During his grueling confirmation hearing Thursday, Donald Trump’s nominee for Treasury secretary, Steven Mnuchin, sought to convince lawmakers that he isn’t the villain of the U.S. mortgage crisis that he’s lately been made out to be.
Mnuchin, a former Goldman Sachs employee with a net worth of as much as $500 million, ran a California-based bank called OneWest that bought up failing banks during the 2008 housing market collapse and subsequently foreclosed on thousands of homeowners who fell behind on their loan payments. Democratic Senators and other opponents of Trump and Mnuchin have used the OneWest example as a way to portray Mnuchin as out of touch with the needs of the middle-class voters who helped elect Trump.
In his hearing, Mnuchin stressed that OneWest strove to help its customers work out new agreements that would prevent them from losing their homes — saying he “ran a loan modification machine” as opposed to a “foreclosure machine.” But he admitted that in many cases that wasn’t possible.
One such case, Mnuchin said, was the so-called Octomom, Nadya Suleman, who became a celebrity after she gave birth to octuplets in 2009, in addition to her six other children. Suleman lost her home to foreclosure in 2012 after failing to make repeated mortgage payments, an outcome Mnuchin said his bank was unable to avert.
“The most troubling loan we had was actually to the Octomom,” Mnuchin said during the hearing. “That was a terrible situation, and we worked very, very hard to move her to another home that they could afford.”
Still, the Treasury Secretary nominee insisted, on several occasions, that he and the bank were not actually to blame for kicking Americans out of their homes, as in many cases their hands were tied by cumbersome government programs and policies of the Obama administration. For example, Mnuchin singled out the U.S. Department of Housing and Urban Development (HUD) program of government-guaranteed mortgages, which his bank OneWest was often charged with administering as part of the mortgage businesses it inherited from the banks it acquired.
The HUD programs came with contingencies that Mnuchin painted as unnecessarily draconian, such as requiring foreclosure on the surviving spouse of a borrower if the spouse wasn’t listed on the mortgage. Another HUD rule imposed penalties if a homeowner fell short on tax and insurance payments: “HUD forced us to foreclose,” Mnuchin said.
“These are government guaranteed programs where we are foreclosing on senior citizens,” Mnuchin added. “And I can assure you nothing was more painstaking for me in the whole place.”
Mnuchin also faulted the Obama administration’s Home Affordable Modification Program (HAMP) for some of the foreclosures, saying OneWest voluntarily participated in the program but found that its rules for valuing a home often disadvantaged homeowners. “We unfortunately had to follow the HAMP rules or we would have been severely penalized,” Mnuchin said.
The former banker aimed to convince senators that he feels empathy for the people on whom his bank foreclosed and that as Treasury secretary he would work to improve the financial system to help all Americans and prevent another economic crisis.
As for Octomom, our colleagues at People magazine report that she is trying to overcome her struggles (which besides foreclosure, also include drug addiction issues) and rehabilitate her life, working part-time as a family therapist. She appears to live in a home in California, though she does not currently own property, according to public records.
