David Dayen: The Only Person Jailed for the Foreclosure Crisis Will Soon Go Free


Lorraine Brown, the lone American convicted of a crime for the mass production of bogus documents used to illegally kick people out of their homes, will be released from prison in Pittsfield Township, Michigan, this week. After serving the minimum 40 months of a 20-year maximum state sentence, Brown is set to be paroled into the feds’ custody, where she will serve out the remainder of a concurrent federal sentence and should get released in the next year.

Brown was CEO of DocX, the third-party document-processing company that engineered the production of some 2 million fictitious mortgage assignments, often forged by people whose name didn’t match their signature, as a recent VICE investigation documented. These assignments were used as evidence in foreclosure cases nationwide beginning in the mid 2000s, leading to an untold number of people being ejected from their houses. Some 9 million Americans have surrendered their homes to banks since 2006, according to the Wall Street Journal, and the case that netted Lorraine Brown added to the evidence pile suggesting much of that misery was based on fraud.

In the course of their criminal investigation into foreclosure fraud, the FBI and US Attorney’s office in Jacksonville, Florida, home of the parent company of DocX (known as Lender Processing Services), called in dozens of agents and forensic examiners, conducted 75 interviews, issued hundreds of subpoenas, and reviewed millions of documents. But after all that, only Lorraine Brown went to prison. She was always something of a scapegoat, but that even she is now on her way out after doing paltry time is a testament to the ongoing failure of the American legal system to mete out proportional punishment for white-collar crime.

Check out the VICE News special on the demolition of foreclosed homes in Detroit.

In Brown’s case, the banking industry needed the raw materials her office provided because investment banks had apparently botched the ownership records on millions of securitized loans while packaging them into bonds. “The fraud in this matter was the result of negligence in the process of creating Mortgage Backed Securities (MBS),” read an FBI request for additional resources to prosecute the case that eventually took down Brown.

A review of 600 pages of documents from the FBI investigation, obtained by VICE through the Freedom of Information Act, focused on DocX, the company one former employee called a mortgage document “sweatshop.” Temporary and low-wage workers posed as bank vice presidents, working long hours signing documents at two long tables. Employees signed as many as 2,100 documents per day, and DocX accelerated the assembly line by having other workers sign on the behalf of those authorized by the bank.

For instance, Linda Green, a former shipping clerk for an auto-parts store, signed as the vice president of at least 20 other financial institutions, according to records compiled by Lynn Szymoniak, a whistleblower who wrote the fraud complaint that triggered the Jacksonville FBI investigation. But Green’s signatures all featured different styles of handwriting, because various people in the office wrote her signature on DocX mortgage assignments. According to a 60 Minutes profile from 2011, Green was selected to be the authorized bank officer because she had an easy-to-spell name.

Federal officials in Jacksonville believed that not only DocX, but their clients—the mortgage companies seeking false evidence—committed fraud by lacking a clear chain of title on millions of homes. And their superiors at FBI headquarters saw potential in the case, according to the FOIA documents. “If evidence collected shows intent to defraud investors by the real estate trusts, this matter has the potential to be a top ten Corporate Fraud case,” read one reply from the FBI’s Criminal Investigative Division that authorized additional resources to the Jacksonville office.

But besides Brown being singled out for some prison time, the US legal system basically swept the whole thing under the rug. Lender Processing Services, DocX’s parent company, paid millions in fines and settlements, but none of its executives were indicted. Neither were the executives of any of DocX’s clients, which included most of America’s major banks.

In fact, Brown’s indictment suggested she alone directed the document forgery and fabrication scheme “unbeknownst to DocX’s clients”—that is, without the banks who needed the illegal docs being in on the scheme.

“Lorraine Brown was a very small cog in a giant machine,” Szymoniak, the whistleblower, told me via email in response to the parole news.

The former CEO technically has 18 months left to run on her federal sentence, but her lawyer Mark Rosenblum told the Detroit News he expects her to serve only a portion of that. The Bureau of Prisons (BOP) can reduce up to 15 percent of any given sentence, and the most recent stats from 2012 show that federal prisoners for fraud crimes serve roughly 88 percent of their sentences. That would make Brown eligible for time served in about 11 months.

The activity that put Brown in prison was eventually wrapped into overlapping civil settlements by state and federal law enforcement that saw banks and associated companies involved in the scheme paid billions in penalties. At the time, Justice Department officials said they reserved the right to criminally prosecute anyone suspected of wrongdoing.


12 Responses

  1. It is nice to have an option to edit what is posted in this blog as most of the people may be stressed-out people facing foreclosure. I could help to improve this blog site as I am a self-taught web developer.

  2. What happened to Homeowners Lives Matter? We need to help each other and cause external force to change laws by bringing the concerns to the law makes. Sometimes they may not be familiar with what homeowners discovered.


  3. OCWEN–>. They took over from Litton. Litton basically assigned the mortgage to themselves. Litton is generally represented as the alleged Nominee in a 1031 exchange with Owen .The assignment is not what you think but used for transferring income from pro rationed equitable interests …primarily from short selling futures.

    The date of the assignment is important as the original loan number holds in it embedded codes as does the new account number from Ocwen . Do not attack the assignment as its prima facie to a rigged or controlled installment method . . .not one in the same with a conventional 30 year variety mortgage .

    These coded ID numbers reference the assignment date from the date of the loans orgination registerclaims@live.com Violations of ASC 860 SEC 1122 AB and 10-b 5

  4. Note was cancelled causing the deed or lien to be extinguished . This election under sec 61 (a) (1) and amended 108 (I) prohibit the notes enforcement under ASC 860 and SEC enforced 1122 AB registerclaims@live.com

  5. Its so late in the game to have so many so called experts so clueless of the real facts in these foreclosure matter

  6. @ Michael

    In California we had a major supply of up front fee fakes who did nothing in defense for the homeowners. All I can suggest is be extremely cautious in fighting this. My mortgage was (ABC) American Brokers Conduit dba American Home Mortgage Servicing(AHMSI), then sold to private equity owner billionaire Wilbur Ross who kept the same name AHMSI. Lynn Synmoniak research expsing all the forgeries was mosytly based on AHMSI and still it didn’t do any of us homeowners any good. I’ve read it over and over again since 2008. You didn’t pay so get out.

  7. Thanks steve. I have ocwen also. They took over from litton. Litton basically assigned the mortgage to themselves. The judges are saying either an assignment of mortgage or a note indorsed in blank is enough for standing for the bank. My note wasn’t indorsed in complaint so they seem to be leaning towards the assignment. We’re saying it was robosigned in our brief and gave the name of the site that names the individual who signed it who actually worked for litton. He was named in the Massachusetts deed of registry. The judges said well it was recorded so what difference does it make.We’re saying the recording office is not gate keepers. They don’t care as long as they get their fees. The judges seem to want to trip up the homeowners at all times. It seems that they don’t want to apply the law even when they know the law is on the homeowners side. When they are beaten in an argument they switch back to homeowners didnt pay. They certainly don’t follow the ucc.

  8. Our defective assignment of mortgage which was done by B of A was prepared by this company. We discovered the back-dating in the assignment of mortgage so as to belong to the CWABS, Inc. securitized trust. We submitted a copy of this assignment of mortgage to the FBI, One FBI officer wrote that we have not submitted evidence to prove Federal criminal offense done by the bank.

    Do we need to submit the Pooling and Servicing Agreement as well to show the closing date of the trust?

  9. @ Micheal

    I had gone through all this back in 2010. I was stuck with a Judge who stared at the ceiling tiles waiting until I was finsihed talking. It did not matter what was said or presented, the descision to foreclose was decided before the hearing started. Point being, corrupt or uneducated it all depeneds on what type of judge you get. Also, I had already received my penny settlement in 2014 when the AG’s went after the poor servicing i the AHMSI aka OCWEN settlement which I believe was tied into the LPS forgeries. Anyway, this is long over for me.

  10. Steve why is that? Is it possible for an appellate court to rule in favor of a bank, with a complaint note not indorsed until summary judgment when it wasn’t indosed on the complaint. An Aom assigned by previous servicer employee known i Ma. as robosignor. No chain from originator to trustee. Piss poor affidavit from present servicer. If they do I’ll be pissed. Let’s see how corrupt or uneducated the judges really are.

  11. From subprime designed to fail falsified mortgages, to fake HAMP programs, to false created docs, the rest of us still remain homeless never to see any justice served.

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