon his California home in 2009.[9]
- OneWest was accused of robo-signing by Carol Stoner, who alleged in a lawsuit that the bank had begun to foreclose on her home in 2009, by using documentation “signed by a well-known robo-signer, not in front of a notary and not on the date of her signature.”[10]
- Kenneth Henning sued OneWest Bank in 2010, alleging that OneWest was using documentation signed by a “notorious robo-signer” in order to get him to default on his home loan on his home in Texas, which he contended was proof of OneWest’s “intent to mislead and rely on fraudulent documents.”[11]
- In 2010, Clara Akalarian sued OneWest Bank, alleging that the person who executed foreclosure-related documents was a “robo-signer,” and that OneWest had wrongly started to foreclose upon her Rhode Island home.[12]
- During the 2012 bankruptcy proceedings of Morris Maxwell, the court ruled that Erica Johnson-Seck, an admitted robo-signer, had executed the mortgage on Morris Maxwell, whose home had been foreclosed upon.[13]
- In 2012, Eliazer Robles and her husband unsuccessfully sued OneWest for “fraud” and “unfair business practices.” They accused OneWest of employing a “robo-signer” for the foreclosure documents on their home.[14]
- OneWest Financial Services Inc., was subject to a “foreclosure ban” in New Jersey after a “robo-signing scandal” in 2010.[15]
- Erica Johnson-Seck, OneWest’s vice president for bankruptcy and foreclosure, said OneWest hired “‘outsourcing vendor’ Lender Processing Services.” She claimed that firm “‘checks the documents completely.’”[16]
- Gary Trafford and Gerri Sheppard of LPS were accused of “overseeing teams of so-called ‘robo-signers’” and “filing tens of thousands of false documents” by the Nevada Attorney General in 2011. Nevada Chief Deputy Attorney General John Kelleher said, “if banks sanctioned the alleged robo-signers’ activities . . . they could be the subject of future actions.”[17]
- Johnson-Seck says she conducted quality control on LPS and was “close friends” with an LPS employee who worked on-site at OneWest in Pasadena, CA.[18]
- In 2010, a division of OneWest was named as a defendant in a Nevada class-action lawsuit that alleged LPS violated “Nevada’s Deceptive Trade Practices Act” and sought to block “pending foreclosures involving allegedly forged . . . documents and [sought] unspecified damages for completed foreclosures.” The defendants included “LPS, one of the nation’s largest foreclosure processors,” as well as “IndyMac Mortgage Services, a division of OneWest Bank.”[19]
Mnuchin’s OneWest Was Temporarily Barred from Foreclosing on New Jersey Customers after Its Involvement in Robo-Signing Scandal
- As previously noted, OneWest Financial Services Inc., was subject to a “foreclosure ban” in New Jersey after a “robo-signing scandal” in 2010.[20]
- Judge Richard J. Williams, in 2011, lifted the New Jersey foreclosure ban on One West Financial Services and other lenders after he “noted that it was impossible for courts to determine which assertions were accurate in foreclosure proceedings. As a result, Williams created a process for monitoring servicers’ foreclosure operations that will involve site visits.”[21]
OneWest’s “‘Outsourcing Vendor,’” Lender Processing Services (LPS), Was Entangled in a “‘Massive’ Robo-Signing Scheme” in Nevada, and OneWest Was Named in a Class Action Lawsuit in Which LPS Was Accused of Robo-Signing Foreclosure Documents
- As previously noted, Erica Johnson-Seck, OneWest’s vice president for bankruptcy and foreclosure, said OneWest hired “‘outsourcing vendor’ Lender Processing Services.” She claimed that firm “‘checks the documents completely.’”[22]
- Gary Trafford and Gerri Sheppard of LPS were accused of “overseeing teams of so-called ‘robo-signers’” and “filing tens of thousands of false documents” by the Nevada Attorney General in 2011. Nevada Chief Deputy Attorney General John Kelleher said, “if banks sanctioned the alleged robo-signers’ activities . . . they could be the subject of future actions.”[23]
- Johnson-Seck says she conducted quality control on LPS and was “close friends” with an LPS employee who worked on-site at OneWest in Pasadena, CA.[24]
- In 2010, a division of OneWest was named as a defendant in a Nevada class-action lawsuit that alleged LPS violated “Nevada’s Deceptive Trade Practices Act” and sought to block “pending foreclosures involving allegedly forged . . . documents and [sought] unspecified damages for completed foreclosures.” The defendants included “LPS, one of the nation’s largest foreclosure processors,” as well as “IndyMac Mortgage Services, a division of OneWest Bank.”[25]
Despite Claiming His Bank Never “Robo-Signed” Mortgages, Mnuchin Signed a Document in 2011 in Which the United States Office of Thrift Supervision Found That OneWest Had “Filed or Caused to Be Filed” Potentially False Affidavits “Not Based . . . on Personal Knowledge or Review of Relevant Books and Records”
- On April 13, 2011, the Office of Thrift Supervision (OTS) issued a Consent Order regarding OneWest Bank FSB. In the order, the OTS listed findings from “an examination of the residential real estate mortgage foreclosure processes of OneWest Bank, FSB.” The OTS found that OneWest:
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- “Filed or caused to be filed in state and federal courts numerous affidavits executed by its employees or employees of third-party service providers making various assertions, such as ownership of the mortgage note and mortgage, the amount of the principal and interest due, and the fees and expenses chargeable to the borrower, in which the affiant represented that the assertions in the affidavit were made based on personal knowledge or based on a review by the affiant of the relevant books and records, when, in many cases, they were not based on such personal knowledge or review of relevant books and records.”
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- “Filed or caused to be filed in state and federal courts, or in local land records offices, numerous affidavits or other mortgage-related documents that were not properly notarized, specifically that were not signed or affirmed in the presence of a notary.”
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- “Litigated foreclosure and bankruptcy proceedings and initiated non-judicial foreclosure proceedings without always ensuring that the promissory note and mortgage document were properly endorsed or assigned and, if necessary, in the possession of the appropriate party at the appropriate time.”
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- “Failed to devote sufficient financial, staffing and managerial resources to ensure proper administration of its foreclosure processes.”
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- “Failed to devote to its foreclosure processes adequate oversight, internal controls, policies, and procedures, compliance risk management, internal audit, third party management, and training.”
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- “Failed sufficiently to oversee outside counsel and other third-party providers handling foreclosure-related services.”
- OneWest neither admitted nor denied the findings, however Steven Mnuchin did sign the Order on behalf of OneWest.[26]
- As part of the consent order, OneWest agreed that within forty-five days, they would “retain an independent consultant acceptable to the Regional Director to conduct an independent review of certain residential foreclosure actions regarding individual borrowers with respect to [OneWest’s] mortgage servicing portfolio. The review shall include residential foreclosure actions or proceedings (including foreclosures that were in process or completed) for loans serviced by [OneWest], whether brought in the name of [OneWest], the investor, the mortgage note holder, or any agent for the mortgage note holder (including MERS), that have been pending at any time from January 1, 2009 to December 31, 2010, as well as residential foreclosure sales that occurred during this time period (Foreclosure Review).”[27]
- OneWest’s “independent” consultant was Navigant Consulting, Inc.[28]
Mnuchin Hired an “Independent” Consulting Firm That Wrote a Report to Support His Claim That OneWest Had Never Robo-Signed Documents, but Just 2 Percent of OneWest’s Relevant Mortgages Were Reviewed for that Portion of the Report, and One of the Co-Owners of OneWest Had a Financial Stake in the Company That Did the Analysis
- On September 8, 2011, Navigant Consulting, Inc., submitted a Statement of Work to OneWest concerning “an independent review of residential foreclosure proceedings for loans serviced by One West Bank, FSB (“OneWest”) and residential foreclosure sales that have been pending or occurred during the period from January 1, 2009 to December 31, 2010.” The statement “comments and guidance received from the Office of the Comptroller of the Currency” and outlined the steps the company would take to review foreclosures.[29]
- Soros Fund Management, LLC, in the quarter that ended on September 30, 2011, disclosed ownership of 12,300 shares of Navigant Consulting, Inc. valued at $114,000. At the time, Soros was a co-owner of OneWest Bank.[30]
- During the Confirmation process, Steven Mnuchin was directly asked by Senator Bob Casey of Pennsylvania, “did OneWest ‘robo-sign’ documents relating to foreclosures and evictions?” Initially Steven Mnuchin responded, “OneWest Bank did not ‘robo-sign’ documents, and as the only bank to successfully complete the Independent Foreclosure Review required by federal banking regulators to investigate allegations of ‘robo-signing’’ I am proud of our institution’s extremely low error rate.”
- In his amended response, Steven Mnuchin attempted to clarify his statement: “the concept of ‘robo-signing’ generally referred to two distinct but related issues: (a) a signer of a foreclosure affidavit attested to facts that were not verified to be accurate; or (b) a signer of a foreclosure affidavit represented himself or herself to be someone else (for example, if the signer was employed by a company that did not have standing to foreclose but represented himself or herself as someone with standing to foreclose). Page 14 of the OCC’s April 2014 report on the Independent Foreclosure Review (“IFR”) demonstrates that OneWest did not do these things. On the review category ‘services did not have standing to foreclose,’ OneWest’s error rate was zero percent. On the review category that investigated the possibility that foreclosure occurred without proper facts supporting the foreclosure (‘Borrower not in default’), OneWest’s error rate was .001 percent. In fact, for 12 of the 14 categories independently reviewed as part of the IFR, OneWest’s error rate was less than 0.5 percent.”[31]
- It appears that Mnuchin’s comments above are based on the “independent” study by Navigant. However, Navigant reviewed just 3,836 of the 192,199 cases that fell within the scope of the review to determine if the “Servicer did not have standing to foreclose.” This constitutes just under 2 percent of the total number of mortgages within the scope of review.[32]
End Notes
[1] MJ Lee, “Republicans Suspend Committee Rules, Advance Mnuchin, Price Nominations,” CNN, February 1, 2017.
[2] Zachary Warmbrodt, “Senate Finance Democrats Boycott Mnuchin, Price Votes,” Politico, January 31, 2017; Alan Johnson and Jill Riepenhoff, “Trump Treasury Pick Mnuchin Misled Senate on Foreclosures, Ohio Cases Show,” Columbus Dispatch, January 29, 2017; and David Dayen, “Mnuchin Again Denies Robo-Signing, despite yet More Evidence He Is Lying,” The Intercept, January 30, 2017.
[3] Phil Mattingly, “Treasury Secretary Nominee’s Foreign Money Links Bring New Scrutiny,” CNN, January 31, 2017.
[4] Mills v. U.S. Bank, et al., No. 13-1907; Hughes v. OneWest Bank, No. A130897; OneWest Bank, FSB v. Stoner, 2011-Ohio-4672; Henning v. OneWest Bank FSB, DC-10-16465-L; Akalarian v. Nation One Mortgage, et al., No. PC 2010-4744; Maxwell v. OneWest Bank, No. 12-31917DM; Chapter 13, Eliazer Robles, et al. v. One West Bank, FSB, October 22, 2012; Johnson-Seck Deposition, July 9, 2009.
[5] Kate Barry, “Court Lifts N.J.’s Foreclosure Ban on Ally,” National Mortgage News, September 19, 2011; and Appraisal Institute, “New Jersey Lifts Ban on Foreclosures by Robo-Signing Banks,” September 21, 2011.
[6] Ariana Eunjung Cha, “OneWest Bank Employee: ‘Not More Than 30 Seconds’ to Sign Each Foreclosure Document,” Washington Post, September 30, 2010; Jeff Horwitz, “Nevada Files First Criminal Charges in Robo-Signing Case,” American Banker, November 16, 2011; Johnson-Seck Deposition, July 9, 2009; Steve Green, “Lender Processing: Faces Class Action Over Robosigning Problems,” Class Action Reporter, January 30, 2012; and James O’Toole, “Two Indicted in ‘Massive’ Nevada Robo-Signing Case,” CNN, November 17, 2011.
[7] In the Matter of One West Bank, FSB, Consent Order, Order No. WN-11-011, OTS Docket No. 18129, April 13, 2011; “Holdings Report for the Calendar Year or Quarter Ended September 30, 2011,” Soros Fund Management LLC, Securities and Exchange Commission Form 13-F, File Number 028-06420, November 14, 2011; Nathan Vardi, “John Paulson and George Soros Score Big Selling OneWest Bank For $3.4 Billion,” Forbes, July 22, 2014; Dan Froomkin, “Mnuchin Questions for Response,” from Senate Finance Committee, Hearing on the Nomination of Steve Mnuchin to be Secretary of the Treasury, The Intercept, January 22, 2017; and “Foreclosure-Related Consent Orders Status Report: Observations, Payments, and Foreclosure Prevention Assistance,” United States Office of the Comptroller of the Currency, April 2014.
[8] Mills v. U.S. Bank, et al., No. 13-1907
[9] Hughes v. OneWest Bank, No. A130897
[10] OneWest Bank, FSB v. Stoner, 2011-Ohio-4672
[11] Henning v. OneWest Bank, FSB, DC-10-16465-L
[12] Akalarian v. Nation One Mortgage, et al., No. PC 2010-4744
[13] Maxwell v. OneWest Bank, No. 12-31917DM, Chapter 13
[14] Eliazer Robles, et al. v. One West Bank, FSB, October 22, 2012.
[15] Kate Barry, “Court Lifts N.J.’s Foreclosure Ban on Ally,” National Mortgage News, September 19, 2011.
[16] Cha, “‘Not More Than 30 Seconds’.”
[17] Horwitz, “First Criminal Charges.”
[18] Johnson-Seck Deposition, July 9, 2009
[19] Steve Green, “Lender Processing: Faces Class Action Over Robosigning Problems,” Class Action Reporter, January 30, 2012.
[20] Barry, “Court Lifts Ban.”
[21] Appraisal Institute, “New Jersey Lifts Ban on Foreclosures by Robo-Signing Banks,” September 21, 2011
[22] Cha, “‘Not More Than 30 Seconds’.”
[23] Horwitz, “First Criminal Charges.”
[24] Johnson-Seck Deposition, July 9, 2009
[25] Steve Green, “Lender Processing: Faces Class Action Over Robosigning Problems,” Class Action Reporter, January 30, 2012.
[26] In the Matter of One West Bank, FSB, Consent Order, Order No. WN-11-011.
[27] Ibid.
[28] Testimony of Morris Morgan, Deputy Comptroller for Large Bank Supervision, Before the Committee on Oversight and Government Reform, United States House of Representatives, March 19, 2012.
[29] “Statement of Work: April 13, 2011, Consent Order, Foreclosure Review,” Navigant Consulting, Inc. (Presented to OneWest Bank, FSB), September 8, 2011.
[30] “Holdings Report,” Soros Fund Management LLC; and Vardi, “Paulson and Soros Score Big.”
[31] Froomkin, “Mnuchin Questions for Response.”