Mnuchin’s Former Bank Pays $89 Million to Settle Mortgage Claims

LOS ANGELES — 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.”

Jolley’s attorney, David Scher, said the foreclosures by Financial Freedom amounted to a “fraud” against homeowners that Mnuchin needs to own up to.

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“He is representing an administration that claims it’s protecting middle America, even as he stole the future from middle America,” said Scher, of the Employment Law Group in Washington.

Mnuchin could not be reached Tuesday through a Treasury Department spokesman. The one-time Wall Street banker and Hollywood film financier has previously denied claims that he was part of a “foreclosure machine.” Mnuchin said he inherited the problems of bad mortgages when he and the investors bought out IndyMac.




Image: Secretary of the Treasury Mnuchin discusses Trump administration's tax reform proposal at the White House in Washington

Secretary of the Treasury Steven Mnuchin takes questions in the White House briefing room in Washington on April 26, 2017.