David Dayen on DemocracyNow who exposed a memo that reveals Mnuchin’s bank may have engaged in “widespread misconduct” while foreclosing on homeowners

JUAN GONZÁLEZ: We turn now to Trump’s pick for treasury secretary, Steven Mnuchin, who faces a—who faces scrutiny for his role at OneWest, a bank which has been called a “foreclosure machine” that profited from the collapse of the housing market. On Tuesday, The Intercept reported on a newly obtained memo that reveals [Mnuchin’s former bank] may have engaged in widespread misconduct while foreclosing on homeowners. The memo argued OneWest was guilty of a host of infractions, including backdating mortgage documents to speed up foreclosures and manipulating the results of home auctions, and it urged a top—California’s attorney general then to sue.

AMY GOODMAN: Mnuchin’s hedge fund bought out the failing California bank IndyMac in 2008, renaming it OneWest. Under his ownership, it foreclosed on 36,000 families, particularly elderly residents trapped in reverse mortgages.

For more, we go to Los Angeles to speak with reporter David Dayen, who broke this story for The Intercept. He’s also the author of the book Chain of Title: How Three Ordinary Americans Uncovered Wall Street’s Great Foreclosure Fraud.

David, welcome back to Democracy Now! Lay out what you found. Explain what this previously undisclosed memo shows.

DAVID DAYEN: Yeah, so this is a memo from deputies in the California Attorney General’s Office, and it describes a year-long investigation that they conducted into OneWest, finding well over a thousand violations of California’s foreclosure process. California is a nonjudicial state. The courts are not involved in foreclosures. But there are very precise steps that lenders are supposed to take when they foreclose on a homeowner. And OneWest was found to have violated these. It was a somewhat limited investigation, because OneWest is a national bank, and states don’t have the jurisdiction to do widespread investigation of them. But they found over a thousand violations just in this limited investigation. And if they did file a civil enforcement action, there would be a discovery period, where they extrapolated, the deputies, that they could find thousands more violations. So they requested authorization to file this action, and the California Attorney General’s Office did not move on that.

AMY GOODMAN: And the California attorney general, of course, was now the current California senator, right, Kamala Harris?

DAVID DAYEN: That’s right. And she’ll have the opportunity to vote on Steven Mnuchin’s OneWest—or, on his treasury secretary nomination. Mnuchin actually was a donor to Kamala Harris as recently as February 2016. He gave $2,000 to Kamala Harris’s Senate election campaign. And there’s no real explanation that was given to these deputies as to why Harris decided not to move forward with the case. There’s a lot of speculation. But now we’re seeing sort of the blowback from failing to prosecute these banks and these top executives: Now one is potentially going to be the treasury secretary.

JUAN GONZÁLEZ: And this issue of backdating documents, because, obviously, the mortgage fraud crisis was—there was the original problem of all of the high-interest loans and no-doc loans that were issued, but then, after the collapse, the financial collapse, there were all the banks and financial institutions that came in to so-called clean up the mess and then engaged in massive fraud in terms of documentation of who owned what loan and who had paid back what. Talk about the importance of OneWest in this second stage of the crisis.

DAVID DAYEN: Yes, OneWest was definitely part of that cleanup crew. They were built out of the ashes of IndyMac, which was a failed lender that originated really bad toxic mortgages. And OneWest was brought in, and they engaged in a number of practices to do foreclosures. The backdating scandal here was, they would file notices of default—and that sort of kicks off the foreclosure process here in California—without actually designating what is known as a trustee, that would engage in the foreclosure sale. And so, when they would do that document to designate the trustee, to make it look like the notice of default was done correctly, they would backdate the document. And the way that the deputies at the AG’s Office figured this out is that some of the documents were backdated so far back, it was before OneWest became a bank. OneWest was inaugurated as a bank in March of 2009, and some of the documents had dates before that, that they were executing these what are known as substitutions of trustee before OneWest even became into being.

Read more from DemocracyNow. Click here.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s