Mnuchin’s Foreclosure Crisis Track Record Is Disqualifying
January 19, 2017
Today, Steven Mnuchin faces his confirmation hearing for Treasury Secretary. Since President-Elect Donald Trump selected Mnuchin as his pick for Treasury Secretary, several stories have emerged about the nominee that could be considered disqualifying: for instance, the story of how Mnuchin and his family profited from Bernie Madoff’s Ponzi scheme, to the tune of several million dollars.
Or his apparent conflicts of interest as co-chairman of Relativity Media’s board, which prioritized repaying debts to Mnuchin’s former bank over other creditors. Or his refusal to divest stakes of “Steven T. Mnuchin Inc.” or disclose what investments the company manages before becoming Treasury Secretary. Or even his longstanding ties to Goldman Sachs, given the Trump campaign’s populist scorn for Wall Street and promises to “drain the swamp.” However, none of these stories are more egregious or wholly disqualifying than Mnuchin’s conduct with OneWest Bank during the financial crisis, and the foreclosure machine he helped create.
The horror stories from OneWest foreclosures are striking and sad. Leslie Parks from Minneapolis, Minnesota, returned from work one December night in 2009 in the middle of a blizzard and found the locks had been changed on her house, even though she was still in negotiation with OneWest. Greg and Diane Horoski, a Long Island couple, went through a years-long legal battle with OneWest after the bank repeatedly and aggressively tried to foreclose on them. The judge who reviewed the case looked at how the bank misled the Horoskis about foreclosure scheduling and payment amounts and ruled the bank’s conduct was “harsh, repugnant, shocking and repulsive.” A 90-year-old woman in Florida misread her mortgage bill and sent a check that was 27 cents short of the full amount. OneWest foreclosed on her house.
All of this happened under the leadership of Steven Mnuchin. When the bank IndyMac failed during the financial crisis, its assets were seized by the FDIC. Mnuchin and a team of investors acquired IndyMac in 2009, rebranded it as OneWest Bank, and Mnuchin became the owner and CEO. In a time when banks were foreclosing on homeowners all throughout the country, OneWest stood out for the frequency, speed, and callousness with which they would kick people out of their houses. The California Reinvestment Coalition found that Financial Freedom, a subsidiary of OneWest, was responsible for 39 percent of all reverse mortgage foreclosures since April 2009, despite only having 17 percent of the market share. OneWest foreclosed on over 36,000 homes in California between 2009 and 2015, and hundreds of thousands of families throughout the country—primarily in communities of color.
Many homeowners felt that OneWest had no interest in working with them for a loan modification, and instead used evasive tactics to foreclose as quickly as possible. This behavior wasn’t just appalling; in many cases, it was illegal. A leaked memo from the California Attorney General’s Office detailed OneWest’s “widespread misconduct” and enumerated a litany of fraudulent practices, including backdating and manipulating legal documents, failing to give homeowners adequate notice of foreclosure, and offering predatory loan conditions in violation of state and federal laws. Warning signs were coming from inside the bank as well. In 2014, whistleblower Andrew Mitchell alerted the Department of Justice that OneWest was mishandling thousands of loan modification applications.
On Wednesday, January 18, 2017, Senator Elizabeth Warren held a “People’s Hearing” on the nomination of Steven Mnuchin and invited people who had been foreclosed on by OneWest to testify. The stories were heartbreaking and echoed a common theme: Dealing with OneWest was a bureaucratic nightmare that led to foreclosure no matter what the residents did.
Christina Clifford of Whittier, California, held back tears as she described how she lost her home of eight years despite her repeated efforts to work out a payment plan with OneWest and apply for a loan modification. When Christina mailed a loan modification application and a check for a partial payment to OneWest, she was hopeful that she could remain in her house. Months later, OneWest contacted her and told Christina they had not received her application. She knew that couldn’t be true. Her check to OneWest, sent in the exact same envelope, had been cashed. Without any other options, she resubmitted the loan modification application and sent a partial payment check. OneWest again cashed the check, and again told her they couldn’t approve her loan modification because they never received her application. In August 2009, Christina was forced to leave her house.
As a result of OneWest’s business practices under Mnuchin’s leadership, hundreds of thousands of families lost their homes and millions of people’s lives were likely affected through the trail of foreclosures, homelessness, and displacement. As for Mnuchin himself, he personally received an estimated $380 million for his efforts at OneWest.
Steven Mnuchin should not be our next Secretary of the Treasury. His leadership and priorities at OneWest demonstrated him to be unqualified and unequipped for this position. It’s not just because OneWest’s behavior was abhorrent, and Mnuchin does not deserve to be rewarded with a high-level Cabinet position after his bank’s foreclosure practices. It’s because the Treasury Secretary is the single most important government position for economic policy, and will serve as the president’s top advisor for achieving economic growth, prosperity, and equality. It is the responsibility of the Treasury Secretary to ensure that the rules of the economy work for all Americans, not just the richest or most politically connected. How can Mnuchin be trusted to fight for the economic well-being of poor and middle-class Americans after working so long to put them out of their homes?