Two years ago, when Steven Mnuchin moved to Los Angeles to become CEO of OneWest Bank, he sold his five-bedroom duplex co-op apartment for $9 million. The New York Times said that the apartment at 740 Park Avenue was "one of the most prestigious addresses in New York." But you needn't feel sorry for Mnuchin. He now lives in a 9-bedroom, 10-bathroom, 22,721 square foot mansion, valued at $26.9 million in LA's swanky Bel Air neighborhood.
In contrast, Rose Gudiel, 35, lives in a small 1200 square feet, one-story 3-bedroom house in La Puente, a working class suburb of Los Angeles, where she, her father (a warehouse worker), and her brother care for her disabled mother.
Gudiel would like Mnuchin to visit her at her home, because his OneWest Bank is trying to evict her and her family. If Mnuchin won't come to visit Gudiel, she will visit him, and bring some of her neighbors and friends with her.
Gudiel has become the public face of a burgeoning crusade to defend homeowners from unfair evictions. Gudiel, her family, neighbors and other supporters have pledged to risk arrest when the Los Angeles County Sheriff tries to evict them this week from Gudiel's home after Fannie Mae and OneWest issued a foreclosure notice. This week, Gudiel, her neighbors, coworkers, and supporters from the Alliance of Californians for Community Empowerment (ACCE) and the Service Employees International Union (SEIU) began a 24-hour-day vigil at the house to prevent the sheriff from evicting the Guidels. They intend to link arms in front of the doorway to stop the sheriff from evicting the family, risking arrest.
OneWest, headquartered in Pasadena, has a considerable track record of mistreating its customers. In 2009, a New York judge called OneWest's behavior "harsh, repugnant, shocking and repulsive'' in trying to foreclose on a New York family. The judge branded the bank's conduct as "inequitable, unconscionable, vexatious and opprobrious.''
That same year, OneWest had the locks changed on the home of a Minneapolis woman in the middle of a blizzard after the company sent her a letter stating, according to the Star-Tribune, "You expressed concern that at the end of the redemption period ... you and your mother will be evicted from the property,... Rest assured, that will not take place due to the rescission of the foreclosure sale."
Gudiel and her parents bought their small house in 2005. They made steady mortgage payments until 2009, when one of her brothers died unexpectedly and the family lost his income. The family was two weeks late on the next mortgage payment. When they sent in the payment, OneWest wouldn't accept it, telling the Gudiels that they needed to apply for a loan modification instead. The Gudiels then spent over a year attempting unsuccessfully to get the bank to modify the loan -- even though their income had long since recovered after another brother moved in with them. Then the bank started foreclosure proceedings.
"My parents instilled in me the idea that if you work hard and study you could live your American Dream," said Gudiel, who works for the California Employment Development Department and also as an in-home care worker. "I was the first person in my family to graduate from college, and I worked hard so that I can own a home. And now these banks are taking my dream away."
In contrast, Mnuchin was born to wealth and privilege. His father, Robert E. Mnuchin, retired as a general partner at Goldman, Sachs, and owned C&M Arts, an art gallery in New York. His mother, Elaine Terner Cooper, was a vice president of the International Directors Council of the Solomon R. Guggenheim Museum and a director of the Byrd Hoffman Foundation, which supports the arts. She was also a trustee of the Whitney Museum of American Art in New York.
After graduating from Yale in 1985, Mnuchin began his banking career at Goldman Sachs. He worked there for 17 years, rising to become an executive vice president. According to one report, he left in 2002 "at the age of 39 with a reported $46 million stake in the bank." He was recruited by his Yale roommate, Eddie Lampert, to join ESL, a hedge fund, as vice chairman. A few months later, he jumped to SFM Capital Management as its CEO. But within a few months he changed jobs again, leaving SFM to co-found Dune Capital with his former Goldman colleagues Daniel Neidich and Chip Seelig.
In 2009, the Federal Deposit Insurance Corp., the government agency in charge of overseeing banks, was trying to unload the Pasadena-based IndyMac bank, which was one of the first major lenders to collapse as a result of its portfolio of risky loans and borrowers stopped paying on variable-rate mortgages. According to the Los Angeles Times, "IndyMac specialized in loans that didn't require much borrower documentation, such as verification of income."
Mnuchin helped put together a group of investors to buy the bank from FDIC as part of a sweetheart deal. Mnuchin became CEO of the new institution, renamed OneWest. To get the troubled IndyMac bank off its books, FDIC allowed Mnuchin and other investors to buy the bank's $20.7 billion in loans and other assets for $16 billion. FDIC and the Federal Home Loan Bank provided $9 billion in financing to sweeten the deal. It also agreed to guarantee some of the thrift's worst assets. OneWest also received a commitment of $1.8 billion in federal bail-out funds, according to ProPublica.
According to the Los Angeles Business Journal, "critics point out that the deal is allowing OneWest's owners to make billions of dollars in profits while costing the Federal Deposit Insurance Corp. -- and the banking industry that funds it -- more than $10 billion."
The LABJ article also suggests that OneWest Bank makes a tidy profit on each foreclosure. "On bad loans, OneWest, which bought many of the loans at 70 percent of par value, gets the cash from a foreclosure," according to the LABJ, "and is also reimbursed up to 95 percent of the difference between the original loan value and the foreclosure sale amount."
In February 2010 the Los Angeles Times reported: "The billionaires' club of private financiers who took over the remains of IndyMac Bank from the Federal Deposit Insurance Corp. turned a profit of $1.57 billion last year on the failed mortgage lender -- more than they invested less than a year ago."
OneWest Bank has grown by purchasing First Federal Bank of California and La Jolla Bank. OneWest is now the 39th largest bank in the U.S. and the largest bank headquartered in Southern California. It has 78 retail branches, $26 billion in assets, and $16 billion in deposits. It also services over $150 billion of mortgage loans on the behalf of third parties, such as Fannie Mae.
Politically, Mnuchin is a hedge fund executive who hedges his bets. During the last presidential season, according to OpenSecrets.org, he donated money to the campaigns of Republican Mitt Romney ($2300) and Rudolph Giuliani ($2300), and Democrats Hillary Clinton ($2300), Bill Richardson ($2100), Chris Dodd ($2300) John Edwards ($2100), and Barack Obama ($2300). (His wife Heather contributed $2,300 to both Chris Dodd and Hillary Clinton.)
In addition to his ongoing corporate roles with OneWest and Dune Capital, and his political ties, Mnuchin serves on the board of the holding company that owns Sears-Roebuck. In New York and Los Angeles, Mnuchin and his wife Heather have also been stalwarts in the high-society charity world, attending and hosting star-studded balls and parties to support their favorite causes.
While living in New York, Mnuchin's wife Heather co-chaired the Annual Practical Magic Ball that raised almost $1.25 million for City Harvest, a charity that helps feed the hungry. The Mnuchins also hosted a 2009 fundraiser for City Harvest at their "Southhampton estate" in the tony Hamptons section of Long Island. Heather also attended a fancy fundraiser luncheon for the Southhampton Hospital in Long Island with the "Malibu Chic Meets Classic Hamptons," designed by influential designers Geoffrey Ross and Hillary Thomas
The couple were also big givers to the Museum of the City of New York, serving on the committee for its black-tie Winter Ball fundraiser ) and the TriBeCa Ball for the New York Academy of Art.
Last January, the Mnuchins hosted a star-studded fundraiser at their new Bel Air home for the Joyful Heart Foundation, the charity headed by actress Mariska Hargitay that raises money to help survivors of domestic violence. Among the more than 120 guests were LA Mayor Antonio Villaraigosa, Hilary Swank, Blair Underwood, Jennifer Love Hewitt, Maria Bello, Debra Messing, and Kathy and Rick Hilton.
According to their 1999 wedding announcement in the New York Times, Heather Crosby was, before her marriage, senior vice president for corporate communications for Launch Media, an Internet music, music information and news company. A yoga enthusiast, Heather Mnuchin also started her own line of yoga clothing Some of the profits will go to the Joyful Heart Foundation, on whose board she serves.
Steve Mnuchin has served on the boards of the Whitney Museum, the Hirshhorn Museum and Sculpture Garden Board, Riverdale Country School, New York Presbyterian Hospital and Los Angeles' Museum of Contemporary Art.
When it comes to high-profile philanthropy, Mnuchin is ready to serve. But Mnuchin and his bank have shown little compassion or basic decency, for Rose Gudiel and her family.
Michael B. Keegan: Mitt Romney, the Quiet Extremist
I wonder if this family is the best choice for poster child for the movement.
http://www.fearnotlaw.com/articles/article40917.html
http://projects.latimes.com/homicide/post/michael-gudiel/
I'm sure supporters will tell us that not only have the banks been after these people for no reason, but so have the police-- but really, there are a lot of people who are unemployed/layed off and losing their homes who could have also used the support from the protestors... but they may not belong to the right union or other groups to get the support.
In their filing, the investors said IndyMac, whose name they intend to change, would specialize in making jumbo mortgages, which carry higher interest rates because government-backed mortgage giants Fannie Mae and Freddie Mac can't buy them. The lender would keep the loans in its portfolio.
Jumbos, which were a core business for IndyMac, are currently defined as loans of more than $625,500 in designated high-cost areas such as coastal Southern California.
The filing also says the investors would look to expand IndyMac's 33-branch network while providing "high-quality, personalized" banking services suited to the tastes of affluent jumbo-mortgage customers.
They should also go after the rigging of the FDIC (why do you think the insured amounts went up? So they could steal even more!) and those making a killing--If you want to understand how OneWest works watch this: www.youtube.com/watch?v=ssl5yb7FewA&feature=results_video&playnext=1&list=PL717138530A845372
Much.
"Loans that don't require income verification?" Charles Ponzi might have been the first one to think of that. But, gee, anyone could manufacture "billions of dollars' worth" of those, and call them Assets.
Then, when it turns out that some of those borrowers don't have any money while others don't even exist at all ... if you're well-connected you can turn those "troubled" or "toxic" assets (sic...) into ... public money?!
Let's step back now from just the picture of Steve M and his relabeled bank, and look at the bigger picture of what FDIC was doing, and what the SEC and the Treasury were (strangely enough... or not so strange at all...) not doing. And what the House of Representatives and the Senate also (not so strangely at all...) "didn't see, either."
If you keep expanding this thing, pretty soon there's no place left to expand it into, and so you are left with what the writers of Article 2, Section 4 never foresaw: that EVERY Civil Officer could simultaneously be guilty of the High Crime of Bribery; not one of them concerned nor repentant.
The original loan amount was $500,000. Missed payments and other foreclosure costs bring the amount up to $550,000. At 70%, OneWest bought the loan for $385,000
The home is located in Stockton, CA, so its current value is likely about $185,000 and OneWest sells the home for that amount. Total loss for OneWest is $200,000. But this is not how FDIC determines the loss.
‘FDIC takes the $500,000 and subtracts the $185,000 Purchase Price. Total loss according to the FDIC is $315,000. If the FDIC is covering “ONLY” 80% of the loss, then the FDIC would reimburse OneWest to the tune of $252,000.
Add the $252,000 to the Purchase Price of $185,000, and you have One West recovering $437,000 for an “investment” of $385,000. Therefore, OneWest makes $52,000 in additional income above the actual Purchase Price loan amount after the FDIC reimbursement.
At this point, it becomes readily apparent why OneWest Bank has no intention of conducting loan modifications. Any modification means that OneWest would lose out on all this additional profit.
This is a cautionary tale and the moral of the story is: meet your financial obligations to your lender or, as they are lawfully allowed to do, they will take your house. And the should.
The most heartening part of this story is that justice is being served and that Mrs Gudiel is being held accountable for her fiscal illiteracy, not some innocent shareholders of the bank who have done nothing wrong but lend her the money in good faith and expect her to repay the money in a timely manner. She failed to uphold her end of the bargain and now deserves to suffer the consequences.
Some days it is warming stories like this about fiscally irresponsible squatters finally having some justice administered to them that really brightens the day.
Please keep stories like this coming. I think it will serve as warnings to those slackers looking to game the system, hoping that their inability to meet financial contracts can be easily forgiven. Freedom is about choices…choices to make mistakes and bear the consequences.
No bailouts. None for banks and none for people.
Kai
-- The Ghost of Christmas Present
(I already totally crushed you with an earlier refutation of this lame quote in a previous post. I cannot believe that you are still using since I spanked you down before. Anyway, here is my response to you from last time, reposted!)
---
Now the correct version (you are wrong…again):
Oh God, to hear the insect on the leaf pronouncing there is too much life among his hungry brothers in the dust!"-A Christmas Carol
Below a better quote to refer to me since I am giving you glimpse of your future. As you continue as the Scrooge, taking freedom, free will, and free choice from good earnest hardworking people, as you take from them what is not yours to take.
"Ghost of the Future," he exclaimed, "I fear you more than any spectre I have seen. But as I know your purpose is to do me good, and as I hope to live to be another man from what I was, I am prepared to bear you company, and do it with a thankful heart. Will you not speak to me?"--A Christmas Carol
And,
“Men’s courses will foreshadow certain ends, to which, if persevered in, they must lead,” said Scrooge. “But if the courses be departed from, the ends will change. Say it is thus with what you show me!”--A Christmas Carol
No need to thank me for presaging the loss of your rights and your soul.
Kai
Or does all this not apply to me, because you think I'm rich (which I'm not, esp since this is my first house and I've lost $400k)? Should we give loan mods to everyone? Or only to those underwater? I'd be underwater had I not put 30% down... or gotten some negative amortization loans... or taken a home equity line of credit... or some other financially irresponsible maneuver. So, will we only give mods to the irresponsible, like Rose? Or to everyone? Or to no-one?
What a banking billionaire makes on his end of the deal is not material. These people using their own rational will thought they were getting a good deal in a good market that they would benefit from. It did not turn out that way, it became a bad deal in a bad market, and now they want solace. No way! You made a deal. One of the externalities of freedom is having to live with the consequences of your own choices, both good AND BAD.
Debt forgiveness is rife with problems, is a moral hazard, is unfair to the banks since they did not create the crisis, the Fed did, and will not work.
A Fed view on the policy:
http://realestateresearch.frbatlanta.org/rer/2011/03/seductive-but-flawed-logic-of-principal-reduction.html
Kai
Here's what I think really happened: she gambled. she lost. She got into a mortgage over her head, one she alone could not afford, depending on others to make the payment. Now, her home is worth approx $260K and she wanted a loan modification to cover the fact her gamble failed.
I don't understand why anyone should be entitled to a loan modification. You buy a home, you assume the risk. I bought a year later at the peak of the market. I've lost more in my home value than Rose's home is worth in it's entirety; however, ethics compels me to pay my commitments, regardless of the type of home the bank CEO lives in. That's completely irrelevant.
Our entitlement mentality has sunk to an all time low. Rose's actions and Peter's article are emblematic of the new America.
According to Hector Tobar's column in the LA Times, she didn't make a single payment for TEN MONTHS.
Dreier, you may want to dig up some facts for the folks you advocate for...