Whistle-blower tells of foreclosure fraud fight
Lynn Szymoniak has battled the biggest banks in the country, exposing major foreclosure fraud. She spoke Sept. 9 at the Chicago Ethical Humanist Society in Skokie. | Joel Lerner~Sun-Times Media
NAME: Lynn Szymoniak
BEST KNOWN AS: Foreclosure-fraud foe
HOME STATE: Florida
Updated: October 14, 2012 12:52PM
SKOKIE — “I’m Lynn Szymoniak and I am in foreclosure.”
When the activist, who has taken her courageous fight to the biggest banking institutions in the country, makes this declaration, she does so not in shame or even fear. She holds her head high.
“It means something different now because the punch line of the story is that I woke up recently and there was $5 million in my bank account that I had gotten from being a whistle-blower about foreclosure fraud,” she said. “When I used to say, ‘I’m Lynn Szymoniak and I’m in foreclosure,’ it meant to certain people in the audience that I was one of them.”
But Szymoniak became more than just one of them; she became an advocate for them when she learned of widespread unethical practices amounting to mortgage fraud. Her fight ultimately led to a $95 million judgement with Szymoniak personally receiving millions in compensation, much of which she has spent on her mission.
For most people, being in foreclosure is “a shameful thing,” the speaker told about 75 audience members Sept. 9 at the Ethical Humanist Society of Chicago in Skokie. It’s for that reason, she said, that she begins her story each time she tells it the same way — as if she’s a member of Alcoholics Anonymous.
“I’m proud of it because I’m with other people who have worked hard to make this system somewhat just,” she said. “Even a modicum of justice would be a wonderful thing for most homeowners in America right now.”
Szymoniak’s story is exemplary in similar ways that mark the stories of many heroic whistle-blowers: One person discovers institutional wrongdoing that runs larger and deeper than he or she could have imagined. And against overwhelming odds, the whistle-blower engages in a David vs. Goliath fight even though the risks and the sacrifices can be extraordinary.
But first it was a rather mundane disagreement with her bank: Szymoniak had an adjustable-rate mortgage that the bank was allowed to adjust twice a year on specific dates. But the bank missed the notification and adjustment date, and then tried to apply a higher rate a month later. It even tried to assess Szymoniak a late fee.
A lawyer and a feisty one willing to stand up for her rights, Szymoniak cried foul. She stopped paying her mortgage and was sued three months later for foreclosure.
“I came to foreclosure like so many people — very, very honestly,” Szymoniak said. “Many people came to foreclosure because they were laid off from their jobs. I came to it because I ran through my money recklessly by spending a lot of it from my 401K when I was trying to recover from cancer and spending a lot of it when I was trying to take care of our mom, who had Alzheimer’s and Parkinson’s.”
A deputy sheriff knocked on Szymoniak’s door to serve her with foreclosure papers. Even though she thought she had borrowed conservatively, housing values in Florida plummeted by 65 percent in three years and her safe cushion wasn’t so safe after all.
Deutsch Bank National Trust Company sued the Florida resident for foreclosure, but Szymoniak had never heard of the entity. She borrowed her money and wrote mortgage checks to Option One Mortgage Co. — so why was she was being sued by this institution?
Szymoniak was told that Deutsch owned the promissory note on her mortgage, which it had lost — though it still claimed it had the right to sue. She later learned the same alleged circumstances were part of a half-million foreclosure cases in the country.
Its prey this time, though, was a lawyer with 33 years’ experience of successfully fighting white-collar crime.
The Floridian filed a motion to dismiss that made the following demand: “Show me the note; show me the mortgage; show me why you think you own my house.”
Deutsch failed to respond until 19 months later when it served Szymoniak with a packet of papers, claiming that it had finally found the note and many related mortgage papers.
“I started looking at the papers they sent to me and it took about 5 minutes to conclude that these papers were bogus,” Szymoniak said.
There were all kinds of red flags, including names, dates and locations. Most notably, the papers were signed by a Linda Green. In her investigation of other foreclosure cases, Szymoniak found many instances of Linda Green signatures with varied handwriting and under different titles — papers that were even notarized.
Her investigation exposed that the Deutsch office in Alpharetta, Ga., had produced more than 2 million phoney mortgage assignments. The company even had “signing rooms” where people would regularly forge foreclosure papers. While law-enforcement officials were initially not receptive to her investigation — “It was as if I had just been talking to myself in the bathroom mirror in the morning and not submitting all these letters and binders and correspondence” — the Georgia office was finally closed down.
“They paid people to forge documents,” Szymoniak recounted. “It’s as simple as that. Although when you read the explanation of it now by, for example, the American Bankers Assn., they don’t call it forgery. They call it ‘surrogate signing.’”
Szymoniak would ultimately appear on an award-winning “60 Minutes” episode in which Linda Green was tracked down at the insistence of CBS newsman Scott Pelley. Green’s only prior experience, as it turned out, was as a counter clerk at an automobile store.
Others also benefitted from the fraud — insurance companies, for example, which controlled empty mortgage-backed securities tied into pension funds. Szymoniak called the corruption “the most significant economic crime in the history of our country.”
Under extreme financial hardship and even having received threats, she pressed on, eventually making her case to government lawyers who said they understood only 30 percent of what she asserted but liked the case enough to take it. Her cases are still ongoing though she settled a part of them with the big banks: Chase, Citibank, Wells, GMA and Bank of America.
“My cases are still going forward but as a result of the settlement, my ability to fight for some of this has changed significantly,” she acknowledged.
But it has hardly stopped. Szymoniak remains frustrated that people have not been held accountable for wrongdoing and asserts there is less due process in foreclosure courts than there are with small-time shoplifters.
She recognizes that good people have joined the fight even if the results are not what she wanted so far.
“Would I do things differently?” she asked rhetorically. “If I had a choice between seeing these people criminally prosecuted or receiving my $18 million share of the settlement, I would choose ‘A.’ It kills me that people across the country have lost and are losing their homes and their investments because groups of bankers and mortgage servicers have been incredibly greedy and continue to be this greedy and continue to be above the law.”