Illegal foreclosures increasing. What to do

When I first worked as a volunteer consumer mediator ten years ago for a non-profit that worked with the Mass. Attorney General’s office, I handled a case that shocked me. A local police officer filed a complaint against his mortgage company because they had started foreclosure proceedings on his house even though he was current on his mortgage.

Despite the fact that he sent in his check every month, the officer had been getting dunning notices, but every time he did, he would call the lender and fax in a copy of the canceled check. They would then say it was OK. Then one day a sheriff’s deputy showed up at his door with a foreclosure notice.

It took me a month to straighten out the problem. Seems the lender had been crediting his check to the wrong account number. It was a simple mistake but it was hell to get it fixed.

With the number of foreclosures skyrocketing, the number of mistaken foreclosures has also seen a dramatic increase, according to a recent report from Associated Press. In one case a woman in Pennsylvania who was current in her mortgage came home from work to find “….that Bank of America had ransacked her belongings, cut off her utilities, poured antifreeze down her drains, padlocked her doors, and confiscated…her pet parrot.”  It took her six weeks to get the bank to clean up her house.

In another case, a man who had no mortgage was served a foreclosure notice by Bank of America. Showing his copy of the canceled check he used to pay off his mortgage made no difference to the bank’s employees. He had to go to court to get them to stop foreclosing. The court awarded him $2,500 plus interest for his costs.

What to do if this happens to you:

The first thing to do is send a certified letter, return receipt requested, explaining why you think the bank has made a bad mistake. This letter can be sent to the local law firm that is trying to handle the foreclosure with a copy to the bank’s president or other high official. Make that copy certified mail, too.

If you have not heard anything within a week, give them both a call. You will have to leave a message. Give them 24 hours to respond. If, after that, you have no action, then if you have a free consumer mediation service in your state (many states do), you might try contacting them.

If all this fails then you should hire a lawyer. Sooner rather than later. This is like those old cartoons where they strap the hero down to a log that is heading for a giant saw. You need to act quickly to stop them or you could have a real mess.

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