Pro-Cornett group attacks Stitt's mortgage company
A group backing Republican Mick Cornett for governor financed a television ad that began airing on Friday attacking the mortgage company founded by Kevin Stitt, Cornett's GOP rival.
The ad cites a magazine article from 2010 about a relatively high default rate at Stitt's company, Gateway Mortgage Group, and regulatory actions in 2009 against the company in Arkansas, Illinois and Georgia
The ad states, “If Kevin Stitt couldn't be trusted to run a business in three other states, how can Oklahomans trust him to run ours now?”
Stitt said Friday the ad referenced "minor infractions" from a decade ago and called on Cornett to run a clean campaign.
The ad is sponsored by Oklahoma Values, a political action committee that financed pro-Cornett television ads earlier this year in the Tulsa market.
Among the top donors to the group is Sue Ann Arnall, an Oklahoma City investor and philanthropist, who raised money in 2016 for the Democratic presidential ticket.
Arnall has given $200,000 to the pro-Cornett PAC, while also donating to Democratic gubernatorial nominee Drew Edmondson.
The group's most recent report with the state ethics commission showed three donors in the second quarter of this year: Mo Anderson, of Waukomis, co-owner and vice-chairman of Keller Williams International, gave $25,000 in April; Burt Holmes, of Tulsa, CEO of the Holmes Organization, gave $10,000 in May; and Margaret Swimmer, a Tulsa attorney, gave $200 in June.
By law, the group must act independently from Cornett's gubernatorial campaign; the two cannot coordinate.
Oklahoma Values is separate from the Foundation for Economic Prosperity, a group of anonymous donors that financed pro-Cornett ads in Tulsa.
The anti-Stitt ad began airing a week after two public polls showed Cornett trailing Stitt by about 10 points in the race. The primary runoff is set for Aug. 28 to determine the GOP nominee.
Stitt founded Gateway Mortgage Group in 2000 in Tulsa and was CEO until last week, when a new CEO was named. Stitt took the title of chairman. It was announced this week that Gateway Mortgage Group has entered into an agreement to acquire Farmers Exchange Bank, in Cherokee.
Stitt responds
At a hastily arranged news conference in Oklahoma City on Friday morning, Stitt said Gateway was "a hugely successful company" that does 3,000 home loans a month. He called the regulatory actions referenced in the ad "minor infractions" and said the company can do business in all 50 states. It is currently licensed in 41 states, he said. He said the company has a low default rate.
"I'm proud of our company," Stitt said. "We have nothing to apologize about.
"It's just when somebody gets down, I guess this is what the politicians do. They know they can't win on their regular record. ... I just ask for Mick Cornett to run a clean campaign."
Stitt said, "Two polls show me winning this race by up to 10 points. And now all of a sudden the negative ads start coming out and they're trying to twist the truth. Oklahomans are too smart for this."
Cornett backers
Dan Conston, a media consultant based in Washington, D.C., who is a senior adviser to the Oklahoma Values PAC, said Friday that Stitt "had the opportunity to come clean with voters about his company being fined in Arkansas, having their license revoked in Illinois for fraud and being banned from doing business in Georgia. Instead he chose to lob baseless attacks at his opponent, just like a typical politician would."
Will Gattenby, spokesman for the Cornett campaign, said, "This is not our campaign's ad, but these allegations about Mr. Stitt are true. Is it true his business committed fraud? Yes. Is it true he's been kicked out of multiple states? Yes. Is it true he bundled subprime loans? Yes. Did he take Obama's TARP bailout money? Yes. Oklahomans need to know the truth."
According to Stitt's campaign, Gateway was not kicked out of multiple states and never took money from the Troubled Asset Relief Program, often referred to as TARP, set up after the financial crisis of 2008.
Donelle Harder, spokeswoman for Stitt's campaign, said, "These are baseless attacks from Mick Cornett's camp and people who funded Hillary Clinton.
"Kevin Stitt was never banned in or kicked out of Illinois or Arkansas or any other state. Furthermore, most of the companies quoted in the article, that the PAC is using as its source, are out of business today. Kevin Stitt's company is a resounding success story, emerging from an era where there were significant regulatory changes being made nationwide and becoming an award-winning company operating in 41 states today with 1,200 employees."
Georgia case
Stitt signed a consent order in 2009 with the Georgia Department of Banking that barred the company from ever seeking another license in the state to be a mortgage lender or broker. The order also prohibited Stitt personally from applying for those licenses for five years.
The consent order does not describe the violations that led to the ban. The company attorney has said there were misrepresentations and insufficient background checks attributable to employees in the Georgia office but that Stitt was not involved.
Stitt's campaign website shows a document amending the consent order in Georgia to allow Gateway Mortgage Group to apply for a license in the state. That document was signed in June 2018 but was retroactive to last year.
TARP
In regard to TARP, a report by the online journalism site ProPublica shows Gateway Mortgage Group received $145,000 under a home loan modification program.
Harder, the Stitt spokeswoman, said the program was intended to help homeowners avoid foreclosure and that Gateway was "required to participate in this program."
She said, "Gateway received payments for loans modified under the program to help offset the costs incurred by Gateway in the modification process and the increased risk of default associated with loans that were eligible under the program."
