Matt Stoller: On Foreclosure Fraud, One of the Good Guys Gets a Win for a Change

This is wonderful news.

“The banks are paying $95 million, for example, to settle a case brought by Lynn Szymoniak, a homeowner who was featured on CBS’ “60 Minutes” last year for uncovering details about banks’ so-called robo-signing of foreclosure documents. Szymoniak will get $18 million from the settlement.”

Most people don’t know Lynn Symoniak, but the banks certainly do.  And so should you.  If you want to know how the foreclosure fraud scandal was uncovered, she is a key figure.  I first encountered her work in 2009, when I was a naive bewildered staffer working on policy issues I didn’t quite understand with enthusiasm and adrenaline that could partially make up for the ignorance.

In 2009, I was a Congressional staffer focused on the complex awkward mash note to regulators that eventually became known as Dodd-Frank.  The financial crisis was in full effect, with hearings that for all intents and purposes were held with caps locks enabled.  Every week was a new scandal or systemic risk, from AIG bonuses to multi-trillion dollar Fed balance sheet expansions.  I didn’t know a lot about how banking regulations interacted with the real economy at the time, but then, it didn’t seem like that was the main criteria for working on the Financial Services Committee.  The committee was not set up to do good policy, it was designed explicitly as a fundraising mechanism for new members of Congress.  The ignorance of those on the committee was remarkable, to which anyone watching hearings at the time could attest.  Rep. Brad Miller, who is a real legislator and a geek on mortgage issues, has said that he had to look up the meaning of credit default swap on Wikipedia in 2008.  That’s the level of information we’re talking about.  To be fair, the world at large didn’t know much about the true nature of the financial system, and frankly, neither did many people inside the big banks.

But still, this was a committee in Congress charged with oversight of the capital markets, so it was confusing that there seemed to be a lack of basic knowledge of how the system worked.  Actually, that’s not quite right – many staffers and members on the committee had a wide and deep well of financial expertise, but it was built on faulty assumptions about credit.  The cocoon of lobbyists had created an environment inevitably built on groupthink, on the idea that the big banks were somehow good for society.  Staffers had to increasingly ignore the suffering of homeowners and mounds of data on income inequality in order to believe this.  This is not so hard to do in DC, there is a lot of money and infrastructure invested in ignorance.  Applied ignorance, however, has a psychological side affect.  In order to believe that your bad harmful decisions do not invalidate you as a human being, a wonderful sense of aggressive ignorance had to be paired with an almost artistic level of privileged self-pity.

One story should suffice to describe this attitude.  A staffer once turned to me after a hearing that ran late and actually said, in typical Capitol Hill asshole fashion, “our job is so hard”.  I looked at his plushy chair and the enormously fun and interesting subject matter before us, and momentarily enjoyed the hatred I felt for him.  That was the attitude.  Self-pity mixed with ignorance and privilege.  My guess is that he’s now working for some trade association for predatory lenders talking about the need for creative credit products to serve under-banked communities, and making an enormous amount in the process.  Now, this does  not apply to everyone – there are spectacularly brilliant morally upstanding people there, and they are the reason that policy success happens, when it does.  But that was/is the general vibe.

This is the environment of policy-making that someone like Lynn had to penetrate.  I would naturally have wanted to work with her, and eventually did – but I was at the time looking at her from the other side of the funhouse mirror.  In the spring, I got a weird email from a Puerto Rican realtor in Orlando.  It was the kind of message you’d get from a Nigerian spammer, with an attached that purported to show “MILLIONS OF FORGERIES ALL OVER THE COURTS”.  It was a time of intense claims, a kind of cultural transition where a billion dollars began to seem like chump change, and a trillion dollars was worth paying attention to.  I spent some time looking into this email, probably violating house policy on opening attachments from people I didn’t know (the Chinese attempt thousands of hacking attempts on the Capitol every day, apparently, which means they have access to a supremely boring picture of the increasingly irrelevant legislative process).

Attached was a document that was quietly going around foreclosure-related circles, showing obvious forgeries on documents put together by banks, documents necessary to foreclose on the millions of Americans lucky enough to participate in the great housing bubble party of 2002-2008.  Of course, like a good Capitol Hill staffer receiving an incredibly important piece of evidence on a multi-trillion dollar scandal, I was like “this guy is crazy” and quickly got back to working on regulatory reform and surfing the internet.  (Unofficial motto of Dodd-Frank: Hey, um, regulators, why don’t you make all the rules and we’ll check out Twitter?  Mkay.  Also your budget is cut!)  I returned to the topic a year later, tricked by the funhouse mirror into believing that the foreclosure fraud scandal wasn’t, couldn’t possibly be the real thread tugging at our economic foundations.

While Dodd-Frank passed in 2010, most of the action in 2009 was on the House side.  Then in 2010, the Senate took it up, and we could move on to other issues.  Near the middle of 2010, I encountered that strange document again.  Over the course of that year, I had developed a set of contacts with bloggers and ex-regulators who had helped on various pieces of Dodd-Frank, and they started letting me know of forgeries and fraud in the foreclosure process.  The real problem I had was connecting that directly to the capital markets.  A few reports starting coming out about foreclosure fraud, with the real kickoff a Gretchen Morgenson column in the summer.  Yves Smith of Naked Capitalism began describing strange legal theories around securitization and foreclosures.  One day, it clicked.  Holy shit foreclosures are where the financial system meets the real economy, and the bank servicers are chewing through our entire housing stock.

Meanwhile, that strange set of documents kept resurfacing.  And those documents, which showed obvious forgeries side by side with easy to comprehend descriptions, turned out to be pivotal evidence.  Rep. Grayson used them in a speech on MERS in Sept, 2010.  Lynn Symoniak was the person who put them together.  She had been waging a frustrating, agonizing, multi-year fight against banks who had been lying and deceiving millions of people around the housing market.  Some of the staffers who had been working on banking began to work internally on generating hearings to pressure regulators, and there were a slew of hearings in late 2010.

Wells Fargo executives came in for a briefing at that time, and told staffers that they were the good bank, the Warren Buffett owned bank.  They didn’t dare robosign.  Of course I had seven robosigned affidavits in my inbox by Wells, courtesy of among others Lynn.  I ended up yelling at those executives and calling them out as liars, though it didn’t matter because the writing was on the wall for the 2010 elections.  Man that was a lonely briefing, as everyone else seemed to be looking to get a job with Wells (the banking staffer of the Congressman who fought against the Fed audit is now the head lobbyist for Wells, incidentally).  That loneliness, that social isolation, really gets to you.  I know at times, it’s gotten to every single person fighting the banks.  And they know it, and use it.

But the fight went on, despite the onrushing bloodbath of an election.  We used Lynn’s documents to prepare for aggressive hearings under housing subcommittee chair Rep. Maxine Waters, and the expertise generated by the lawyers in the fight and people like Lynn to drive this issue to the regulators.  Lynn continued to fight as aggressively as anyone I’ve seen, using media platforms like 60 Minutes and every political and policy connection should could make to drive this massive fraud into the public arena so it could be addressed.  I’m guessing that untold numbers of lawyers, law enforcement officials, homeowners, policymakers, regulators, bankers, and homeowners have made use of her work, for better or worse.  And she has paid the price for it.

Going up against the banks is not easy.  What these banks do to ensure that their opponents (their real opponents, not the pliant risk-averse operations like the Center for Responsible Lending) are weak is starve them of funds, over-lawyer them, smear them with PR, and basically do anything they can to ensure that it is painful, lonely, agonizing, and horrible to stand up for your rights and the rights of others.  Another one of these heroic figures, Lisa Epstein, was smeared in a juvenile report put out by the Florida Inspector General back in January.  Florida attorneys June Clarkson and Theresa Edwards were fired by Attorney General Pam Bondi, and their reputations savaged.  There’s a lot more to the story, of course.  It’s just a very narrow slice of what I saw.

I don’t particularly like the settlement.  First of all it’s complex, thus it presents a natural territorial advantage for those with many lawyers.  Second of all, it doesn’t address one of the root problems, which is that bank servicers cannot actually do their jobs properly because they haven’t invested in either the people or the personnel to do it.  And there are many more problems, of course.

That said, a small group of people really can change the world.  Lynn did so.  I was privileged enough to witness her integrity and competence.  That she will no longer be financially persecuted, that she will have succeeded in doing well by doing good, means something.  It’s not help for homeowners, it’s not jail for those who ordered fraud and forgery, it’s not the pink slip that oh so many regulators should get.  But it’s meaningful.  There’s a reason the side that commits fraud overfunds its people, provides support for them, and makes sure they are given prestigious positions and plum jobs.  It works, it means they win.  But for once, one of ours won the ability to go about her life, free from the constraints of having big enemies and no money.  This isn’t the biggest deal in the world.  But tt means that those who fought the good fight, can keep fighting.  That’s not nothing.

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About Matt Stoller

From 2011-2012, Matt was a fellow at the Roosevelt Institute. He contributed to Politico, Alternet, Salon, The Nation and Reuters, focusing on the intersection of foreclosures, the financial system, and political corruption. In 2012, he starred in “Brand X with Russell Brand” on the FX network, and was a writer and consultant for the show. He has also produced for MSNBC’s The Dylan Ratigan Show. From 2009-2010, he worked as Senior Policy Advisor for Congressman Alan Grayson. You can follow him on Twitter at @matthewstoller.


  1. Large Whale

    $18 million is the relator’s take in a qui tam (20%). That’s not what Szymoniak herself will receive. Most of it will go to her attorneys.

  2. Tom Crowl

    Great article!

    Another worthwhile area for some attention is how the politically connected Boards of the TBTF banks inhibit accountability…

    Its a tight club of mutual support dedicated to their own preservation and enrichment.

    (And great source of support for both parties… making sure they pay no real attention to their corruption.)

    1. jake chase

      After reading this drivel I looked up this guy Stoller who graces us with a home page and displays himself as every inch the kind of intelligent id*ot who infests Washington, Congressional staffs, think tanks and other leisure class hideaways, living at the expense of those who continue working and paying tribute to the banking and tax and monopoly system. All these shaggy haired Harvard foozlers keep fiddling while Rome burns and congratulate themselves when they move twelve inches to the left and associate with other timid reformers in the faux battle of Democrats vs Republicans. The job of all these clowns continues to be public relations on behalf of the Washington cesspool. Telling us that some Congressman or Senator is a “real legislator”. A real legislator with his hand out in which direction this week?

  3. jylly jakes

    Kudos to Lynn! She managed to FINALLY get the truth out on the national stage back in April of 2011. I recall the banks tried putting her poetry student son on their lawsuit after her 60 Minutes interview.

    Matt, this is a great piece. I like the description of the political cognitive dissonance. And yes, the isolation is a staggering mental challenge. That’s changed for me since we spoke at Bootcamp at NYL. The is a rapidly expanding group providing support to those of us fighting the banks for our homes. If you want to see how we are rollling these days give me a shout.

    Keep fighting the good fight. Kudos to you too.

  4. Jack M.Hoff

    Matt, thanks for the article. How do you propose that the people of this country shed this awful bought and paid for system we call government? Surely, small triumphs such as you describe do nothing at all to stem the rising tide of fraud. I’m sure 95 million doesn’t mean as much to any TBTF bank as a five dollar bill does to me. What we need are people who are in Washington DC to be statesmen, not billionaire’s. Its impossible to get that with the way lobbying works, and the fact that virtually anybody employed in govt has a revolving door into lucrative business jobs when they exit or are voted out of office. Just how do we change the structure short of a revolution? Can it even be done?

  5. Brine Fish

    “That said, a small group of people really can change the world.” It certainly won’t come from the mild mannered good Germans on Capitol Hill who are just looking for a “job at Wells Fargo”.
    This is bizarre. There has been epic tragedy on the ground for millions of families and it’s this kind of ‘aw shucks’ testimonial that is bizarre. Epic fail, most deadbeat politicans spend most of their time trying to get people to give them money. Maybe Stoller can be a war correspondent like that cartoon NBC Richard Engel. Remember? A country uterly destroyed, 100Ks dead, millions evicted, and cartoon sorta says ‘aw shucks’ we’re makin’ progress while riding his embedded tank.

    1. Walter Wit Man

      Yep. There is no evidence to support the wistful wishes of hope you quote.

      It’s like the left is purposely not learning its lesson and is setting us up to make the same mistakes all over again. Lucy kicking the football.

      Just yesterday I discovered our voting machines are hackable so I’m in no mood to learn about the slight success a very motivated activist had by working within the system.

      And double hell, I’m in no mood to read from Al Jazeera or BBC or the WSJ or New York Times or even the Atlantic or Huffington Post. These are all fraudulent organizations. The only purpose they serve is to fill your head with false information. The people here uncover these lies all the time. Why do we limit ourselves to these same criminal sources?

      Fuck the system. Fuck the MSM. If you haven’t learned your lesson by now, you’re part of the problem.

      1. Walter Wit Man

        The MSM bit was in response to the links post.

        And no offense to Matt, my comment reflects the fact I just realized most of the Left pretends to oppose the MSM, but all they do is link to and talk about the MSM without highlighting alternative reporting.

          1. Walter Wit Man

            Most people reading this blog. Including me. I also include Matt Stoller as well, since he’s a former staffer for a putative progressive Democrat. So pretty much all “progressive” and liberal Democrats and everyone to their left. People that “get it”–that our system is corrupted and fascist.

      2. diptherio

        “If you haven’t learned your lesson by now, you’re part of the problem.”

        Good luck convincing people of your point of view with that attitude. And you admit you only realized that our voting machines were hackable yesterday (Hacking Democracy came out in 2006!). How do you expect people who may not be as saavy as yourself to have “learned their lesson” when you yourself only learned it yesterday?

        It’s hard for many people to admit that things they have believed in might not be true, but more people are getting wise. There is hope; and we should celebrate every victory against the plutocrats, whether it occurs within the system or outside it.

        Now get thee down to your local Occupy and start figuring out what we should do next. But the “if you haven’t come to the same conclusions I have then you’re a problem” attitude is not going to be helpful.

        1. Walter Wit Man

          I no longer expect to convince people. The propaganda is so overwhelming that the vast majority of people are impervious to logic. Therefore I only seek to share my truth and stay as true to that as I can.

          And my truth tells me that the people that have been around the liberal blogosphere since 2006, and before, when issues like the hackability of our election machines were first being reported, should have figured out by now that it is pointless to find hope within the system.

          We all learn at different paces. I too was suckered and naive and wanted to change the system through the Democratic party and electoral politics. I am not saying I’m better. And I could be wrong. Maybe the Democrats will save the day.

          But the accumulating evidence is overwhelming. Trying to fight the banks through the legal system is a sucker’s game. Period. So when savvy commentators and political actors tell us to keep hope alive and give us this one little victory as evidence . . . . my bullshit detector is screaming.

        2. Walter Wit Man

          Solutions to save Democracy (if it’s possible):

          1. Acceptance and public protest. Our political system is hopelessly corrupted and fascist. There is no saving it from within unless it’s drastically overhauled. Realizing this and then sharing this reality with others is a positive step.

          2. Stop voting for and supporting the legacy parties. This also means the NGOs and groups associated with them, like Act Blue, Move On, all the progressive groups, Avaaz, Doctors without Borders, Amnesty International, and many others. They are all corrupted and perpetuate the cycle of rigged democracy.

          3. Demand impeachment. The president and many members of his administration should be immediately impeached for war crimes and other offenses and should be arrested and charged with crimes, after grand jury indictments. One should not be a member of any political party or vote for any politician unless the promise to make this happen. If they fail to do this they should be impeached or removed from office.

          4. Support alternative parties.

          5. Support alternative media and information. Why let the corrupt and criminal MSM lead us around? Why do so many liberals simply react to the right wing smear machine that is perpetually on the MSM? It’s propaganda and the liberals pretend to be rebutting the propaganda but their rebuttals are so weak and complicit that they end up justifying the propaganda. They should be leading the political debate rather than following.

          6. Constitutional reform of Democracy–we need to end money in politics, publicly fund elections, and regulate advertising. We also need paper ballots and better control.

          In my mind these are minimum solutions that need to be implemented if there is any hope of saving the system.

          But maybe this action list is too little too late and no democracy is workable.

  6. 2little2late

    This settlement isn’t at all funny, although it is a joke. It would be like every time someone dies from an exploding Pinto, the government expects the Pinto manufacturer to report the accident on its own, and pay the government a fee. The families of the victim will get a couple of thousand at the most, per incident, if reported. And the accidents continue to happen, possibly by the millions, as the reporting is on the honor system. Greg Smith can attest to the honor inherent in that system.

    Having known of Ms. Symoniak’s struggles for a number of years, and the torturous fight the industry put her through; I purposely changed my example above, fearing repercussions from a litigious and deep pocketed auto industry. The Pintos in my example are in fact spotted ponies, carrying gas cans on their rears.

  7. Naples Greedster

    Who was Lynn fighting against? Do we have specific names? Did they pay her off? Any lawyer fighting for the benefit of organized crime should be publicized, humiliated and shamed. This includes the debt collector shits, up to on staff Bank heavies. They have homes and families too, one would presume.

    1. Rik

      I have not read the settlement but…Unless person or persons are going to jail or a judgement is rendered that is so large it puts the banks back on their heels, then ultimately this is a waste of Lynn Szymoniak’s hard work. In the end all that was accomplished is that some attorney’s made a ton of money and the bankers won another settlement. Did anyone admit to any wrongdoing? Probably not so what was gained?

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    Lets get a round of golf in while the Fed deals with the housing mess

    1. Tabitha Sabastian

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    2. ScottS

      I’ll go and report on it Gonzo/Hunter S Thompson style I can get help with the $700 entrance fee.

  9. Steve in Flyover

    It’s hard to say anybody has “won” when the “victor” is just about as sleazy as the banks.

    As researched by one of the readers of the “Housing Bubble Blog”, she has been a serial refinancer/equity extractor.

    The “Crusading Hero looking out for the little guy” story plays a lot better than “Sleazeball won $18 million bucks on a technicality” story.

    1. Jane

      How dare you insult Ms. Szymoniak for her work to expose one of the biggest crime sprees this country has even seen.

      As far as I know, with my limited knowledge of banking law, it is not a crime to refinance a loan. However, it is a crime to file fraudulent paperwork with the courts relating to a lawsuit, which is what the banks were doing, and what Lynn was trying to expose. To homeowners who have been the victims of this fraud, she is a national hero.

      She didn’t get the $18 million on a ‘technicality’, she got it for being a whisteblower, and endured ‘cruel and unusual’
      treatment by the banks, but didn’t give up. Read this:$18-million

      And if you think fraud is a ‘technicality’, then why don’t you give it a try and then send us a postcard from jail. Trust me, YOU won’t receive a ‘get-out-of-jail-free’ card, like the banks did.

      1. Dick

        Ya Vol! More wrath needed!! The problem is that the bad guys still aren’t “reformed”, and as you say, they have largely gotten away with it. That is an immense failure of justice – and they are still-doing-what-they-did-before. Occupy!

        1. Jane

          Dick and Jane – didn’t they make a movie about us?

          ‘Largely gotten away with it’ ???

          I would say that they wholly got away with fraud – I don’t see any criminal charges coming down the pike.

  10. steelhead23

    Matt, I have to thank you for this piece. First and foremost – it made me smile. Haven’t smiled in months reading NC. Second, the tour of the sausage factory was quite illuminating, but I have to say, I suspect that you’ll be about as welcome a future committee staffer as Mr. Greg Smith will be among financiers. But the real joy comes in piecing this together with a ZH piece suggesting that whistleblowing amongst financiers is a growth industry.

    It feels good to smile again. Thanks.

  11. LillithMc

    The entire mortgage industry, including real estate agents, knew something was wrong. I have 14 fraudulent offers in a file on a listing from 2006. No one cared. I was told not to “interfere” with someone’s ability to earn a commission. IF the paradigm changes and there is a return to honesty and ethics, that will be a big change. The system was sound during most of my 35 years in the business and could be restored. The last ten years will always be a black hole.
    60 Minutes has produced a number of shows with evidence of wrong-doing. The problem was “too big to solve”.

    1. Middle Comfort

      Real estate been insane starting in the 1970s. There has always been atrocious extraction of people in run down ‘hoods and limited responsibility by the FIRE sector, even though they know exactly what they are doing. Loan sharking, embezzlement, fraud – it has always been there. Realtors knew something was wrong? Give me a f#$king break. Suprised a number of them haven’t been sued.

      1. LillithMc

        Maybe I just worked in the ethical areas and not the “hood”, but actually, I did work in the “hood” too. It was not sleeze city where I worked beginning 1974. Lack of ethics would be instant dismissal until 2000. They did not want lawsuits. Never did we have loans funded without anyone reading them until mid-2000’s. Did you ever get a loan without underwriting before 2005? I didn’t think so.

  12. Tim

    Yeah, it paid off for her, but what about the other whistleblower robosigner lady in Arizona that got picked of???

    I think this is clever PR: a subliminal message that says, fraud discovered, “settlement” is the closure on that discovery, no more whislblowing necessary.

  13. steelhead23

    Matt, not to be too snarky, given your obvious emotional attachment to this issue, but I found this statement a tad too shy for my tastes.
    “(the banking staffer of the Congressman who fought against the Fed audit is now the head lobbyist for Wells, incidentally).”

    Who? Yes, I could do a bit of homework and likely come up with a name, buy hey, this dude is not your friend, you owe him no loyalty. Name the bastard dammit!

  14. Glen

    Nice to see the win. Nice to get your report on action in Congress trying to fix this mess.

    And now the report from my part of the sticks – Americans realize they’ve been screwed badly. Most think government is completely corrupt and no longer represents Americans. This seems to run the gamut from left to right. How this ends up working out – your guess is as good as mine, but it would be very very wrong to assume that Americans will vote to maintain the status quo.

    1. Nigerian Scam

      SOPA, ACTA, NDAA, HR347, threats to whistleblowers – our votes don’t mean Democracy, especially now. Good thing congress is protected by Fatherland Security, some of them were bought off with sweetheart mortgages and we just can’t be allowed to know, or see behind any curtains. Good thing Matt answered the phone when Lynn called, phew. (snark)

  15. scraping_by

    Unless the banks profited %95 million or less, this is a clear win for the banks, not the rest of us. Just adding a small expense to graft won’t make the graft less likely, just sneakier and probably more expensive.

  16. Senka

    After two years of fighting, we can finally see some results…not only that Lynn won after so many obstacles she run into, but the awareness from the others is much better than before…Please read my post about Register John O’Brien and share his message with you registers of deeds…we need more people like him…

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