By Moe Bedard

Let the truth be known. Most homeowners do not respond or fight back when they are facing foreclosure. The lender files the notice of default and the court hearing comes and goes without a peep, answer or simple appearance from the defendant (homeowner). 120-180 days later, the trustee sale happens on the court steps and they become another foreclosure statistic.

Then there’s Richard Davet.

In 1996, Mr. Davet was served with a foreclosure action  in his Cuyahoga County, Ohio 1940’s 6 bedroom home. Unlike many homeowners that just take their foreclosure medicine and move on to rent, Richard Davet decided he was going to fight back against NationsBanc Mortgage Corp. and challenge them till the end in a Ohio court of law.

Davet planted his heels firmly and turned his fight into a full time job as he hit the books at the library of Case Western Law. He began his fight by challenging the lawsuit and then pro-longed the suit by flooding the court with motions, objections and affidavits, and he appealed the judge’s rulings at every chance, which bought him 11 years, mortgage payment free in his home.

Wall Street Journal;

“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.

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 could be called a foreclosure fighter and pioneer or what a lot of critics have called him, “a scumbag”.

The Wall Street Journal

The mortgage company that filed the suit, then NationsBanc Mortgage Corp., had so much trouble with the case that four years into it they brought in lawyers from Jones Day.

I obtained this quote from the law firms website;

Since 1893, Jones Day has grown, in response to our clients’ needs, from a small, local practice to a truly global firm with more than 2,300 lawyers in 30 offices around the world. Today, Jones Day is one of the most recognized and respected law firms in the world, and we count more than 250 of the Fortune 500 among our clients.

I think it’s quite amusing that a homeowner from Cuyahoga County, Ohio gave this powerful, 2,300 lawyer and 30 office law firm a 11 year fight.

More form WSJ;

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.

There are many debates circulating in the blog-sphere and forum arena on the internet in regards to foreclosure defense actions and the recent Ohio rulings. We reported on the recent Judge Boyko ruling and other similar rulings that are coming out of Ohio in November.  These cases and many like them are at the forefront of the foreclosure legal sphere and will remain a hot topic as the foreclosure crisis continue with now apparent end in sight.

Here are some of those interesting comments circulating on the internet; 

“It is heartwarming to see, that the Law can be worked by a “pro se” party. If the Bank had to bring in the awesome gun of Jones Day, then the Law can work. It is not that the party managed to live 11 years for free, for if you count the billable hours to learn the law, free is then an abstract. A delay in the foreclosure could only occur if the Court’s gave merti to his arguments. Which must have had some validity to take this long. Kudos to the system for making a grant effort and doing correctly.

As both a corporate and general practice lawyer, I’m with JC and bboy, but am really appalled at the name calling and lack of analysis of most of the other responders. I’ve also had a mortgage closing business back in the mid ’80’s when things went belly up, and I’ve seen a lot (but hardly all).

There is a big difference between having the Note, which allows you to sue for the repayment of the debt, and having the ownership of the property which a mortgage affords, and allows you to foreclose. If you don’t “own” the mortgage, you have no right to foreclose it, and you can’t foreclose for fees. Take it from there - these rights of ownership are important! Too many lenders are ripping us off with unjustified fees. I think the borrower here was actually doing the law and financing a great service.” Comment bylaserhaas.

“Judges like this one clamor for more pay as they waste mountains of tax dollars pampering a pro se debtor tying up the court for how long? ELEVEN YEARS?!?” Comment by Increased judicial salaries? HA!!!

I agree with JC–if you read the article carefully you will note two things:

1. The entire legal process stemmed from NationsBanc’s allegedly erroneous tacking on of 90 separate sets of late fees, which the bank subsequently was largely unable to conclusively document were connected to payments actually made late.

2. NationsBanc apparently did not even own the mortgage in question (presumably the first mortgage) until 3 years after it initiated the initial foreclosure action.

As a corporate lawyer who has a little bit of familiarity with the ins and outs of large banks, I am wholly unsurprised that someone who actually READ the terms of their mortgage papers would be able to drag out a process this long. Many of these banks have a HORRIFIC record of maintaining accurate and complete records on borrowers. In this situation, this failure to maintain records properly left the borrower subject to allegedly erroneous late fees that made payment of his mortgage impossible.

This case should act as a wake up call to the mortgage servicers of the nation: your sole value added to the process is to KEEP TRACK OF THE PAPERWORK. Don’t expect every borrower to be instantly cowed by a lawsuit or a foreclosure notice–there are folks out there (even non-lawyers) who can read and will use the boilerplate in the contracts (together with common law contracts doctrines) to stymie your efforts to go after ‘deadbeat’ borrowers.

All in all, Mr. Davet’s lawsuit shows that the legal system does work. By requiring lenders to actually DOCUMENT their claims, maybe, just maybe, this case will lead to better customer service and an end to frivolous fees.” Comment by bboy

“When I worked for a federal judge in Ohio I saw my fair share of “jailhouse lawyer” lawsuits from prisoners and their persistent and baseless motions. Mr. Davet’s actions remind me of those days. If he was a licensed attorney, he could certainly face disciplinary actions.

Of course, his unwillingness to pay legal fees may evince his cheap character.

As for his central argument of note ownership, I am curious to see if Ohio is willing to hinder securitizations by forcing the loan originator to hold onto the note. Comment by Cleveland Esq.”

“As a corporate lawyer who has a little bit of familiarity with the ins and outs of large banks, I am wholly unsurprised that someone who actually READ the terms of their mortgage papers would be able to drag out a process this long. Many of these banks have a HORRIFIC record of maintaining accurate and complete records on borrowers. In this situation, this failure to maintain records properly left the borrower subject to allegedly erroneous late fees that made payment of his mortgage impossible.”

“This case should act as a wake up call to the mortgage servicers of the nation: your sole value added to the process is to KEEP TRACK OF THE PAPERWORK. Don’t expect every borrower to be instantly cowed by a lawsuit or a foreclosure notice–there are folks out there (even non-lawyers) who can read and will use the boilerplate in the contracts (together with common law contracts doctrines) to stymie your efforts to go after ‘deadbeat’ borrowers.

All in all, Mr. Davet’s lawsuit shows that the legal system does work. By requiring lenders to actually DOCUMENT their claims, maybe, just maybe, this case will lead to better customer service and an end to frivolous fees.”

http://loanworkout.org/2007/12/28/ohio-homeowner-fights-foreclosure-and-lives-payment-free-for-11-years/