You Got Lucky

Over the past few years we’ve been hearing a long litany of abuses (if not outright atrocities) committed by the banking industry against various homeowners as the housing bubble burst and lenders of all types began trying to cut their losses and cash in on the possibilities. For a lot of people these abuses seem particularly egregious because not only did the banking industry bring the housing market disaster on itself through business dealings that a six-year-old could have identified as idiotic, but they then went crying to the Federal government to save them from their own disaster and were given the better part of $1 trillion to fix the problem. If you tried such a thing you’d be sued, jailed, berated by your neighbors, and mocked by scruffy bloggers all over the world for years to come, but you can’t, because you’re an individual and not an industry whose loss to bankruptcy would probably have caused our entire economy to collapse. For that matter, if you tried to foreclose on a property which you did not own and in fact had no interest in whatsoever, you’d probably be charged with fraud, arrested, and vigorously sued – and if you ignored the judgments against you, you’d be jailed for contempt of court and then have the damages against you increased…

Unfortunately, none of those things seem to have happened to any of the banks that have been trying to foreclose on people who don’t have loans with them; not even Bank of America, which has been repeatedly exposed for doing this and then mocked on the Internet (and vigorously sued). In one of the more recent cases, the company somehow became convinced that a Florida couple who had paid cash for their house and did not have a mortgage with Bank of America or anyone else was behind on their mortgage payments, and tried to foreclose on them. The bank dropped the proceedings last February when it became clear they had no legal basis for the case, but apparently decided that they also didn’t have to abide by the judge’s ruling that they had to pay for the couple’s legal bills (a common judgment in such cases). For the past four months, the company has just ignored all communications on the subject, subjected the couple (and their attorney) to miles and miles of stonewalling, and assumed that nothing would come of it. Which worked out well enough until the couple and their attorney decided they’d had enough and called upon the local Sherriff to foreclose on the nearest bank branch…

You can read about the case in the if you want, but basically the plaintiffs got to enjoy what the newspaper calls a foreclosure victim’s fantasy by walking into their local Bank of America branch with a court order, two large Sherriff’s deputies, and a moving van standing by, and demanding that the company either pay up or lose the contents of the branch (which would be sold at public auction). After a brief but no doubt intensely satisfying standoff, the branch manager wrote a check for the amount in question and the heroes of our story were able to go on their way. I’m sure it was an unpleasant morning for the branch manager, and having the whole thing splash across the local media (and the Internet) can’t have been good for the company’s increasingly tattered reputation. But as bad as this was, I still can’t help thinking that things could have been much, much worse…
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For starters, consider that the bank really was in contempt of a legal court order, and could easily have been fined for every day they failed to comply with the judgment. This could easily have gone much higher than the $2,534 they were refusing to cough up; even a token fine like $100 per day would have reached nearly $6,000 by now, and if the judge had been really incensed, she could have upped it to $1,000 ($60,000) or even $10,000 per day ($600,000). Then there’s the possibility that the couple could sue the bank for punitive damages – and given this laughably incompetent handling of the case by Bank of America, it’s possible they’d win. That could run into millions of dollars, especially if the bank annoyed the trial judge enough (as ignoring a court order is wont to do). Now multiply that by the literally dozens of such cases that have popped up over the past few years, and you’ve got a crisis to rival the original housing crash…

Of course, Bank of America would just go running back to Congress for another bailout. But if it was just them, and not the entire industry, it would be a lot harder to get the Federal government to play along – and if they keep doing this, it’s always possible that sooner or later their friends in Washington will just let them meet the disaster they keep courting. For the moment, they’ve been lucky, but as the old saying goes, if you play chicken with a train you’ve got to be lucky every time; the train only has to get lucky once…