WSJ: The Court House: How One Family Fought Foreclosure

Discussion in 'Bankruptcy' started by mugglefuggle, Jan 4, 2008.

  1. mugglefuggle

    mugglefuggle Guest

    The Wall Street Journal

    The Court House: How One Family Fought Foreclosure


    December 28, 2007; Page A1

    BEACHWOOD, Ohio -- Faced with the threat of foreclosure, many
    homeowners give up and abandon their homes.

    Then there's Richard Davet.

    [Richard Davet]

    He and his wife, Lynn, lived in a six-bedroom home in this Cleveland
    suburb for nearly 20 years when, in 1996, he was served with a
    foreclosure lawsuit. Rather than turn over the keys, he hit the law
    books. Flooding the courts with papers, Mr. Davet staved off
    foreclosure for 11 years, until this past January, when a county
    sheriff's deputy evicted the couple and changed the locks. They didn't
    make a mortgage payment the entire time.

    "Our four Scottish terriers are buried there," says the 63-year-old
    Mr. Davet. "It was heaven on earth, an unbelievable property, and they
    took it from us like candy from a baby."

    Mr. Davet's case is believed to be the longest residential foreclosure
    of its kind in the history of Cuyahoga County, which is at the
    epicenter of the foreclosure crisis currently enveloping Ohio and many
    other parts of the country. Foreclosure actions are generally routine,
    typically taking from a few months to a couple of years to get the
    borrower out of the home. Companies turn the work over to so-called
    foreclosure-mill law firms, and generally cases are uncontested.

    [Go to the Law Blog]

    Mr. Davet's argument -- NationsBanc couldn't bring the suit because it
    didn't legally own his mortgage -- is the same red-hot legal theory
    now being embraced by judges and regulators in Ohio and elsewhere to
    help give homeowners a chance against foreclosure. Is this all about a
    legal system at work, or not working? Discuss it here2.

    These days, more homeowners are digging in their heels. They delay
    foreclosures by filing for bankruptcy on the eve of a court-ordered
    sale of the property, or by refusing to answer the door when the
    plaintiff tries to "serve" them with a foreclosure lawsuit. They pay
    lawyers a few hundred dollars to file a motion that can buy them a
    little more time.

    But few are as dogged as Mr. Davet. And his fight may not be over yet.
    Though ousted from his home for nearly a year now, he is trying to get
    the charming 1940s house back, plus damages. He's relying on the legal
    argument -- currently making headlines -- that a financial institution
    can only file a foreclosure action if it can prove it actually owns
    and holds the mortgage and promissory note.

    "I give him credit. He truly believes a banking institution did him a
    great wrong," says Daniel Kalk, one of several lawyers who at various
    times represented Mr. Davet in the case. "The funny thing is, some of
    the things he argued 10 years ago -- all of a sudden you see a federal
    court saying the same thing."

    A former jewelry-business owner, Mr. Davet and his wife, a former
    graphic-arts tutor, bought their home in 1978 for $150,000. As its
    value increased they borrowed against it. They made their mortgage
    payments, but on one loan, they allegedly made payments late -- 90
    times, according to NationsBanc Mortgage Corp., which assessed the
    couple some $4,000 in late fees.

    After the Davets for two years refused demands to pay the late fees,
    during which NationsBanc began refusing to accept their regular
    mortgage payments, the company sued for foreclosure. At the time the
    couple still owed $80,000 in principal, plus an additional $160,000 on
    a second mortgage on the home. Mr. Davet insists the late fees were
    erroneous -- he points to a deposition in which a NationsBanc employee
    conceded that the company couldn't back up its claims for a chunk of
    the fees. So he began his full-time crusade in the courts to keep his

    -- The Davets' motion for reconsideration

    He started with the help of lawyers, but those arrangements didn't
    last. Dan Dreyfuss, who represented the couple when the case was
    filed, called Mr. Davet's strategy "a recipe for how to confound the
    courts." He quit after Mr. Davet filed a motion to disqualify a judge
    against his advice. Mr. Kalk eventually sued Mr. Davet, successfully,
    for unpaid legal fees.

    On his own, as a "pro se" litigant, Mr. Davet was undeterred. Four
    times a week he went to Case Western Reserve University School of Law
    to study legal writing and case law in its library. His briefs were
    angry and colorful, including football analogies and an aside on Enron

    Among his maneuvers: asking a judge to arrest NationsBanc's CEO for
    initiating a "sham" proceeding against him because the company claimed
    in error that it owned his loan. (The judge dismissed the request.) He
    later sought to disqualify the judge because she had accepted campaign
    contributions from real-estate developers, whose Beachwood
    developments Mr. Davet had publicly protested before the foreclosure
    litigation. When he didn't win that motion, Mr. Davet sought to
    disqualify the judge who had dismissed it. He appealed at every chance
    he could, which bought him extra years in his home.

    "Mr. Davet has litigated these same issues over and over again...and
    in each instance the courts have dismissed his claims," said Bank of
    America Corp., Charlotte, N.C., which merged with the owner of
    The Davet family [home]

    Several years into the case, Bank of America took the unusual step of
    bringing in lawyers from a big corporate law firm, Jones Day. Five
    years later, in 2005, a judge granted foreclosure in the amount Mr.
    Davet owed and set a sale date for the property so that the creditors
    could take the sale proceeds. But when the property finally went to
    sale, Mr. Davet set up a shell company to win the auction, for
    $436,000. He couldn't pay more than the required $10,000 deposit, but
    the move delayed his eviction by months.

    Mr. Davet says it wasn't a delay tactic and that he was trying to line
    up investors to buy the property. The house was later sold to another
    family for $410,000.

    The eviction finally happened on a snowy day in January of this year.
    Don Saunders, who lived three doors down from Mr. Davet and is a
    trustee of the neighborhood association, says it came as a shock in
    the upscale area.

    Mr. Davet continued to try, unsuccessfully, to get the federal court
    to agree that the state judgment was invalid. Then, a possible
    lifeline arrived this past October, when a federal judge in Cleveland,
    Christopher A. Boyko, dismissed 14 foreclosure suits because the
    plaintiffs that brought them couldn't prove they owned the mortgages
    when the suits were filed.

    Such a problem can occur when mortgages are turned into securities and
    sold to investors. The companies involved in the transaction may not
    have checked that each mortgage was legally transferred, or
    "assigned," to the new owners. In essence, the originating lender
    continued to legally own the mortgage -- and would thus need to be the
    plaintiff in a foreclosure suit. In Mr. Davet's case, however, the
    mortgage, which was not securitized, changed hands multiple times and
    wasn't actually owned by NationsBanc until three years after the
    company filed suit.

    Other judges have since followed Judge Boyko's lead. The Ohio attorney
    general has asked numerous judges to dismiss or delay foreclosures
    based on similar grounds.

    Earlier this month, Mr. Davet filed a second federal appeal, this time
    citing the Boyko ruling, which he believes he inspired. It's unclear
    whether the latest salvo will work. If it doesn't, Mr. Davet says, he
    will set his sights on the U.S. Supreme Court.

    All the litigation makes the home's new owner, Paul Mikhli, a dentist,
    "a little nervous." Should Mr. Davet succeed, he adds, title insurance
    should cover his expenses.

    After spending much of the year living at the homes of friends and
    family, including their daughter, a university student in Indiana, the
    Davets recently moved into a small, $900-a-month home in a rural
    community east of Cleveland. "The money is short," Mr. Davet said on a
    recent afternoon, adding that one of his siblings, a pawn-shop owner,
    has been helping financially.

    But hope prevails. From time to time, he drives back to Beachwood,
    just to see how his old home is doing.

    --James R. Hagerty contributed to this article.

    URL for this article:

    Letter to the editor:

    Weep Not for This Loss

    January 2, 2008; Page A9

    Foreclosure is a sad event, but no one should be weeping for Richard
    Davet ("How One Family Fought Foreclosure," page one, Dec. 28). His
    story doesn't relate to the countless people in the U.S. who are
    experiencing problems stemming from subprime mortgages. He and his
    wife purchased their home in 1978. That home would be paid off today
    if they hadn't continued to borrow against the property. While the
    rest of America was making monthly housing payments, Mr. Davet played
    games through the judicial system and lived free for 11 years. He has
    one excuse after another to keep his home, but fails to admit that he
    should have paid back the money he borrowed. Now he is freeloading on
    his family and friends because "the money is short."

    Jan Eivin Hansen
    mugglefuggle, Jan 4, 2008
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  2. mugglefuggle

    Richard Davet

    Jan 6, 2016
    Likes Received:
    I would hope Jan Eivin Hansen is not an accountant where comprehension is necessary before making such comments.

    "After the Davets for two years refused demands to pay the late fees,
    during which NationsBanc began refusing to accept their regular
    mortgage payments, the company sued for foreclosure."

    Before making such disparaging comments in writing to the editor, you would think a little research was in order. Nationsbanc nka Bank of America REFUSED the Davet's mortgage payments in violation of the Davet's mortgage.
    Richard Davet, Jan 6, 2016
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