Date: May 17, 2017
NBC News and other major media covered an $89 million settlement between the U.S. government and Financial Freedom, the troubled reverse-mortgage provider once led by Steven Mnuchin — now U.S. Treasury Secretary. The deal was made possible by TELG client Sandy Jolley, a consumer advocate who received $1.6 million for blowing the whistle on Financial Freedom's shady practices.
Scher
Quoteworthy:
"[Mnuchin] is representing an administration that claims it's protecting middle America, even as he stole the future from middle America,"
David L. Scher
[EXCERPT]
Mnuchin’s Former Bank Pays $89 Million to Settle Mortgage Claims
A reverse mortgage lending company that was previously connected to Treasury Secretary Steve Mnuchin has agreed to pay $89 million to settle claims that it abused a federal home insurance program. Federal officials had been investigating the company’s failed home loans to a mostly-elderly clientele.
The company, Financial Freedom of Austin, Texas, agreed to make the payment to close a U.S. government investigation into its practice of allegedly speeding home foreclosures without following Department of Housing and Urban Development requirements. Mnuchin led a group of investors that bought IndyMac Bank and its Financial Freedom unit in 2009. The investors realized a large profit when they reorganized IndyMac, based in Pasadena, Calif., as OneWest Bank.
An Oxnard, Calif., consumer advocate, who helped blow the whistle on the reverse mortgage tactics, will collect $1.6 million of the settlement, according to the U.S. Department of Justice, which announced the settlement Tuesday.
In an interview Tuesday, the whistleblower, Sandra Jolley, recalled how Financial Freedom relentlessly pursued her terminally ill father to get him to sign a reverse mortgage on his modest ranch home, shortly before his death. Jolley went on to counsel many other families that faced foreclosures by the company. After getting word of the settlement Tuesday, Jolley told NBC News: “The human toll is indescribable.”
[ADDITIONAL COVERAGE]
Mnuchin’s former bank agrees to $89 million settlement with the U.S. government
From CNN Money (May 16, 2017)
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 Tuesday.
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.
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.
Mnuchin served as chairman for six years, starting in 2009.
Steve Mnuchin’s Old Company Just Settled for $89 Million for Ripping Off the Government on Dodgy Loans
From The Intercept (May 16, 2017)
For four years during Treasury Secretary Steven Mnuchin’s tenure as chair of OneWest Bank, its reverse-mortgage subsidiary Financial Freedom ripped off the government by receiving unlawful federal insurance payments on reverse mortgages, according to an $89 million Justice Department settlement made public today.
Financial Freedom serviced thousands of government-insured reverse mortgages from 2011 to 2016. According to the settlement, the company repeatedly filed insurance claims with the Federal Housing Administration (FHA), and received interest payments, without following program guidelines. This gave Financial Freedom a critical backstop for reverse mortgages that often harmed borrowers.
“This lender failed to comply with FHA servicing requirements and sought to receive financial gains that it was not legally entitled to,” said Inspector General for the Department of Housing and Urban Development David Montoya, in a statement accompanying the settlement.
Mnuchin’s former bank in $89 million settlement over reverse mortgages
From Reuters (May 16, 2017)
U.S. Treasury Secretary Steven Mnuchin’s former bank agreed to pay $89 million to settle allegations it wrongfully sought payments from a federally insured reverse mortgage program, the U.S. Department of Justice said on Tuesday.
Austin, Texas-based Financial Freedom, once a unit of OneWest Bank, obtained insurance payments for interest from the U.S. Department of Housing and Urban Development (HUD), despite mortgage holders being ineligible for them, according to the settlement agreement.
With reverse mortgage loans, seniors borrow money against the equity they have built in their homes. To protect lenders, HUD provides mortgage insurance through a program administered by the Federal Housing Administration.
The government accused Financial Freedom of seeking to obtain certain insurance payments between 2011 and 2016, although it did not meet deadlines for property appraisals, claims submissions and foreclosure proceedings.
