Donald Trump’s treasury secretary nominee Steve Mnuchin on Monday doubled down on his lie to the Senate Finance Committee, again claiming in amended answers for the record that OneWest Bank never robo-signed foreclosure documents, despite copious evidence that they did.
To make his claim, Mnuchin relied on a discredited government review of OneWest foreclosures, while neglecting actual examples of robo-signing newly uncovered in a news report Sunday.
The Columbus Dispatch found dozens of cases in Ohio public records where low-level OneWest employees in Austin, Texas signed off on affidavits attesting to reviewing the underlying loan file, when they had not. These affidavits included those signed by Erica Johnson-Seck, who admitted in a July 2009 court deposition to spending only 30 seconds on each document and never even reading them.
Bill Faith, executive director of the Coalition on Homelessness and Housing in Ohio, told the Dispatch, “The guy is just lying. There’s no other way to say it.”
But Mnuchin ignored this and other evidence in his resubmission of answers. On the robo-signing question, offered by Sen. Bob Casey, D-Pa., Mnuchin explained that “The concept of ‘robo-signing’ generally referred to two distinct but related issues: (a) a signer of a foreclosure affidavit attested to facts that were not verified to be accurate; or (b) a signer of a foreclosure affidavit represented himself or herself to be someone else.”
Those two techniques were precisely what Johnson-Seck admitted to in her deposition. She attested to facts in foreclosure cases without verifying them in any way. She also represented herself as having the authority to sign documents for at least seven different financial institutions. In fact, Brooklyn judge Arthur Schack threw out a OneWest foreclosure because Johnson-Seck had both assigned a mortgage to Deutsche Bank and executed an affidavit on behalf of Deutsche Bank, appearing as multiple officers in the same case.
Mnuchin blew right past this evidence and pointed only to this April 2014 report of the results of the Independent Foreclosure Review, saying it proves OneWest’s innocence. According to a table showing tens of thousands of OneWest errors in foreclosure cases, the bank never executed a foreclosure where “the servicer did not have standing to foreclose,” and on only 23 occasions (out of nearly 179,000) foreclosed when the “borrower was not in default.”
“It is true that small numbers of borrowers were found to have been affected by errors,” said Mnuchin, “and OneWest fully remediated those borrowers in the manner prescribed by federal regulators.”
But the Independent Foreclosure Review he cited was neither independent nor a review. OneWest and its fellow banks hand-picked and paid for the reviewers themselves. These reviewers were not government officials but third-party consultants, who labored under guidelines chosen by the banks. For instance, Aurora Loan Services hired a consultant that had previously managed Aurora’s own foreclosure practices. Bank of America created default answers that the consultants would just double-check.
Whistleblowers at a number of consultants disclosed being pressured by managers to overlook entire categories of borrower harm, and steered away from reporting significant mistakes. “Quit digging so deep… put down your shovel,” one reviewer was told. And if any errors did go through, banks could overrule them through an appeal process.
Indeed, this review, ordered by the Office of the Comptroller of the Currency and the Federal Reserve, minimized evidence of borrower harm, according to a 2013 Government Accountability Office report. Regulators allowed banks to design the reviews and make them incomprehensibly complex, drowning the reviewers in data. In two years, OCC and the Fed never offered guidance as to whether basic errors – like missing loan documents – constituted a violation.
OneWest was actually the only servicer to finish its review; the others were abandoned. But the table to which Mnuchin refers only reinforces how banks were allowed through the reviews to hide their past.
Mnuchin claims the chart shows that OneWest never foreclosed on a homeowner when they did not have standing to foreclose, but OneWest created that category, and there’s no way to know how they defined it. Similarly, only OneWest knows what was covered in the category showing foreclosures when the borrower was not in default.
By contrast, there’s a large category of 10,547 borrowers who were harmed by “general issues,” with no explanation of what that means. This allows people like Mnuchin to deflect criticism about abusive practices by not requiring OneWest to be specific about what they actually did.
Because of this lack of definition, there’s no way to be sure that the table “proves” a lack of robo-signing by OneWest or not. But the clear admission of guilt by a OneWest employee, and clear examples of robo-signed documents in the public records of Ohio and other states, means that we don’t have to wonder about whether Mnuchin lied.
Mnuchin’s use of the Independent Foreclosure Review as a shield reveals yet another example of the sad legacy of accountability for financial fraud under President Obama. Regulators designed a flawed study of foreclosures that, almost by design, did not reveal the extent of borrower harm in the foreclosure crisis.
And now Trump’s Treasury Secretary nominee is using that flawed review to whitewash his lie to the Senate Finance Committee.
Democrats on the committee blocked the vote to advance Mnuchin’s nomination to the Senate floor. Instead of being held Monday night, it will now be taken Tuesday morning.