What it Takes to “Foreclose” on Your Bank

When Todd Allen went to bed the night of Thursday, June 2, his mind had already fast-forwarded to the following workday, when he was to show up at a Bank of America branch in Naples, Fla., along with a moving truck and two sheriff’s deputies prepared to act on the attorney’s written instructions. If BofA didn’t pay money owed to his clients Warren and Maureen Nyerges—more than $2,500 in costs the Nyergeses accumulated in a pro se defense against an erroneous foreclosure filing—the deputies were to begin removing filing cabinets, chairs, desks, copiers and computers.  Cash, too. Straight from the tellers’ drawers.

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Allen was nervous. “I didn’t sleep at all,” he says. Though he didn’t exactly want to do it, he says the bank’s failure to respond to previous attempts to collect the court-ordered judgment left him no choice. Now, with a court-ordered writ of execution behind him, the attorney was “prepared to clean out the bank.” (The writ of execution would allow his clients to obtain judgment money from the proceeds of BofA property acquired by the sheriff’s office and auctioned at a sheriff’s sale.)  Though the authorization to seize property was not technically a “foreclosure,” its deployment was certainly reminiscent of one, only with the traditional roles turned upside down. The narrative was tailor-made for TV news cameras.

It also proved to be tailor-made for the Internet. After one local crew captured the next-day’s action, complete with footage of the giant moving truck, articles and videos began appearing on sites like The Huffington Post, Yahoo News, YouTube and more. In a real estate market in which so many families have had their own property reclaimed by banks (4.5 million households are either three payments late or in foreclosure proceedings, says CNBC), the idea of homeowners turning the tables was bound to evoke, for some, a certain sense of schadenfreude. Many online commenters responded with glee.

Just eight months into his career as an attorney with the Law Office of Conrad Willkomm, P.A, Allen didn’t anticipate such a vast media explosion. In the week ensuing his initial publicity, he did a string of interviews with national and even international outlets, one of the latter keeping him up until 2:00 a.m. “I expected it to run in the local media,” he said of the story last week. “It’s overwhelming now. I just got a call from the Jon Stewart show.” Warren Nyerges was similarly surprised by all the attention. “Never in my wildest hallucinations did I ever dream this,” he says. Maureen Nyerges, who was present when the sheriff’s deputies showed up at BofA, described that experience as “surreal.” While flattered by the YouTube responses, she was also caught off-guard. “I thought, ‘Oh my gosh this is so weird, people I’ve never met are making their own videos regarding our situation.'”

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A Bigger Issue »

A Bigger Issue

In the end, there was no dramatic haul-away. Bank of America got to keep its desks and chairs. After having discussed the situation with BofA’s legal department, a “visibly shaken” (in Allen’s words) branch manager cut a check for the amount owed. In response to an inquiry from Credit.com, Bank of America provided the following statement: “We are very sorry for our errors and the resulting experience Mr. Nyerges had with Bank of America.  He has been fully paid the amount we owed.  While the matter is now resolved, we’re embarrassed by this chain of events and the trouble this has caused him.  We will improve our process to prevent these errors in the future.”

Those errors, Allen says, speak to a bigger problem with foreclosure filings in the state of Florida, the product of courts wishing to clear foreclosure cases from their dockets and banks not having done their due diligence to investigate foreclosure documents before presenting their cases to court. The problem of banks having, in the past, “robo-signed” documents required in foreclosure cases, rather than conduct legwork necessary to understand a property’s history, grew to be a national problem that led to Bank of America and JP Morgan Chase temporarily halting foreclosures last October in order to review documents and procedures, according to Daily Finance. State attorneys general have since conducted probes into foreclosure practices in their own states. Last week in Arizona, an official with the U.S. Department of Housing and Urban Development stated that BofA “significantly hindered” a federal investigation of foreclosure practices there, as reported by the Wall Street Journal.

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As for the Nyergeses, they had purchased their 2,700-square-foot home, a property that had been foreclosed on previously, with $165,000 in 2009. The kicker: they bought it from Bank of America. Due to some glitch in the paperwork—an example of a bank inadequately researching a property’s history, Allen says—BofA tried to foreclose on the very home it had sold them for cash, even though it had no mortgage. After the erroneous foreclosure issues arose in February 2010, handled by a now-shuttered law firm working on BofA’s behalf, Nyerges says he couldn’t find a lawyer to take his case. So, the retired police officer defended himself. This amounted to a 26-hour crash course in civil procedure, one that ultimately earned him the right to stay in his home and compensation for time spent on his legal wranglings via a December 2010 ruling.

When BofA failed to pay out the judgment, the Nyergeses hired Allen.  Only after Allen had written a letter to BofA’s general counsel in April, to no response, did the court order the writ of execution upon which Allen was able to take the unusual step of attempting to confiscate BofA’s  property, thus prying the legal fees they owed out of them. (At that point, it had been five months since the judgment and the Nyergeses had yet to receive their money.) Typically, banks will settle judgments after the other side’s attorney has put a request in writing, says Robert F. Brennan, a Los Angeles-area attorney who specializes in issues of consumer protection law. “Normally that does it.”

It wasn’t the first time Bank of America erroneously filed a foreclosure claim against someone who paid for their home in cash. As the Florida Sun-Sentinel reported, a Fort Lauderdale man found himself in similar straits in July 2010. For others who might find themselves in a similar foreclosure snafu, Warren Nyerges offers this advice. “I would tell anybody having a problem with a foreclosure, put time into it, document everything, and keep your chin up,” he says. “I’m just an average Joe, if I can do it, they can do it.”

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