Washington, DC – Today, U.S. Senator Catherine Cortez Masto (D-Nev.) participated in the floor debate in opposition to Steven Mnuchin’s nomination to serve as President Trump’s Treasury Secretary. In her remarks, Cortez Masto highlighted how Mnuchin’s OneWest Bank used predatory practices to take advantage of Nevadans facing foreclosure and how she worked to combat those practices as the state’s Attorney General. Watch Senator Cortez Masto’s remarks here.
Below are Senator Cortez Masto’s remarks as prepared for delivery:
I rise today, along with many of my colleagues, to speak out against the White House nominating Steven Mnuchin to be the next Secretary of the U.S. Treasury.
President Trump has nominated the former CEO of OneWest Bank – who, before that, for 17 years, was a Goldman Sachs executive – to run the federal agency tasked with crafting and implementing U.S. economic policy…so much for “draining the swamp.”
I want to start out by sharing the story of a good friend, Lola Orvik, who I met when I was Attorney General.
In 2013, Lola’s mortgage on her townhouse in Henderson was underwater. Like thousands of other Nevadans, she needed to refinance – but five different loan modification applications had all been rejected by her bank.
Lola was desperate for a solution and on the verge of losing her home. She received a telephone call offering help that was too good to be true… and it was. After calling my office, the Attorney General’s office, she thankfully discovered that it was a scam.
I am so glad she called my office. Our staff referred her to a new program we had created, “The Home Again Homeowner Relief Program” – a one-stop shop to help struggling homeowners. It helped Lola finally get a loan modification, reduce her principal by $37,000, slash her interest rate from 5.7 percent to 2 percent, and keep the house that she had lived in for nearly 20 years.
The Home Again program helped thousands of Nevada homeowners understand all the state and federal housing resources available to them. It has helped folks like Lola restructure their loans to ensure more affordable monthly payments. That simple hotline number has gone a long way.
Because we were there to help her, Lola got her life back.
However, not everyone was as fortunate as Lola. In fact, some families are still trying to overcome the continuing, destructive impact of the foreclosure crisis in Nevada and across this country.
In the depths of the Great Recession, Lola’s predicament was not unique. Nevada was ground zero for the housing crisis. Property values plummeted, “For Sale” signs lined the streets, foreclosure notices hung on doors throughout the state, and thousands of families lived in constant fear of losing their homes.
In 2008, Nevada had the highest foreclosure rate in the nation, with more than 77,000 homes getting a notice at the door saying they were at risk for eviction.
We led the nation in terms of the foreclosure rate for 62 straight months during the recession.
Things got so bad that by 2010, nearly 70% of Nevada homeowners were underwater on their homes – meaning that they owed more on their mortgages than the current values of their property.
As Nevada’s Attorney General, I fought the big banks, Wall Street institutions and default servicing companies to secure more than $1.9 billion to help hardworking families get back on their feet. That money helped to fund the Home Again program.
But more than just getting that money back, this was about changing the conduct and predatory practices of the Big Banks when working with homeowners. For instance, we made dual tracking an illegal practice – so that banks could no longer foreclose on a home while simultaneously considering their request for a loan modification and charging them fees every step of the way, we demanded that a homeowner have a single point of contact within the financial institution so the homeowner would no longer get shuffled around from person to person and told to resubmit their loan modification application over and over again, and we demanded that the banks demonstrate that they had personal knowledge of the foreclosure documents they filed to prevent robo-signing and unlawful foreclosures of a home.
Unfortunately, not every bank was willing to do everything possible to help the millions of Nevadans and Americans who were suffering.
Mr. Mnuchin’s OneWest Bank — formerly known as IndyMac — was one such bank. Instead of trying to help homeowners, OneWest enforced predatory and unforgiving practices that only served to line the pockets of Mr. Mnuchin and his co-owners.
Steven Mnuchin purchased IndyMac from the federal government after it collapsed, and he then took control of the thousands of mortgages the bank managed.
Mnuchin rebranded the bank as ‘OneWest’ and went to work using questionable foreclosure practices, like dual tracking, so he could make more money. This is not right!
Instead of working to help these homeowners stay in their homes, OneWest Bank under Mnuchin’s leadership became a “foreclosure machine.”
The bank had one of the highest denial rates for applications to the Home Affordable Modification Program, a judge in Wisconsin cited the OneWest’s “harsh, repugnant, shocking, and repulsive” practices when deciding a suit against them, and recent documents show that the company used robo-signing to deny modification claims — proving that it did not fairly consider loan modification applications for tens of thousands of homeowners.
When confronted with these facts at his Senate confirmation hearing, Mr. Mnuchin lied.
He denied OneWest used robo-signing, offered empty excuses, and shifted blame for his company’s heinous practices.
And during his confirmation hearing, Mr. Mnuchin repeatedly refused to say how many homes OneWest foreclosed on in Nevada.
According to new data, during the foreclosure crisis and its immediate aftermath, OneWest made $3 billion in profit while evicting 3,654 Nevada families from their homes. This includes 181 foreclosures on seniors that had taken out reverse mortgages.
When he eventually left the bank, Mr. Mnuchin received a $10.9 million payout. This is on top of the annual compensation of $4.5 million he has received since 2015, when OneWest was bought out by other investors.
3,654 Nevada families lost their homes because Mr. Mnuchin’s OneWest put profits over people.
That’s a snapshot and a statistic that does not do justice to how much pain that caused for those families.
I want to spend some time on these accusations of robo-signing, both because Mr. Mnuchin clearly lied, and also because this was an issue I took on when I was Attorney General during and after the crash.
First, let’s be clear about what this is… robo-signing is a procedure used by mortgage companies to sign foreclosure documents without reviewing them.
This is a reckless practice used by banks to cut corners and forge documents, to rush things along. And it caused thousands of families to be wrongly evicted from their homes.
Like OneWest, the banks were involved in a massive robo-signing scheme in my home state of Nevada, and I went after them aggressively as the state’s Attorney General.
Nevada led the nation in foreclosures every month for more than four years. And Mr. Mnuchin’s company did not care that middle class families were losing their homes during the crisis.
In fact, during his confirmation hearing before the Senate he admitted, “I never wanted to be in the mortgage servicing business. I didn’t want to be in the reverse mortgage business, I wanted to build a regional bank.”
In other words, Mr. Mnuchin had to convince his investors that they would make money, a point that Mr. Mnuchin admitted at the hearing, saying, “Yes, my investors made a lot of money on OneWest.”
Not only did his investors make a lot of money, Mr. Mnuchin did so as well – since leaving the bank, he has pocketed nearly $20 million.
Mr. Mnuchin was making millions, while thousands of Nevadans were losing their homes and their dignity.
Nevadans like Heather McCreary of Sparks, who came to Capitol Hill last month to share her heart-wrenching story of how she applied to OneWest for a loan modification in 2010, after she and her husband lost their jobs as a result of the financial crisis.
Despite three applications and following all instructions, the bank kept Heather’s family dangling and then suddenly foreclosed on their home.
I want to read some of Heather’s testimony. It is moving and heartbreaking and deserves to be heard by every member of this body. Here’s what she told us:
In 2008, when the economy started to get worse, I was laid off. The following year in 2009, my husband Jack was laid off too. Though Jack was able to find another job pretty fast, he had to take a big pay cut—from about $25 an hour to $8.50 an hour. Between the cut in Jack’s pay and the loss in income I experienced when going on unemployment insurance benefits after I got laid off, we were pinched and we were drowning financially.
However, we were determined to keep our dream home, so Jack and I were tenacious about doing whatever we could to get help. We sought help from the Hope Now Alliance, which is an alliance of HUD-approved counselors who provide free foreclosure help, and from the Washoe County Senior Law Project.
We worked side-by-side with both organizations to do everything required of us by our mortgage servicer IndyMac, which later became OneWest. When we first asked for help, OneWest gave us a short forbearance and allowed us to make a smaller payment for several months with the goal of a reduction in our monthly mortgage payments through the Home Affordable Modification Program (or HAMP).
By applying for the HAMP program, we thought we were back on the road to keeping our home.
We complied 100 percent with OneWest’s requirements for HAMP—we were incredibly nervous about being able to keep our house, so we were extremely careful to make sure we did everything we could to keep the process going forward. Our application for HAMP was processed and we were approved for a modification. I sent in the signed paperwork and the first payment under the modified payment amount.
But then the process started to fall apart. After a whole 30 days, OneWest returned our personal check and told us that only certified checks would be accepted, so they were now voiding the modification offer. We had followed the instructions to the letter on OneWest’s paperwork, crossing our “T”s and dotting our “I”s. But in the end, this didn’t matter—and OneWest’s rejection of our HAMP application put us on the road to foreclosure.
We applied two more times for loan modifications over the next six months because we were given assurances by people at OneWest that they would approve our application. We again complied with every request OneWest made of us, taking care to send in extra documents whenever OneWest requested them.
But as far as I can tell, OneWest never attempted to process the loan modification. The foreclosure went through and we lost our home on September 10, 2010. The foreclosure left us without a home, and finding a new rental was extremely difficult because of our credit. Juggling the demands of raising our twins and this was so hard—the foreclosure even meant that our kids had to miss school. Eventually we did find a new place, but we had to pay an outrageous rent— even though it was not a good home for us at all.
It’s hard to explain the shame, embarrassment, and grief Jack and I felt. I’ve cried a river of tears over this. I really didn’t think we were asking too much: we wanted to hang on to our home for the sake of our kids, and we did everything we could to stay in our home. And while I will probably never know exactly what OneWest did, the outcome of my story proves that Steve Mnuchin’s company had no interest in helping us. They wanted to foreclose because they were focused on their profits.
Heather’s story is just one of thousands that highlights just how wrong Mr. Mnuchin is to be our next Secretary of the US Treasury.
The Treasury Department has the vital mission of promoting the conditions that enable economic growth, stability, job opportunities, the ability to buy a car or own a home. Their actions directly affect the lives of every American.
Our next Treasury Secretary should have a proven record of fighting to expand economic opportunities for everyone. That is what Americans deserve. Yet, from where I stand, Mr. Mnuchin falls far short of that test.
President Trump’s choice of Mr. Mnuchin to lead the U.S. Treasury is a slap in the face for Nevada families like Heather’s. Her story makes it crystal clear – this is not someone who will be looking out for working people when he implements our nation’s economic policy.
In many ways, President Trump’s unfortunate choice of someone like Mr. Mnuchin should not surprise us. In 2006, the President said he ‘sort of hoped’ the real estate market would tank, and in 2007, he said he was ‘excited’ for the housing market crash. The motive was the same – profits.
We cannot afford to return to the misguided policies that brought us to the worst financial crisis since the Great Depression. Families cannot afford to lose their homes again. But that is exactly what we can expect if Steven Mnuchin is confirmed as President Trump’s Treasury Secretary.
When I ran for Senate, I promised Nevadans that I would fight for them, that I would stand up for them and be their voice here in Washington. Today, I am that voice, and that is why I rise with my colleagues in opposition to the “Foreclosure King,” Mr. Mnuchin.