No Mortgage with Bank of America? We Foreclosed Anyway!

There is another side to the growing foreclosure crisis. Aside from the deceptive and unethical practices that were used to convince borrowers to buy homes they could not afford, there are more victims than those who ended up over their heads. More and more people are suffering through a foreclosure process on a home that they never bought. False foreclosure complaints are on the rise. These are homeowners that paid their mortgage on time or have even paid off their loans. Now because of careless errors, they are in the midst of an impossible false foreclosure, one that is not so easy to resolve. It is difficult to reach a live person at customer service in many of these banks. Worse, the undertrained representative usually has no idea what to do with a wrongful foreclosure claim, and the victim is passed around like a hot potato from one hapless robo agent to the next.

Many have to resort to hiring a lawyer, even after presenting documentation to the banks. They say they have to sue not only to stop the wrongful foreclosure, but also to attempt to win back their costs. There are no official statistics for these homeowners, but lawyers, real estate agents, and consumer advocates say their ranks are growing. In November, during foreclosure hearings on Capitol Hill, senator after senator scolded the banks about wrongful foreclosures. They said their offices were flooded with complaints from people who had done everything right, but were being treated by banks as if they had done everything wrong.

"This is the worst I’ve ever seen it," says Ira Rheingold, an attorney and executive director of the National Association of Consumer Advocates. Diane Thompson, a lawyer with the National Consumer Law Center, has defended hundreds of foreclosure cases. "In virtually every case, I believe the homeowner was not in default when you looked at the surrounding facts. It is a widespread problem throughout the country." Homeowners in Florida, Nevada, Texas and Pennsylvania have filed lawsuits alleging that they were victims of mistaken foreclosure. In many of those cases, the bank went so far as to haul away belongings and change the locks on the wrong homes. One example of such suit was filed in March by homeowner Angela Iannelli in Pennsylvania. She was current on her payments when, she says, she arrived home in October 2009 to find that Bank of America had ransacked her belongings, cut off her utilities, poured anti-freeze down her drains, padlocked her doors and confiscated Luke, her pet parrot of 10 years.

It took her six weeks to get the bank to clean up the house. Maria and Jose Perez of Seguin, Texas filed suit in October after Bank of America sent them a notice that their house was scheduled for a foreclosure sale Nov. 2. The couple says they are up-to-date on their mortgage payment and they have no loan with Bank of America. A trial is set for June 13. The stories and lawsuits go on and on. From one bad mistake to the next, banks continue to conduct their business in a careless fashion with little regard for their customers. Once on a foreclosure list, even mistakenly, it is next to impossible to get off without a lawyer. The banks try to defend their mistakes by saying that the errors are minimal. Clearly they are not. Class actions lawsuits have begun to be filed in Kentucky and California.

"It is mind-boggling that these large banks accepted billions and billions of TARP money from the government, and they are just committing a fraud on the American people," says Jack Gaitlin, who filed the Kentucky suit on Oct. 4. He was referring to the 2008 government bailout of the banks, the Troubled Asset Relief Program.