Not long after Trump announced Steve Mnuchin as his nominee to be Treasury Secretary, the story about how a company of his – OneWest – had foreclosed on a 90 year-old woman over a discrepancy of 27 cents was pretty widely circulated. I wrote about it here, along with some background about how Mnuchin had been part of the group that bought IndyMac (which later became OneWest) in January 2009 after it was taken into receivership by the FDIC due to impending bankruptcy related to “liar loans” – and proceeded to foreclose on about 36,000 mortgages.
But as David Dayen reports, the foreclosure procedures practiced by OneWest appear to have gone beyond simply being callused.
OneWest Bank, which Donald Trump’s nominee for treasury secretary, Steven Mnuchin, ran from 2009 to 2015, repeatedly broke California’s foreclosure laws during that period, according to a previously undisclosed 2013 memo from top prosecutors in the state attorney general’s office.
The memo obtained by The Intercept alleges that OneWest rushed delinquent homeowners out of their homes by violating notice and waiting period statutes, illegally backdated key documents, and effectively gamed foreclosure auctions.
In the memo, the leaders of the state attorney general’s Consumer Law Section said they had “uncovered evidence suggestive of widespread misconduct” in a yearlong investigation. In a detailed 22-page request, they identified over a thousand legal violations in the small subsection of OneWest loans they were able to examine, and they recommended that Attorney General Kamala Harris file a civil enforcement action against the Pasadena-based bank. They even wrote up a sample legal complaint, seeking injunctive relief and millions of dollars in penalties…
The consistent violations of California foreclosure processes outlined in the memo would indicate that Mnuchin’s bank didn’t merely act callously, but did so with blatant disregard for the law.
According to the memo, OneWest also obstructed the investigation by ordering third parties to refuse to comply with state subpoenas.
Dayen goes into great detail about the specific legal violations outlined in the memo – which primarily consisted of back-dating and robo-signing documents related to thousands of foreclosures. But in the end, one would think that a potential Treasury Secretary would either be required to answer for these charges or withdraw his name as the nominee. To merely ignore something like this normalizes the kind of corruption and recklessness that led to the Great Recession.
But this isn’t the only instance of legal issues related to Steve Mnuchin and OneWest.
OneWest Bank, a mortgage lender founded and run by Steven Mnuchin until last year, discriminated against blacks, Hispanics and Asians and avoided putting branches in minority communities, according to a federal complaint filed by two California housing watchdogs.
The redlining accusation, filed with the Department of Housing and Urban Development, was made against CIT Group Inc., which purchased OneWest in a $3.4 billion deal that closed last year.
Mnuchin, Donald Trump’s campaign finance chairperson and a leading candidate for the job of Treasury secretary, is on CIT’s board…
Of 69 OneWest home loans made in Los Angeles County in 2012 and 2013, none went to African-Americans, according to the complaint.
In 2015, when non-white minorities made up nearly 62 percent of the population in greater Los Angeles, they received 18.5 percent of CIT mortgages. CIT was less likely than other lenders to sell mortgages in neighborhoods of color. Fewer than 30 percent of CIT loans were made on houses in minority census tracts, compared to more than 49 percent for the lending industry, according to the complaint.
This is the kind of redlining that Ta-Nehisi Coates wrote about in “The Ghetto Is Public Policy.” It also represents policies that have resulted in historic settlements when pursued by Obama’s DOJ and HUD.
In summary, Donald Trump’s nominee to be our next Treasury Secretary not only ran a company that demonstrated a calloused response to homeowners, it also engaged in foreclosure fraud and discriminatory mortgage practices. I can think of no better example of the “swamp” that needs draining.