Foreclosure fanatic: Mnuchin’s past actions make him a risky selection
The recent hearing on the nomination of Steven Mnuchin for secretary of the Treasury Department revealed a man unable or unwilling to provide many additional facts about his controversial history running OneWest Bank.
Mnuchin said in his Senate confirmation hearing that he was proud of his work, but the facts show there’s little to admire about Mnuchin’s tenure, but much doubt about his ability to be a good Treasury secretary.
Mnuchin purchased the loans of struggling homeowners at an enormous discount, with the benefit of billions of dollars in government backstops.
He and his partners chose to pull nearly $1.9 billion dollars for themselves out of those loans, but chose not to take the actions that would have kept more borrowers in their homes.
Instead of investing in the American dream, Mnuchin and his partners churned out foreclosure notices, then sold the company for a quick buck.
The documents show it was engaged in dual-tracking — offering loan modifications while pursuing foreclosure at the same time — and that they robo-signed documents — signing off on multiple foreclosures per minute, without reviewing the homeowner’s case.
In addition, they lost — sometimes repeatedly — important paperwork that could have helped prevent foreclosures.
OneWest, under Mnuchin’s leadership, foreclosed on homeowners like Heather McCreary, who lost her home even though she qualified for a modification.
McCreary had sent in her signed modification agreement, along with her first payment, but because it wasn’t in the form of certified funds, OneWest returned her check and voided the modification.
OneWest is also trying to seize the home of Colleen Ison-Hodroff, an 84-year-old widow who began fighting foreclosure just days after her husband died. There are likely thousands of Americans with stories like these.
At the Senate confirmation hearing, Mnuchin took no responsibility for this record. He spoke as though foreclosures had been rare and unavoidable, when in fact OneWest appears to have done more foreclosures than successful modifications.
He inaccurately blamed OneWest’s foreclosures on government rules while simultaneously boasting of vague and unsubstantiated government applause for the bank’s practices.
Mr. Mnuchin cited OneWest’s 100,000 modifications as evidence of its good work. But this number is profoundly misleading — it refers to the number of offers for temporary relief, not the number of good deals made with homeowners.
In truth, OneWest offered long-term, affordable payment arrangements to about 46,000 homeowners before it pushed its loans out the door to be managed by another company.
This is a lower ratio of actual modifications to initial offers than many of the company’s peers. OneWest also denied help to homeowners at a higher rate than seven of the top 10 largest servicers.
Mnuchin’s short list of accolades curiously includes the Independent Foreclosure Review process as a mark of success. The IFR was initiated in response to widespread servicing misconduct and mismanagement by 16 mortgage servicers, including OneWest.
But the process regulators put in place turned out to be as broken as the system itself, resulting in reviews that produced a lot of revenue for Wall Street consultants and not enough relief for homeowners.
A quicker alternative was eventually offered. Many servicers took it, but OneWest elected not to. Moreover, the review of One West’s loans exposed abuses and resulted in millions of dollars in payouts to homeowners, a third of which stemmed from mistreatment of service members.
Mnuchin placed blame for the bank’s disproportionate reverse mortgage foreclosures on seniors on the Department of Housing and Urban Development.
Mnuchin pointed to a 2015 letter that HUD sent to lenders that made it harder to extend relief to homeowners with reverse mortgages.
This policy, which has subsequently changed, was not in place during most of the years Mnuchin led a reverse mortgage servicer and foreclosed on seniors.
In fact, HUD issued this policy just four months before Mnuchin sold OneWest. Under Mnuchin, OneWest had a green light from HUD, to help seniors stay in their homes. It simply chose not to.
Mnuchin had the opportunity, the resources, and obligation to address these problems, but the available evidence shows that he failed to do so.
If he couldn’t manage to run a regional bank without losing paperwork for homeowners whose homes were at risk, why should the Senate — or the American people — trust him to take on far greater responsibilities as Treasury secretary?
Sarah Edelman is director of housing policy at the Center for American Progress. Paulina Gonzalez is executive director of the California Reinvestment Coalition. Jim Lardner is senior fellow at Americans for Financial Reform.
The views of contributors are their own and not the views of The Hill.