Attorney Lynn Szymoniak had spent a career investigating insurance fraud when a bank moved to foreclose on her Florida home in 2008. Almost four years later, the fraud she said she uncovered by combing through mortgage documents earned her $18 million.
Szymoniak, 63, is among six whistle-blowers who will pocket $46.5 million as part of a $25 billion national foreclosure settlement that state and federal officials reached in February with five banks, including Bank of America and JPMorgan Chase, according to the Justice Department.
"When they did this to her, they picked the wrong person at the wrong time in the wrong place," said Richard Harpootlian, Szymoniak's attorney in two whistle-blower cases. "They stuck their hand into the beehive."
Szymoniak's examination, in which she relied on her experience as an insurance fraud investigator, led to her claims against banks for submitting fraudulent documents to the federal government asserting they owned loans insured by the Federal Housing Administration, she said.
The national foreclosure settlement with the five banks, which resolves claims of abusive foreclosure practices, provides mortgage relief to borrowers, pays $1.5 billion to those who lost their homes to foreclosure, and sets standards for how the banks service mortgage loans.
Szymoniak's foreclosure case began in July 2008 when Deutsche Bank, as trustee for a mortgage securitization trust, sued to seize her Palm Beach Gardens home, which was once worth $1.3 million. The bank couldn't prove it owned her loan and claimed it had lost the mortgage note, she said.
John Gallagher, a spokesman for Frankfurt-based Deutsche Bank, declined to comment on Szymoniak's foreclosure case.
Like many homeowners, Szymoniak said she was surprised by the subprime mortgage crisis and its effect on the U.S. real estate market.
She stopped making mortgage payments in 2008 after a battle with cancer wiped out her savings and she cut back on work to care for her mother, who was sick, she said.
Szymoniak said she was first alerted to problems in the paperwork on her foreclosure when Deutsche Bank said it acquired her mortgage note in October 2008, three months after the bank sued over the loan.
"So I began doing what I've done for years — go out and investigate," she said. "It was pretty obvious to me that the paperwork was fraudulent."
Her work quickly uncovered widespread document fraud in the mortgage industry, she said, and eventually led to the filing of her whistle-blower cases in 2010.
Szymoniak said her review of mortgage documents uncovered the practice known as robo-signing, in which bank officials and contractors signed tens of thousands of foreclosure documents at a time without verifying any of the information. The same people also used various job titles on the forms, Szymoniak said.
Szymoniak said she's unsure what she'll do with the $18 million. Deutsche Bank is proceeding with its foreclosure action against her home, she said.
"Even if I pay off the mortgage, I would own a house with no clear title, so I still couldn't sell it," she said.