OKLAHOMA CITY (AP) — Republican nominee for Oklahoma governor Kevin Stitt has been criticized by his Democrat opponent for his record as the head of a mortgage company.
Stitt, running as a businessman and outsider, is locked in a tight race against Democratic Drew Edmonson, a former attorney general who served 16 years before making an unsuccessful bid for governor in 2010.
Democrats have attacked the business record of Stitt, who founded Oklahoma-based Gateway Mortgage Group in 2000 and stepped down as the company’s CEO in August, before he secured the GOP nomination in the race to replace term-limited Republican Gov. Mary Fallin.
The Democratic Governors Association takes aim at his history with Gateway in a television ad that began running earlier this month.
A look at the claims:
AD: “Stitt’s company was ranked one of the shadiest mortgage lenders … and has been sued dozens of times, and suspended in multiple states.”
THE FACTS: It is true that Gateway was listed by a publication as one of the shadiest mortgage lenders and that the company has been sued dozens of times, though experts say such lawsuits are common for a mortgage company. It is false that the company was suspended in multiple states.
After the 2008 financial crisis, the online publication Business Insider listed Gateway as one of the “15 shadiest mortgage lenders” being backed by the federal government.
The publication based its story on data from the Center for Public Integrity , a nonprofit investigative journalism organization, which compiled a list of troubled lenders in 2009 based on comparing a lender’s default rates with other lenders in a geographic region. Gateway ranked tenth on the list for its above-average default rate of 11.9 percent.
Stephen Curry, Gateway’s new CEO, acknowledged the company’s high default rate at the time, noting the 2008 time period was a challenging one for the lending industry.
“Gateway’s performance may have been worse than average but nowhere extreme enough to be considered shady,” Curry said in an interview with The Associated Press. He added that the company’s foreclosures fell dramatically in later years.
Gateway has also been sued multiple times in several states for various allegations, including gender discrimination, breach of contract and fraud. Court records show cases against Gateway in recent years in Illinois, Missouri, Oklahoma and South Carolina.
But financial experts say it wouldn’t be uncommon for a business of that size to run into problems with regulators during the financial crisis. The company currently has about 1,300 employees and operates in 41 states.
Nancy Titus-Piersma, a professor at Oklahoma State University’s Spears School of Business, said while she isn’t intimately familiar with Gateway’s history, it was common for mortgage lenders to face lawsuits during the financial crisis, which exposed lenders for making risky loan offers and led to stricter regulations of the industry.
“They weren’t different from anybody else at that time in the industry,” Titus-Piersma said. “That’s just the way business was being done then. Was it right? No. But our country chose to have a regulatory environment that allowed it to happen.”
It’s untrue, however, that Gateway’s operations were suspended in multiple states. Democrats say Gateway’s license was suspended in two states: Illinois and Georgia.
The AP reviewed actions taken in both states and found the company’s license was only suspended in Georgia in 2009, amid allegations that the company made false statements and misrepresented facts to lenders, according to documents from the state’s banking agency. In June, Stitt and Gateway reached an agreement with Georgia regulators that the company can reapply for a license at any time.
In Illinois banking officials issued an order to revoke the company’s license, but Gateway appealed and reached a consent order with regulators that included a fine and a probationary period.
Enforcement actions were taken against the company in at least seven other states, none of those allegations led to a suspension. In most cases, Gateway was assessed a civil penalty, took corrective action and remained licensed.
Stitt has acknowledged his company’s missteps over the years and says that as CEO, he’s handled those mistakes appropriately.
“We’ve paid for minor infractions in a couple of states over the years,” Stitt said at a press conference earlier this year . “Here’s the deal: I hold people accountable. If we find a mistake, we’re going to fix it. And I’m going to do the same thing with state government.”
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