Steven Mnuchin’s former OneWest bank agrees to $89 million settlement

A reverse mortgage company that was part of Treasury Secretary Steven Mnuchin’s banking enterprise at OneWest has agreed to pay more than $89 million to resolve federal allegations, the Justice Department announced in may 2017.

At issue are claims Financial Freedom made for reimbursement from a government insurance fund run by the Federal Housing Administration. The Justice Department said that between 2011 and 2016, the company put in for interest that it was not entitled to receive.

“The Department of Justice is committed to ensuring that those who participate in federal mortgage insurance programs comply with requirements essential to the success of its programs,” Acting Assistant Attorney General Chad Readler, head of the agency’s civil division, said in a statement.

Financial Freedom was part of the package Mnuchin scooped up when he led a team of investors who bought California subprime mortgage lender IndyMac from federal regulators shortly after it failed in 2008. It originally paid $1.55 billion to the FDIC for the deal, but sold the bank and its affiliates, renamed OneWest, for $3.4 billion in 2015. It’s now owned by CIT Group and goes by CIT Bank.

Steven Mnuchin served as chairman for six years, starting in 2009. During his confirmation fight, Mnuchin had to answer a host of questions about the behavior of OneWest and its subsidiaries.

During Mnuchin’s tenure, Financial Freedom foreclosed on more than 16,000 reverse mortgages, according to records obtained under the Freedom of Information Act by the public interest group California Reinvestment Coalition.

That made up almost 40% of all government-guaranteed reverse mortgage foreclosures. It was more than twice what a lender of Financial Freedom’s size should have produced, according to the interest group.

The investigation settled with Tuesday’s announcement stemmed from broad concerns flagged by Sandra Jolley, who runs a reverse mortgage consulting firm based in California. Jolley will receive $1.6 million of the settlement through federal whistleblower laws.

Steven Terner Mnuchin, born on 21st December 1962, is an American banker who is the 77th United States Secretary of the Treasury as part of the Trump administration. Previously Mnuchin has been a film producer and hedge fund manager.

After he graduated from Yale University in 1985, Mnuchin worked for investment bank Goldman Sachs for 17 years, eventually becoming its Chief Information Officer. After he left Goldman Sachs in 2002, he worked for and founded several hedge funds. Mnuchin joined Trump’s presidential campaign in 2016, and was named national finance chairman for the campaign. On February 13, 2017, Mnuchin was confirmed to be President Donald Trump’s Secretary of the Treasury by a 53–47 vote in the U.S. Senate.

 

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Photo by Chairman of the Joint Chiefs of Staff