Late last month, President-elect Donald Trump announced that he would nominate Steven Mnuchin, a former Goldman Sachs man and chairman of OneWest Bank, as Treasury Secretary. Last month, two California-based housing watchdog groups accused OneWest of racially discriminatory lending, which is par for the course really, given that Trump himself first made headlines when the Department of Justice accused him and his father of racially discriminatory housing practices back in the 1970s.
Following the 2008 financial crisis, Mnuchin bought the failed mortgage lender IndyMac, rebuilding it (with $1.2 billion in aid from the FDIC) under the name OneWest, before selling it in 2015, making about $380 million on the sale.
The foreclosure practices of OneWest’s Financial Freedom unit were relentless during Mnuchin’s tenure, ProPublica reminds us, targeting in particular the (mostly elderly) recipients of the controversial loans known as reverse mortgages. In 2012, the Consumer Financial Protection Bureau advised Congress that “vigorous enforcement is necessary to ensure that older homeowners are not defrauded of a lifetime of home equity.” Many of the at least 50,000 people OneWest has foreclosed on in recent years did not receive such protections, however:
ProPublica found numerous examples where Financial Freedom had foreclosed for legally questionable reasons. The company served several other homeowners at their homes to let them know they were being sued for not occupying their homes. In Florida, a shortfall of only $0.27 led to a foreclosure attempt. In Atlanta, the company sought to foreclose on a widow after her husband’s death, but backed down when a legal aid attorney sued, citing federal law that allowed the surviving spouse to remain in the home.
Since the financial crisis, OneWest, through Financial Freedom, has conducted a disproportionate number of the nation’s reverse mortgage foreclosures. It was responsible for 16,200 foreclosures on government-backed reverse mortgages, or 39 percent of all foreclosures nationwide, from 2009 through late 2014, even though it only serviced about 17 percent of the loans, according to government data analyzed by the California Reinvestment Coalition, an advocacy group for low-income consumers. While some foreclosures were justified, legal aid attorneys say Financial Freedom has refused to work with borrowers in foreclosure to establish payment plans, in contrast with other servicers of reverse mortgages.
“We’re just coming out of a foreclosure crisis and a serious economic downturn. It’s not the time to appoint someone who sided with corporate America over real people,” Alys Cohen, an attorney with the National Consumer Law Center, recently told Politico. “Mr. Mnuchin comes from Wall Street and has served monied interests over homeowners.”
Mnuchin still holds about a 1 percent stake in CIT, the lender that acquired OneWest for $3.4 billion in 2015, which, if confirmed as Treasury Secretary, he might have to divest. (He stepped down from the company’s board earlier this month.) According to ProPublica, The Department of Housing and Urban Development’s Office of the Inspector General is currently investigating Financial Freedom’s foreclosure practices.
In 2006, regarding the possibility of a housing market collapse, Donald Trump said: “I sort of hope that happens because then people like me would go in and buy.”