Journalism in the Public Interest

Four Whistleblowers Who Sounded the Alarm on Banks’ Mortgage Shenanigans

Whistleblower suits settled as part of the government’s $25 billion settlement offer a glimpse at the kinds of behavior that ran rampant in big banks’ mortgage operations.

According to one whistleblower suit, Bank of America allegedly denied qualified homeowners access to the government's loan modification program. (Mario Tama/Getty Images file photo)

Buried in the sweeping mortgage settlement with banks, for which final documents were filed this week, are five whistleblower cases that shed light on the litany of foreclosure abuses by the banks.

According to one suit, Bank of America allegedly passed bad loans on to the Federal Housing Administration. According to another, the bank allegedly denied qualified homeowners access to HAMP, the government's loan modification program.

The suits were all settled as part of the overall $25 billion mortgage deal. They were filed under the False Claims Act, which provides incentives for whistleblowers to come forward in cases in which someone has defrauded the government. Whistleblowers can net up to 25 percent of the total settlement from False Claims suits, and in some of these cases, the reward is in the millions.

Details are available for four of the cases; documents in a fifth, against JPMorgan Chase, have not yet been filed in Massachusetts. While the cases were settled as part of the overarching agreement, they still have to be accepted by the courts in which they were originally filed. In reaching the settlements, none of the banks admits or denies the lawsuits' allegations.

We've laid out the details of each case.

Countrywide Defrauded the FHA

Kyle Lagow worked at LandSafe, a contractor of Countrywide, which Bank of America bought in 2008. He brought a suit in 2009 alleging that the company systematically undermined the appraisal process for home loans in order to approve as many as possible:

The result was bad loans passed on to the FHA for insurance, while Countrywide was later able to file millions in claims from the FHA. (Read the complaint, which has plenty of juicy details.)

Lagow alleged that much of the appraisal staff was not properly trained, and that many of the appraisals were done by a developer, KB Home, which had a stake in making sure the loans closed:

Countrywide pressured LandSafe to blacklist appraisers with whom KB Home "had too many issues." (KB Home did not respond to requests for comment.):

Lagow's complaints were ignored or challenged:

He also said he was fired for bringing the issue to Countrywide executives. Lagow's suit was settled for $75 million, and was a component of the FHA's $1 billion settlement with Bank of America over FHA insurance. Documents detailing his cut of the $75 million haven't yet been filed. Bank of America did not respond to requests for comment.

Rampant Robosigning at Bank of America, Wells Fargo, JPMorgan and Citi

Lynn Szymoniak, a lawyer, was facing foreclosure in 2008 when she received what she believed were fake documents from her bank. She began an investigation and eventually filed a false claim suit against the country's four largest mortgage servicers.

Szymoniak's suit is still sealed, but she told CBS' "60 Minutes" last year about a mystery woman, "Linda Green," who appeared to be the vice president of 20 different banks and whose signature varied on the thousands of mortgage documents she had supposedly signed. Szymoniak also discovered what she called a "sweatshop" company, Docx, which had forged signatures on thousands of mortgage documents. (The banks that Szymoniak named told "60 Minutes" that Docx was hired by subcontractors. The company has since been shut down.)

Her suit was settled for $95 million, and she will receive $18 million. JPMorgan Chase declined to comment, and Wells Fargo and Bank of America did not respond to our inquiries. A spokesman for Citi declined to respond to the specific allegations but said that Citi "is making every effort to ensure that no foreclosure goes forward based on an inaccurate or defective affidavit."

JPMorgan Chase Hid Fees from Veterans Program

Two employees at a Georgia mortgage broker alleged in a suit filed last summer that JPMorgan, along with Bank of America, Wells Fargo and Citigroup, scammed a program that is supposed to make it easier for veterans to get loans. The banks hid fees that would have disqualified loans from the program, lumping them with other items on the clients' bills, and then submitted fraudulent documents to the government for reimbursement under the veterans program:

Read their full complaint.

JPMorgan settled for $45 million. The two whistleblowers, Victor Bibby and Brian Donnelly, told Reuters that together they would receive $11 million. They also said they would continue their case against the other banks. JPMorgan declined to comment.

Bank of America Cut Qualified Homeowners Out of HAMP

Gregory Mackler worked at Urban Lending, a company contracted by Bank of America to handle HAMP requests. His suit, filed last summer, alleged that Bank of America actively sought to reduce the number of people who qualified for the government's loan modification program, HAMP, pushing instead the bank's often less affordable proprietary loan modifications. This approach saved Bank of America money but cost homeowners. (Read the complaint.)

Mackler's complaint describes many ways that Bank of America, through Urban Lending, allegedly disqualified homeowners for HAMP.

Payments were intentionally processed incorrectly so that they would be deemed late:

Houses that were owner-occupied were declared not so based on "drive-by" inspections:

In some instances, Countrywide started foreclosure proceedings on homeowners who had been told they were "under review" for HAMP modifications. (ProPublica has detailed many similar instances.) And the customer advocates assigned to HAMP customers didn't have access to the information that they needed:

When Mackler raised concerns with Bank of America executives, the suit alleged, he was ignored or told that Bank of America was "not of course interested":

According to the suit, Mackler was fired "in retaliation" in March 2011. Bank of America did not respond to our requests for comment.

The suit was settled for $6.5 million, and Mackler's cut has not been finalized.

Barry Schmittou

March 15, 2012, 4:12 p.m.

The Obama administration is treasonous for failing to prosecute anyone.

They also allowed Wachovia Bank to launder $378 billion for the murderous Mexican Drug cartels, and no one was prosecuted.

Obama also protects insurance companies that ignore life threatening medical conditions in four different types of insurance, and they rig bids to increase sales of these policies but no one is prosecuted !!

The Republicans seem to allow the same crimes but I was having too many surgeries during that time to document them as much.

The Obama administrations trolls who attack me should be sure to mention why it’s okay for Obama to ignore all the deadly corporate crimes they are ignoring as seen in the Court filing I posted at the following website. Please remember the Court told me only the Attorney General can stop the insurance companies from ignoring medical conditions and Obama’s AG will not take action :

Actually Barry, it is the AG in the state where the policy is written not the federal AG who could address your concerns.  Health, Home and Vehicle insurance are under the regulation of the state insurance regulatory agencies.  President Obama did sign regulation that precludes health insurance companies from not covering pre-existing conditions.  I would suggest call your state department of insurance and filing a complaint as well as contact your state AG to redress your issues.

I can promise you it won’t do any good.  I’ve made several calls to The State of Texas AG and they never call you back.  Written complaints are lost or at best you recieve a letter which says “Thanks for your comments.” 
The only cases the AG’s can prosecute are very high profile cases which will bring them great publicity.  Oh and the cases have to brought to them all wrapped up with a bow on top. Just like the SEC.

This would explain why they’re so interested in getting that settlement out of the way.  If the whistleblowing cases pan out, the banks wouldn’t be in a very good position, so better to give a token apology before actual assets are at risk.

I assume that the whistleblower protections will magically evaporate shortly.  I mean, between this and Bradley Manning…

Barry Schmittou

March 16, 2012, 11:17 a.m.

Thank you for your kind comments. Please understand these are violations of Federal laws that are being protected by the Obama administration.

U.S. Magistrate Judge Bryant read the evidence and wrote to me saying I have “more than sufficiently alleged fraudulent abuse”.

Judge Bryant also wrote that the Federal 6th Circuit Court of Appeals Panel of Judges wrote this about enforcing criminal laws in Health insurance claims that are regulated by U.S. Title 29 :

“the enforcement of such provisions is the exclusive prerogative of the Attorney General”

The Attorney General and Secretary of Labor appointed and directed by Obama are very aware the patients can die while they wait for their case to get to Court and be resolved. They refuse to seek prosecution even though Barack Obama said the following at the National Prayer meeting in February 2012 :

“When I talk about making sure insurance companies aren’t discriminating against those who are already sick I do it because I know that far too many neighbors in our country have been hurt and treated unfairly over the last few years, and I believe in God’s command to love thy neighbor as thyself. For me as a Christian, it also coincides with Jesus’s teaching To whom much is given much is expected”

(end of quotes)

Letters I have received from Obama’s DOL Directors in Washington and Atlanta further prove the Federal nature of these crimes :

The Atlanta Regional Director of the DOL EBSA wrote the following after reviewing the quotes linked below where numerous U.S. Judges’ wrote that MetLife and doctors’ paid by MetLife ignore life threatening medical conditions :

“Please be assured that EBSA’s top priority is to protect the benefits of participants and to make sure that providers of those benefits obey the law.”

(Written on 12/10/2010 by DOL Regional Director RC Marshall)

On January 26, 2011 Department of Labor Director of Participant Response Ms. Sharon Watson sent a letter from Washington saying :

“As we previously indicated, we take the allegations you have made that MetLife has engaged in a pattern of fraudulent activities regarding your claim and other participants’ claims very seriously and have taken the information under advisement.”

Ms. Watson closed by saying :
“At this time, there is nothing more EBSA can do for you”

It took me four years to get the DOL to even acknowledge and respond to the evidence I submitted.

They responded when I placed a video on YouTube where the DOL agent repeatedly said “We can’t go against MetLife”.

The following website shows the quotes that Obama’s DOL and DOJ are ignoring. Numerous Federal Court Judges write that MetLife’s Doctors’ ignore life threatening medical conditions including brain lesions. Multiple Sclerosis, cancer and cardiac conditions of many patients, and a foot that a new mother broke in five places :

To see how MetLife’s attorneys also lie in multiple courts if the patient lives to have their case heard please see the Federal Judges quotes at :

This next website shows how MetLife Simultaneously Destroys 7 Laws Requiring Care, Skill, Diligence, Prudence and Safeguards!

Links at the following website prove MetLife and two of their executives gave Obama huge contributions. Then the two executives signed page five of the DOJ’s agreement where no one was prosecuted for rigging huge bids to sell the exact same policies where MetLife is ignoring life threatening medical conditions when patients file claims. Please view Exhibit C of :

That’s about five percent of the evidence I’ve presented to Obama’s Directors, Republican Senator Grassley and leaders of both parties.

Additionally, the website above shows evidence of Obama protecting corporations that commit multiple crimes incuidng Wachovia Bank Laundering $378 Billion for the murderous drug cartels and no one was prosecuted.

That’s enough money to fund the entire Afghanistan war twice, and no one was prosecuted !!!!!!

Leaders of both parties continue to ignore the evidence while falsely proclaiming they are serving God as seen in the quotes I posted above that Obama said at the National Prayer meeting.  Obama is willfully enabling the destruction of thousands of lives every year and that’s why I continue to pray God will help us all !

Terribly sorry to see AGs cave at DofJs insistence. Strangely Nevada’s Catherine Cortez-Masto did not personally sign “The Settlement”? One more display (Eric Holder) of the Presidents inability to hire qualified “help.”

I still view banks as a cancer slowly consuming their host, us.

Someday I would like to see a study of the number of bank robberies with a gun or threat, from 2006 - 2010 with total dollars stolen, and number of people convicted and years sentenced. Then with a chart, compared to dollars stolen by the banking industry, (they were using an ink pen), number of people convicted and years sentenced. Should be interesting. I feel sorry for the homeowners and the massive number of hours they have needed to exhaust on their fights with the banks and government.

Somehow I just don’t see any of this becoming a campaign issue. Holder, the DOJ, and ultimately Obama are all responsible for the lack of prosecution.
I’m also not sure what the fuss is about.  To anyone following this subject it is quite clear that “Nobody on Wall St. committed any crimes.”

Barry Schmittou

March 16, 2012, 4:52 p.m.

If it does not become a campaign issue it is because the Republicans have sold their souls to the same wealthy sociopaths that own the Democrat leaders souls.

They all claim to have strong Christian beliefs while they do exactly the opposite of Christ’s teachings about love and mercy. I pray often for the Democrat and Republican leaders too, because they all seem to be trying to destroy the lives of everyone except the very wealthy. They are stealing so many resources when there would be plenty if they could learn to share.

This is all Bush’s and Palin’s fault.  Without them, there would be no problems with the economy.

It’s important to emphasize these whistleblower actions were False Claims Act cases involving fraud against the federal government which can be very lucrative.
If your whistleblowing case does NOT fall within the narrow confines of this law, you have NO legal protections and it is practically impossible to get legal representation even if you have money to pay attorneys.


What happens to all the whistleblowers who are not covered under the False Claims Act?  They are effectively silenced and the news media never reports anything about them.

If powerful people are worried about what you might say, you can be silenced too… to prevent you from blowing the whistle.

Ally Financial Inc., formerly known as GMAC, was one of the entities forced to contribute to the mortgage settlement. Yet according to this story, no whistleblower was involved with the Ally/GMAC takedown. Does the fact that no dog barked in the night mean GMAC’s frauds (unacknowledged) were so blatant they just jumped up and popped assorted AGs in the eye?

Joseph Zernik, Human Rights Alert (NGO)

March 17, 2012, 4:26 a.m.

The evidence of criminality in Bank of America was patent all along, as was the evidence of its patronizing by the US courts and the US Department of Justice:
[1] 12-03-15 PRESS RELEASE: Evidence of widespread corruption of the US courts and proposed corrective measures submitted to the US House of Representatives
[2] 11-08-08 PRESS RELEASE: Fraud and Corruption in the US Courts are Tightly Linked to Failing Banking Regulation and the Global Economic Crisis – presentation in the 16th World Criminology Congress, Japan
[3] 10-05-05 Countrywide, Bank of America [NYSE;BAC], and its President Brian Moynihan Compilation of Records Evidence of Racketeering
Joseph Zernik, PhD
Human Rights Alert (NGO)

Thank you Barry Schmittou and others here who have pointed a very substantial light on the diabolical underpinnings of insurance companies, government at all levels, banks, and other institutiona that have bled the public…in vast cases to the point of literal death. There has been so much diligently presented that that alone will further awaken readers. Keep getting the word out!

A fine summary. However, please stop referring to these fraudulent undertakings as ‘shenanigans’. While this word can mean ‘deceit’ or ‘trickery’, it also implies mischievous but harmless pranks—-which the banks’ mortgage practices certainly were not.

Carola Von H.—to answer your question about Ally Financial:

The False Claims Act suits were only one component of the government’s case against each of the banks. The settlement covers dozens of investigations by various state and federal agencies. (That’s partly why it took so long to finalize).

You can see an explanation of all the different investigations here:

For one specific piece of the government’s investigation of Ally, you can check out the Dept. of Housing and Urban Development’s audit of their foreclosure process:

Cora Currier—Thank you for the links to info about the investigations behind the government’s case against Ally Financial aka GMAC.

Marvin Mishbuccha

March 22, 2012, 4:42 p.m.

This is a very useful summary.  While I am not qualified to make this judgement, it seems understandable that some experts tend to look at B of A as a raging criminal enterprise. 
As a taxpayer and citizen and former customer, I would hope that the FBI and other parties at all levels of government that can investigate the company for criminal violations are working to make some criminal cases.
I am concerned that the government promised not to do that in return for paltry settlements totaling $25 billion.  There should be lots of executives of the bank, its vendors, and plenty of attorneys who should be subject to criminal prosecution.  Put a few behind bars, and some of this will stop.  Why have the lawyers involved in the fraudulent mortgages not been centered and disbarred?

There is NO TRUE Justice anymore when it comes to the Banking Systems,They have been allowed to run their Fraudulent Activity as long as they pay off Elected Officials.And if anyone should be accounted for their Activity is should be the Ones on Capital Hill.

Foreclosure is a sham and a fraud.  The financiars never lent the people any money, they lent credit.  The banks are the borrower’s of hundreds of trillions in U.S. TAXPAYER money. Their debt is an unsustainable $1.2 quadrillion dollars in fraud. The proof they never lent the people any money is in the Origination Fraud. That is why there are no legally enforceable liens and why you have your stamped paid deed in your possession. Foreclosure is outright robbery being committed by the judges in Judicial States and the Government in non-judicial States. The judges, law enforcement, the politicians and the Government are agents of the World Bank disguised as something they are not.  They are traitors.

This article is part of an ongoing investigation:
Foreclosure Crisis

Foreclosure Crisis: Banks and Government Fail Homeowners

Banks and the government have fallen short in helping homeowners in danger of foreclosure.

The Story So Far

Systemic failures at the country’s banks and mortgage servicers have exacerbated the most severe foreclosure crisis since the Great Depression, and government efforts to limit the damage have fallen short. ProPublica created an unrivaled database of homeowners who have faced foreclosure, opened a Facebook page to encourage homeowners to share their stories, wrote profiles of some of them, and incorporated their experiences into our reporting. We also provided a comprehensive rundown of the numbers behind the crisis.

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