President Trump on Monday announced his intention to nominate Joseph Otting, the former president and CEO of OneWest Bank, to serve in a top bank-oversight post, a decision that brought the bank’s history with reverse mortgages and foreclosures back into the headlines.
As comptroller of the currency, Otting would spearhead the regulation of the nation’s banks and federal savings associations, heading up his own independent branch of the Department of the Treasury. Were he to receive Senate confirmation, he’d become the second prominent OneWest veteran to join Treasury after his would-be boss, secretary Steven Mnuchin, who founded the bank and served as its chairman.
Just as when Mnuchin got the nod from Trump to head Treasury, Otting’s nomination to the Office of the Comptroller of the Currency ignited a firestorm among Democrats who questioned OneWest’s handling of reverse and forward mortgage foreclosures, as well as claims that the company “robo-signed” documents without fully vetting their contents.
Rep. Maxine Waters, the California Democrat who serves as the ranking minority member of the House Financial Services Committee, condemned Otting’s nomination in a statement issued shortly after the announcement.
“With Mnuchin at Treasury and Otting at OCC, we should all be concerned that the mission of the OCC will be at risk,” Waters said.
“Otting has no business leading the OCC,” the statement continued. “I urge my Senate colleagues to reject his nomination.”
Waters’s statement also referenced former OneWest reverse mortgage subsidiary Financial Freedom’s $89 million settlement with the Federal Housing Administration, which RMD reported last month. The Department of Housing and Urban Development had accused Financial Freedom, now owned by CIT Group, of improperly requesting FHA insurance reimbursements for erroneous interest charges between 2011 and 2016. Otting served as CEO of OneWest from 2010 until its acquisition by CIT in 2015; Mnuchin continued to serve on CIT’s board until his nomination was announced last December.
Mnuchin weathered questions about OneWest’s reverse-mortgage foreclosure practices during his confirmation hearing, with Waters even dubbing him “the Foreclosure King.” But many in the Home Equity Conversion Mortgage industry pointed out that the term “foreclosure” can be misleading when it applies to reverse mortgages, as it only infrequently results in an eviction; instead, most reverse mortgage foreclosures stem from the death or move-out of the last surviving borrower.
Otting’s nomination represents a departure from previous presidents’ approaches to the lesser-known comptroller of the currency position: The last five people to hold the job were lawyers, the Los Angeles Times points out, including current acting comptroller of the currency Keith Noreika and his predecessor, Thomas Curry.
Like Mnuchin and the president himself, Otting has no public-service experience; Curry, for instance, was a Massachusetts bank regulator and a director of the Federal Deposit Insurance Corporation, according to the L.A. Times.
The OCC often participates in banking-industry enforcement actions, helping to secure the $185 million in settlement cash from Wells Fargo amid its phony-account scandal in 2016.
Written by Alex Spanko