Six years ago, as the nation emerged from a devastating recession, City of Oakland building inspectors flagged four East Oakland homes for dangerous, substandard conditions. They wrote that the houses were unfit for human habitation. The foreclosed properties, lost by their previous owners during the financial crisis, were owned at the time by giant Southern California savings-and-loan OneWest Bank.
At this time, in 2010, Oakland was trying to get a handle on foreclosed properties. Deteriorated houses such as these were common. They posed health-and-safety hazards and drove down property values.
But, according to a complaint filed last week with the federal Department of Housing and Urban Development, these four crumbling houses were no aberration: They were part of a larger pattern of racial discrimination by OneWest.
The claim, filed by two nonprofits, alleges that the bank spent time and money maintaining properties in majority-white neighborhoods, but allowed buildings in Black, Latino, and Asian communities such as East Oakland to become blighted.
The bank is also being accused of redlining communities of color by opening few branches in minority neighborhoods, making it hard for non-white customers to open accounts.
The fair-housing complaint against OneWest comes just as its former chairman and CEO, Steven Mnuchin, is being considered by President-elect Donald Trump as the next secretary of the Treasury Department. In 2009, Mnuchin led a group of billionaire investors that purchased Indymac bank from the federal government and turned it into OneWest. He ran OneWest until last year. The racial discrimination OneWest is accused of happened under Mnuchin’s leadership.
As treasury secretary for President Trump, Mnuchin would have extensive powers to shape the U.S. economy, including mortgage-lending markets.
The nonprofits that filed the complaint — the California Reinvestment Coalition and Fair Housing Advocates of Northern California — researched foreclosed properties owned by OneWest Bank in Contra Costa and Solano counties. They found that houses in communities of color were kept in a “state of disrepair,” while foreclosures in mostly white neighborhoods were maintained in “materially better condition.”
City of Oakland records back up the nonprofits’ claims. The city cited OneWest for four substandard properties in 2010, according to Alameda County public records reviewed by the Express. All four houses were located in majority Black and Latino census tracts of East Oakland. OneWest has since sold the properties.
In 2012, in response to concerns that companies such as OneWest were not maintaining foreclosed homes, Oakland created a foreclosed property registry for banks and investors. City records show that, in 2013, inspectors again surveyed the condition of four additional houses foreclosed on by OneWest. One of these properties was found to be in violation of health and safety standards.
Since 2009, OneWest has foreclosed on 129 properties in Alameda County, according to public records. The bank currently owns three foreclosed homes in the county.
One, in downtown Hayward, is a single story house with detached garage. Its doors and windows are currently covered in plywood. Black people are the largest racial group in the census tract around the house.
Another foreclosed home currently owned by OneWest, a two story house on Sunkist Drive in deep East Oakland, has been abandoned since the bank foreclosed on its previous owner several years ago. There were repeated complaints about the property to the city, especially after squatters moved in, according to several neighbors.
The Express visited the home this past Monday. It is still abandoned, and doesn’t appear to be for sale (see photo). Its doors and windows are shuttered with metal panels. A sign taped on the front door explained that the house is managed by Assurant Field Asset Services of Austin, Texas, and that it has been “winterized.” Weeds are growing in the building’s gutters, and the wooden stairs connecting it to the street are splintered and broken. The front and back yards are overgrown with weeds.
Black residents account for 40 percent of the neighborhood’s population, according to U.S. Census data.
The Express was unable to check on the condition of the third house, located in a residential neighborhood in San Leandro.
According to the nonprofits that filed the complaint, OneWest also appears to be avoiding communities of color when it chooses locations for bank branches, a type of redlining that makes it more difficult for minorities to access financial services. Under federal law, OneWest is required to provide equal financial services to communities that have been historically redlined — but the bank appears to have done the opposite.
The groups analyzed all of the bank’s 74 branch locations throughout six Southern California counties. Despite the region’s racial diversity, characterized by a wide Latino majority, and sprawling urban and suburban areas with Black and Asian majorities, 62 of the branches are located in census tracts that are majority white. Eleven are located in Latino-majority tracts, while only one is in a majority Asian tract.
OneWest has no bank branches in predominately Black neighborhoods.
“It’s an appalling picture, this research paints,” said Maeve Elise Brown, the executive director of the Oakland-based nonprofit Housing and Economic Rights Advocates, who reviewed the information in the fair-housing complaint. “We’re seeing lack of access to financial services on the one hand. And then, on the other, in communities of color, the bank appears to be allowing the homes to remain untended.”
The groups also analyzed federal mortgage-lending data and found that OneWest isn’t helping Latino, Asian, and Black residents of Los Angeles purchase homes. Despite the Los Angeles metro area’s white population accounting for only 35 percent of its total residents, 85 percent of the bank’s home loans were written for white customers.
Latinos, by far the largest racial group in Los Angeles at 43 percent of the population, only benefitted from 8.4 percent of the bank’s mortgage-lending activities, and Black people were virtually shut out, receiving only 1.7 percent of OneWest’s mortgage loans in 2015.
OneWest doesn’t have any bank branches in the Bay Area. The bank’s parent company, CIT Group, did not respond to an email and phone call.
Mnuchin, a former partner at Goldman Sachs, led a group of billionaire hedge-fund investors — which included George Soros and John Paulson — to buy the failed savings-and-loan Indymac in 2009. They renamed it OneWest Bank, and the federal government agreed to guarantee them against losses it might incur due to bad home loans.
Mnuchin was chairman and CEO of OneWest until last year, when he and his co-investors sold the company to CIT Group for double the $1.5 billion they paid.
In May of this year, Trump named Mnuchin his campaign’s national-finance chairman, responsible for helping raise money for his fight against Hillary Clinton. Mnuchin helped collect millions for Trump, and personally contributed $425,000 to the Trump Victory Committee.
Trump and Mnuchin have also been business partners in the past. In 2009, Mnuchin considered buying Trump Entertainment Resorts, the Trump-owned company that operates the president-elect’s Atlantic City casinos.
According to reports by major national media outlets, the president-elect is strongly considering Mnuchin for his cabinet. An announcement on the secretary of treasury post is expected this month.