In response to written questions from Senate lawmakers, Steve Mnuchin said OneWest did not engage in robo-signing, which he defined narrowly. | Getty Robo-signing affair dogs Mnuchin before committee vote

At the depths of the foreclosure crisis, one employee of Steven Mnuchin’s bank was signing a foreclosure or bankruptcy document about once every three minutes, according to a 2009 court deposition.

That practice, which was widespread at the time, has drawn renewed scrutiny from lawyers and consumer advocates, who have called into question Mnuchin's fitness to be U.S. Treasury secretary. Mnuchin says his former bank, OneWest, didn't illegally foreclose on homeowners, despite the speed at which documents were processed.


The Senate Finance Committee is scheduled to vote on his nomination at 10 a.m. on Tuesday.

Robotic signing of documents — known as robo-signing — wasn’t unique to OneWest. Its use after the housing collapse helped give rise to the Consumer Financial Protection Bureau and triggered a scandal from which banks have yet to fully recover. Now it's dogging Mnuchin.

Mnuchin’s then-employee, Erica Johnson-Seck, was a vice president of bankruptcy and foreclosure at OneWest and its predecessor IndyMac. In a 2009 deposition, she told lawyers she was signing about 750 foreclosure and bankruptcy documents a week. To speed things up, she shortened her signature and spent “not more than 30 seconds” executing documents that had been prepared by OneWest and its vendors.

Robo-signing of documents had become almost routine at the time, when millions of bad home loans overwhelmed banks and mortgage servicing companies. Robo-signing exploded into congressional hearings and clogged local courtrooms, ensnaring several big banks and leading to a $28 billion government settlement that still hasn’t fully played out.

Mnuchin, in response to written questions from Senate lawmakers, said last week that OneWest did not engage in robo-signing, which he defined narrowly. Robo-signing, he said, occurred when a signatory “attested to facts that were not verified to be accurate” or “represented himself or herself to be someone else.”

“OneWest did not do these things,” Mnuchin told the committee, citing a 2014 report from the the Office of Comptroller of the Currency. That report found no proof that OneWest foreclosed when it didn’t have legal authority. The company foreclosed on homeowners who weren’t behind on their payments at a rate of only .001 percent, the OCC found.

“Small numbers of borrowers were found to have been affected by errors,” Mnuchin told the senators. “OneWest fully remediated those borrowers in the manner prescribed by federal regulators.”

But the Office of Thrift Supervision defined robo-signing more broadly in a 2011 consent order with OneWest. That order found that the bank and its contractors had filed affidavits based on “personal knowledge or based on a review by the affiant of the relevant books and records, when, in many cases, they were not based on such personal knowledge or review.” The consent order ended in July 2015.

Johnson-Seck’s statement was part of a deposition taken during a Palm Beach, Fla., foreclosure filed by IndyMac. IndyMac was notorious for making mortgages to borrowers with no income or assets, a problem that Mnuchin inherited when he and his investors bought the bank from the Federal Deposit Insurance Corp. in 2008. Many of IndyMac's loans were destined to fail when home prices plunged.

Despite her speedy signing, Johnson-Seck’s affidavits frequently held up in court, where many judges rejected robo-signing accusations mounted by delinquent homeowners, Mnuchin spokesman Barney Keller said.

“The media is picking on a hard-working bank employee whose reputation has been maligned but whose work has been upheld by numerous courts all around the country in the face of scurrilous and false allegations," said Keller, executive vice president at Jamestown Associates.

Marc Dann, a lawyer who represents homeowners in foreclosure, said Keller misses the point.

"That some courts found that OneWest could still foreclose on other evidence has nothing to do with the fact that they were routinely endorsing notes, assigning mortgages and signing affidavits for which they had no personal knowledge," Dann said. "That was robo-signing, and that is what our future Treasury secretary said OneWest didn't do."

Several big mortgage servicers, including Citi, Ocwen and Wells Fargo, settled with states and the federal government over robo-signing, agreeing to provide some $28 billion in consumer relief and fines.

OneWest, which had a much smaller portfolio of loans, was not part of that settlement. It did agree to undergo an independent review and publish details of its servicing failures. As of March 2014, it had paid more than $8.5 million to homeowners.

Still, Mnuchin's statements have rankled consumer advocates, who are calling on the Senate to deny his confirmation. The Columbus Dispatch over the weekend detailed the OneWest's robo-signing practices in Ohio.

“It wasn’t just him or his company, this was an industry standard that got out of control,” said Bill Faith, executive director of the Coalition on Homelessness and Housing in Ohio. Officials with the Obama administration, including alumni of Goldman Sachs and other big banks, also gave short shrift to the problem, he said. Mnuchin is a former Goldman Sachs partner.

“If he showed some regret, remorse, said we need to keep constraints on this industry, anything that would show that he learned his lesson, then I’d have a little more sympathy. But he just got up there and lied about it,” Faith said. “Frankly, this isn’t just a Trump problem. We had problems with people at Goldman Sachs and other places in position of influence in the prior administration.”