Banks retake wrong homes

Christopher Marconi was in the shower when he heard a loud banging on his door. By the time he grabbed a towel and hustled to his front step, a U.S. marshal's sedan was peeling out of his driveway. Nailed to Marconi's front door was a foreclosure summons from Wells Fargo, naming him as a defendant. But the notice was for a house Marconi had never seen - on a mortgage he never had.

Tom Williams was in his kitchen thumbing through the mail when he opened a letter from GMAC. It informed him that the bank would confiscate his house unless he immediately paid off his mortgage balance of $276,000. But Williams had never missed a mortgage payment. And his loan wasn't due to mature until 2032.

Warren Nyerges opened his front door in Naples, Fla., to find a scraggly-haired summons server standing on his stoop. He plopped a foreclosure notice from Bank of America in Nyerges' hands. But Nyerges had paid for his house in cash. And he'd never had a checking account, much less a mortgage, with Bank of America.

By now, you may have heard the stories of bank robo-signers powering through hundreds of foreclosure affidavits a day without verifying a single fact. But most of those involved homeowners who had stopped paying their mortgage. They were genuine defaulters. Now a new species of homeowner is getting pushed into foreclosure hell.

People have always loved to complain about their banks. The push-button circus that passes for customer service. The larding on of fees. But the false foreclosure cases are hardly the usual complaints. These homeowners paid their mortgages - or loan modifications - on time. Some even paid off their loans. Worse, those on the receiving end of a bad foreclosure claim tell similar stories of getting bounced from one bank official to the next with no resolution while the foreclosure process continues.

Many have to resort to paying a lawyer, even after presenting documentation. They say they have to sue not only to stop the wrongful foreclosure but 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 deluged with complaints from people who had done everything right.

"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 such lawsuit was filed in March by Pennsylvania homeowner Angela Iannelli. She was up to date 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.

Iannelli's lawyer says the parties are in the process of "mutually resolving the issues" and the lawsuit is "in the process of being discontinued." Bank of America did not immediately respond to a request for comment on her case.

Now the class actions are coming. In Kentucky and California, class-action lawsuits have been filed against major lenders on behalf of homeowners in loan modification programs who allege that they made all of their payments but got foreclosed on anyway.

"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 lawsuit on Oct. 4. He was referring to the 2008 government bailout of the banks, the Troubled Asset Relief Program.

Depositions from employees working for the banks or their law firms depict a foreclosure process in which it was standard practice for employees with virtually no training to masquerade as vice presidents, sometimes signing documents on behalf of as many as 15 different banks. Together, the banks and their law firms created a quick-and-dirty foreclosure machine that was designed to rush through foreclosures as fast as possible.

Former employees at banks and foreclosure law firms have testified that they also knowingly pushed through foreclosures on the wrong people.

The banks say they are reviewing their mortgage and foreclosure procedures.

As for people wrongly caught in the foreclosure net, they say they are reviewing those cases, too.

But what emerges from court filings, depositions, and interviews is that once the bank places you on its foreclosure assembly line, it becomes nearly impossible to get off.

The minute Marconi ripped the foreclosure notice from the door of his house in Garrison, N.Y., on Oct. 20, he saw he was named as a defendant along with a woman who had run a red light and smashed into Marconi's car four years earlier. Marconi had received a payment from her insurance company. It was her house, in Rye, N.Y., that Wells Fargo was foreclosing on.

Marconi explained the bizarre mix-up to Wells Fargo's customer service department, its ethics complaint department, its law firm and the office of the chief executive officer, John Stumpf. Marconi says they all told him that they could not help him and that he needed to get a lawyer.

Wells Fargo spokeswoman Vickee J. Adams says Marconi was named in the foreclosure suit because he filed a judgment against the woman in the car accident. It is common for lien holders to be mentioned in foreclosure documents. But Marconi says the judgment against the woman was satisfied in April 2009.

"Now I have to pay a $3,500 retainer for a lawyer to get my name pulled off some lawsuit by Wells Fargo," Marconi says.