Steve Mnuchin. CREDIT: AP Photo/Evan Vucci
President-elect Donald Trump’s treasury nomination oversaw the aggressive foreclosure of homes belonging to vulnerable populations — particularly the elderly — when he was chairman of OneWest Bank, Propublica reported.
During his tenure at OneWest, Steve Mnuchin headed up its subsidiary Financial Freedoms, which promoted reverse mortgages among elderly recipients to take their home equity. This type of loan allowed borrowers to build up equity without selling their houses. Because elderly homeowners often thought that the paperwork they received were scams, Financial Freedom would use that to start foreclosure proceedings, CNN reported.
In one case, OneWest tried to foreclose on a house belonging to John Yang, an 80-year-old Korean immigrant in Florida, because the bank said he didn’t live there, which would be a violation of the terms of his loan. The bank delivered the legal notice to him at his home — the very same place they accused him of not occupying. A legal aid attorney intervened to prevent him from losing his home.
When asked how this foreclosure came so close to taking place, an OneWest employee said in a deposition this year, “You’re trying to make logic out of an illogical situation.”
At least 50,000 other people were not as lucky. OneWest foreclosed those homes “often in circumstances that consumer advocates say run counter to federal rules,” Propublica reported. The publication pointed out that some foreclosures were justified, but Financial Freedom would refuse to “work with borrowers in foreclosure to establish payment plans, in contrast with other servicers of reverse mortgages.”
Between 2009 and 2014, OneWest “was responsible for 16,200 foreclosures on government-backed reverse mortgages, or 39 percent of all foreclosures nationwide,” the publication reported, using government data analyzed by the California Reinvestment Coalition, an advocacy group for low-income consumers.
Mnuchin and his investment partners took over IndyMac after it failed in 2008, with the Federal Deposit Insurance Corp. (FDIC) covering the bank’s losses on foreclosed single-family, owner-occupied loans. An estimated 35,000 foreclosures took place, with losses estimated at $4.6 billion. The FDIC paid the bank $1.2 billion, leaving the bank to absorb $3.4 billion in losses. Politico reported that Mnuchin still came out ahead after OneWest merged with CIT Bank worth $3.4 billion last year. In that case, Mnuchin took home a $10.9 million payout and left CIT’s board in early December after Trump’s nomination.
Allegations that OneWest preyed on the disadvantaged aren’t new. Advocacy groups previously alleged that OneWest failed to serve and discriminated against minority homeowners. Their complaint said that OneWest’s discriminatory practices began in 2011 at a time when Mnuchin’s investment group owned the bank. They alleged that OneWest made few loans to both African-American and Asian-American borrowers, had only a handful of branches in minority neighborhoods, and allowed properties repossessed in nonwhite neighborhoods to fall into disrepair, the Los Angeles Times reported in November.
If OneWest’s discriminatory practices against vulnerable populations seems familiar, it’s because Mnuchin’s future boss, the incoming president elect, knows what it’s like to make life more difficult for vulnerable populations. Trump and his father have been accused of discriminating against blacks at their family properties that resulted in a Department of Justice investigation in 1973. At the time, Trump accused the government of forcing him to rent out to “welfare recipients.”