In 2011, at the peak of the housing crisis, regulators for the Treasury Department ordered Steve Mnuchin and directors at OneWest Bank in California to fix the bank’s questionable handling of home loans. In a consent order filed that year by the department’s Office of Thrift Supervision, regulators accused the bank of using “unsafe or unsound” methods for dealing with mortgage loans and foreclosures in 2009 and 2010. They found that bank employees and third-party providers lied in foreclosure paperwork filed in state and federal courts about information related to the ownership of many home loans, money due on the loans, and the fees chargeable to the borrower. They also accused employees of filing court documents with signatures that were not notarized and initiating foreclosures and bankruptcies without all the necessary paperwork. The office additionally claimed that the bank “failed to devote to its foreclosure processes adequate oversight, internal controls, policies, and procedures, compliance risk management, internal audit, third party management, and training.”
As a result of the examination, the Treasury Department’s Office of Thrift Supervision (which later merged into the Office of the Comptroller of the Currency) ordered the bank to work with an independent monitor to address these issues. That involved requiring Mnuchin and other bank executives to write rules about how employees are supposed to work with borrowers to handle foreclosures, creating a process to ensure employees’ statements in court documents are accurate, plus a long list of other rules to make sure employees don’t break the law. Regulators found the same problems at the nation’s largest mortgage lenders, including Bank of America and Citibank, and ordered them to do the same. OneWest complied with this legal order and in 2015, the Treasury Department released the bank from the monitoring agreement.