WSJ: The Court House: How One Family Fought Foreclosure


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The Wall Street Journal

The Court House: How One Family Fought Foreclosure

By AMIR EFRATI

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]
http://tinyurl.com/yp9ut5

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.

DISCUSS ON THE LAW BLOG
[Go to the Law Blog]
http://tinyurl.com/yu5dnr

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
home.

-- The Davets' motion for reconsideration
http://online.wsj.com/public/resources/documents/motion-WSJ20071228.pdf

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
Corp.

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
NationsBanc.

http://tinyurl.com/yu84wo
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:
http://online.wsj.com/article/SB119881051300654741.html


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
Seattle

http://online.wsj.com/article/SB119924031635861491.html
 
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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.
 

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