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Who Wants to be a Millionaire?

JUN 5, 2012 5:22pm ET
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On July 21, 2010, President Obama signed a bill that literally overhauled every corner of the financial industry—Dodd-Frank became an immediate game changer. Among other it contains an obscure provision that may fail to catch people's attention.

In addition to the sweeping changes in Dodd-Frank, the bill contains a small, obscure provision buried in section 922, which is a piece of reform that could turn everyday Americans into millionaires by doing one simple thing: becoming a whistleblower.

Section 922 of Dodd-Frank sets the stage for whistleblower activities. Not only does the law provide minimum thresholds for whistleblower payouts but it also requires the SEC to award hefty payouts to persons who provide information regarding securities law violations.

The section actually rewards a tattletale going directly to the SEC as opposed to reporting the illegal or fraudulent act directly to the company. And to sweeten the pot, whistleblowers earn a reward of 10% to 30% of any monetary sanctions imposed that exceed $1 million by going directly to the SEC with original information that leads to enforcement and penalties.

This change in focus on whistleblower activities has caused great angst within the financial industry since section 922 encourages external reporting of rule-breaking to the SEC.

Historically, the primary goal of whistle blowing was to reduce willful wrongdoing by an individual or a company. Internal reporting would allow a company to investigate early on and address the problems and resolve the issue.

Section 922 changes this and actually promotes the release of varying degrees of quality intelligence about alleged corporate misconduct. Additionally, Section 922 can be costly to the commission, which needs to process and validate the questionable information which is reported to it.

So why are whistleblowers so successful?

It could just be the sign of the times. The general public has a new awareness of what rights they have and are more willing to come forward with the protections and payouts they can potentially receive.

Juries also play a big role in why whistle blowing has gained in popularity. Jurors can often relate to these stories and they understand the role of the victim who is simply looking out for the good of the public. These juries often are offended by those companies who are perceived to willfully break the rules and often have had similar experiences themselves.

These events are something the public can understand.

The impact of all this on the mortgage industry has been enormous. And the irony of it all is you don’t have to be an employee, current or otherwise, to be a whistleblower. It was an unemployed attorney who faced foreclosure that blew the lid of the robo-signing debacle and brought foreclosures to a screeching halt.

Whistleblowers also played a key role in the national foreclosure settlement agreed to in February of this year. According to federal court papers filed in Washington, whistleblower claims totaling $228 million led to the record-breaking national foreclosure settlement to the tune $26 billion.

Given the current environment, whistle blowing is here to stay and reporting will likely increase since it now has the power to turn middle-class Americans into millionaires, supposedly in the name of the greater good.

Hopefully, the government will continue to show restraint and continue to turn down about 80% of the cases it reviews. After all, if a complaint is turned down, the whistleblower is always free to pursue litigation against the offending company on their own.

 

Diane Gozza is EVP, business development, Integrated Mortgage Solutions, Houston.

Comments (7)
Im not one that voted, agrees, with the Man on the hill..Yet why not pay or reward those that will come forth and speak of the Financial Crisis...After All it is the Banks, Financial Instutuion that put us all in this mess to began with..Im so sick of hearing that Home owers got in over their heads...What was wrong with going to ur town bank, getting a loan, nothing..at least we did not have this Melt Down, Depression...

If I were or u were to committ fraud, theft, bogus fees, would you want some one going to the gov..no..what i thought..yet if this is being done to you, it's cost your retirment, your home, your family, etc..would you not want the public to know of the get rich scems..remember after all it is the american people that bailed all these jerks out, did we get a say no...do we get a say now..no...have any of these such as Goldman Sacks, Litton Loan, Larry Litton, Selene, OCWEA, Capital, do u see any of them putting the bread on your table..? NO JUST WHAT I THOUGHT..SO YOU WANT THEM TO GET BY WITH THIS, WHILE IF YOU TURN THE TABLE SAY YOUR OWN MOTHER was frauded, kicked to the curb, how would you feel...thats what i thought...you would fight...so will we the american people for the Govt. has allowed this to happen, they all got rich including many in Washington...the old saying when times get bad the RICH GET RICHER...NO DOUBT..YET THEY ALL HAD TO FRAUD THE AMERICAN PEOPLE, GOVT PAYS THEM BACK, THEY SELL AGAIN, THE WHOLE CYLE ALL OVER AGAIN...

I DO NOT AGREE WITH ALL OF THE DODD FRANK ACT..HOW EVER AMERICAN PEOPLE NEED TO TAKE CONTROLL, OF OUR COUNTRY...WE SHOULD HAVE A SAY IF THEY GET MONEY...AFTER ALL I DO NOT SEE ANY OF THEM GIVING UP 10 OF THEIR HOMES AROUND THE WORLD, THEIR LEMOS, THEIR 20 MILLION YAHTS..

YET U WANT THEM TO GO FREE..

HAS THIS FRAUD, THEFT, CRAP HIT YOU YET...WELL WAIT IT WILL HIT EVERY AMERICAN SOME DAY...

MAKES ME SICK THAT MY GRAND CHILDREN WILL NEVER KNOW WHAT AMERICA WAS ALL ABOUT, THE WONDERFUL COUNTRY WE ONCE WERE...

THE AMERICAN DREAM IS GONE...DEAD...THANK YOU...

SAD THAT THESE KNEW EXACTLY WHAT THEY WERE DOING, KNOWING THE GOVT WOULD BAIL THEM OUT, COME BACK GET MORE, ALL THE WHILE THEY CONTINUE TO KICK PEOPLE OUT TO THE CURB..

IM A VICTUM...IM ANGRY...IM PAYING ON MY HOME FOR 6YRS, NO PROBLEM BUT LITTON, LARRY HAD TO GET GREEDY, SO THEY HAD TO BOTCH UP LOANS, MAKE THEM LOOK LIKE THEY WERE IN DEFAULT YET WERE NOT, THEN TRANSFER TO SELENE THE GOOD HOMES WITH LARGE EQUITY, SO THEY CAN STIL PROFIT MORE..IM FED UP...ATTORNEYS FEES, THE STRESS, HAS CAUSED ME MUCH ILLNSS, YS TAKEN AWAY FROM MY FAMILY, MY LIFE, MY INCOME..SO DO YOU WANT TO PAY MY LEGAL BILLS..

DID NOT THINK SO..

ANGRY..
SUPPORT THE AMERICAN PEOPLE NOT THE GREEDY WHORES OF WALL STREET..

IN ANOTHER 2YRS U WATCH WHO ALL COMES OUT THAT HAVE COMMITTED SO MUCH FRAUD, THEFT, JUST TO MAKE A BUCK, KICKING THE SMALL CHILDREN ON THE STREET...

SURE IF ALL HAD WORKED AS THE PRESIDENT PLANNED OR DID HE KNOW IN THE BACK OF HIS MIND JUST WHAT WAS GOING TO HAPPEN..MAYBE THIS WAS THE CHANGE HE SOLD HIM SELF ON...

CHANGE...WELL WE GOT IT..

NO I DID NOT VOTE FOR HIM THEN OR THIS TIME...

SO WHAT U PAY A FEW WHISTLE BLOWERS, YET ALL OUR COUNTRY TO GO INTO DEBT TRILLIONS, DUE TO THE ASS HOLES...
Posted by | Tuesday, June 05 2012 at 6:52PM ET
Whistle blowers have been crushed by corrupt corporate culture, and nothing has changed. If whistle blowers have a big stick and can go directly to the SEC we may get some action and enforcement at last to help change the direction of a corporate environment that is out of control and feels above the law. I say here-here to the Dodd/Frank law. Go for it!
Posted by | Thursday, June 07 2012 at 5:53PM ET
Paula, you make no sense.
Posted by | Friday, June 08 2012 at 10:36AM ET
Perhaps proofreading should be mandatory before posting a comment.
Posted by | Monday, June 11 2012 at 3:26PM ET
i dont know where to start: this ha s got to be the most complicated ripoff i have ever seen. everybody is blaming everybody attempting to pass the buck. the people we have sent to washington to represent us, either are too nieave, ignorant or dont care. i will start my understanding with lewis ranieri, the proclaimed guru that facilitated the mortgage securitization. after making millions @ solomon brothers; packagings and selling them worldwide, mr ranieri is back with and apology and a new company, Ranieri Partners. he has 2- companies under this umbrella, Selene Finance and Selene RMOF REO II Acquisition LLC, rmof stands for "residential mortgage opportunity fund" his opportunity i guess, he may have more companies under this umbrella just not important to research it. he is buying residential mort paper on homes all over the united states from whoever wants to sell. he bought 300,000,000.00 from bankrupt taylor bean mort. company for appx 80,000,000.00 or about .25 cents on the dollar, some loans good some bad,adding fees and related cost as he can. if the homeowner is behind on payments, he sends loan to rmof for foreclousure at full deed of trust amount, he pd .25 cents on the dollar, house is sold at foreclousure because he is usually the only bidder at full deed of trust amt. should he not be he still makes 75%. thru selene he tries to get homeowners current for min. of 6- months so he can get FHA to under wright the loan paper. he then can sell it for 100% of face. i try to remember he is here to help homeowners. seems to me if he wanted to help the homeowners he would neg. the deals to buy the notes from the banks and other original lenders pass the discount he bought them for to the homeowners adding 5-10% charge for his company etc.... this fellow dont take no prisoners he is making money coming and going, this is smart business; but i bet the families and little kids in the street tonight dont think so. someone in this so called mortgage feasco needs to understand; this is for real, american families are being put in the street for the sake of money...i tryed to work with selene on 1 house: it went thru foreclousure @ 399000.00 old BOA loan which he most likely bought for .25 to .40 cents on the dollar. or 100,000- 160,000, this was in feb of 2012, i offered selene 350,000 for the house, he should have discounted it and allowed the original owner stay in the house but his wife and kids had already left him and he no longer wanted it. selene turnrd my offer down flat ...said they had another offer for 415000.... i have been in construction and contracting all my adult life 40 yrs, im 61. there is appx 130000 in repairs needed to the house i dont guess the other offer knows this... and selene not talking! i see all these banks and former lenders, mortgage companies, etc selling mort. paper for pennies on the dollar and these wall street guys making another fortune and folks losing there homes left and right, and being ordered to get out, and lost notes and deed of trust and our legel system somewhat lax in there understanding of foreclousure. we as taxpayers are giving banks billions and billions to help them stay in business and there selling assets for pennies on the dollar!!! what goes around comes around
Posted by | Monday, June 11 2012 at 9:15PM ET
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