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Six Americans stand to collect up to $46.5 million for their part in helping to expose foreclosure abuses by the nation's largest banks. (AP Photo)

Jackpot! Foreclosure whistleblowers become millionaires

July 2, 2012 @ 8:52 am (Updated: 12:31 pm - 7/2/12 )

Six Americans stand to collect up to $46.5 million for their part in helping to expose foreclosure abuses by the nation's largest banks.

The whistleblowers helped the government expose how some banks used fraudulent documents to collect money from federal housing programs.

For their help in the lawsuits against the banks, these whistleblowers will be able to collect big paychecks due to the False Claims Act, "which allows private citizens to file lawsuits on behalf of the U.S. when they have knowledge that the government is being defrauded," CNNMoney reports.

Those who file the lawsuits stand to collect between 15 percent to 30 percent of the penalties assessed in the case.

For homeowner Lynn Szymoniak, it was like winning the lottery. Szymoniak was served foreclosure papers in 2008. She helped prove banks had been using fraudulent documents to prove ownership of defaulted mortgages, for which the banks were then submitting insurance claims to the Federal Housing Administration. From the government's $95 million award in a lawsuit, Szymoniak will get $18 million.

"I recognize that mine's a very, very happy ending," Szymoniak told CNNMoney. "I know there are plenty of people who have tried as hard as I have and won't see these kinds of results."

The other five whistleblowers came from within the industry, such as an appraiser who helped the government show that Countrywide Financial had been inflating home appraisals to collect higher claims from FHA. Other whistleblowers exposed banks overcharging veterans who had mortgages guaranteed by the Department of Veterans Affairs.

The whistleblower lawsuits helped lead to a foreclosure settlement, approved in May, between the nation's five largest banks and state and federal officials. The settlement stems over banks' errors uncovered in the processing of foreclosures. In the settlement, banks agreed to pay $5 billion in fines and about $20 billion in refinancing and mortgage modifications for homeowners.

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Comments (2)


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  • maplefish wrote...
    Now we need to
    July 2, 2012 10:54 am
    Hold all banks and any employees involved in this despicable crime accountable with severe prison sentences.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • J-Bone wrote...
    ????
    July 2, 2012 4:17 pm
    Let me get this straight. These banks are being forced to pay penalties for fraud. That's all well and good, but those payments are coming from government bailout money and with profits made off of the interest payments of other customers. Sounds like they'll really learn there lesson this time. Should be a nice feather in the cap for class warfare/Buffett rule crowd, but not much else.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • { "Thumbs Up":"1","Thumbs Down":"-1" }