What’s Wrong Today:
What would you do if a bank broke into your
house while you were on vacation and removed all your belongings and destroyed
them?
Katie Barnett of MacArthur, OH, said
that’s exactly what happened to her. She claims that a bank she doesnât have an
account with broke into her house while she was on vacation and either took or
destroyed most of her possessions. Apparently, the bank, First National Bank in
Wellston meant to foreclose and repossess a house across the street. The Bank blames
its GPS for the mix-up.
The Wrongologist has written about the
Mortgage Electronic Registration System (MERS) here
and here. This is not an isolated incident. There have
been many fraudulent events and “OOPS” moments in the mortgage
crisis. Instead of the repo man mistaking the address, in other cases, the MERS
system had a typo in the address when the title changed from one holder of the
loan servicing to another through the bundling of transactions involved in the
whole credit default swap mess.
There are likely a lot of houses that have
been foreclosed on incorrectly, just like Ms. Barnett’s.
As we have reported, there is a bi-partisan
move in Congress to codify the use of the Mortgage Electronic Registration
System as equivalent to a courthouse filing and to loosen or eliminate the
“show the note” requirements followed by most courts in the foreclosure process.
But, the banks have not shown themselves to
be worthy stewards of a codified MERS. They have illegally foreclosed on
members of the military in addition to having been found guilty of “robo-signing”
foreclosures without verifying all the pertinent information. They were also
ordered to end âdual
tracking” in which they pursued foreclosure even as they worked with
homeowners on modifying loans, but many have continued the practice.
The Department of Justice and 40 state
attorneys general announced a $25
billion settlement with five big banks last year over foreclosure fraud.
Returning to Katie Barnett, she said that she asked Anthony Thorne, the
president of the bank, to compensate her for her loss. She asked for $18,000,
but he refused to pay her, apparently saying “We’re not paying you retail
here, that’s just the way it is”.
The Wrongologist was very curious about the
other side of the story. In
a message on the bank’s
website, First National Bank president and CEO Anthony (Tony) Thorne indicated
that: (emphasis by the Wrongologist)
compensate her fairly and equitably for her inconvenience and loss. However,
the written list of items that she provided to us and the value she assigned to those items is inconsistent with the list and
descriptions of items removed that was prepared by the employees who did the work,
and with the list and values of missing items provided by the homeowner herself
as recorded in an earlier telephone conversation with one of our
representatives.
In a meeting with me in my office, I indicated to
the homeowner that we wanted to compensate her but would have to look further into the differences in the lists.
So the bank thinks they took fewer, less
valuable things than what Ms. Barnett says is missing. Hereâs a good rule: Donât
trust the thief, trust the victim!
If only the bank thought that they shouldn’t
have to pay the difference between current value and replacement value for the
damages. But no, they say they didnât steal all that much. Since the bank seems
to be in the wrong here, why would Ms. Barnett take anything but replacement
value? And for the bank president to refuse to pay “retail” prices to
replace the stuff his firm stole and destroyed in the first place?
Big Tony needs a few lessons in PR 101.
Consider: How much money will the bank save
by haggling over the $18,000 claim made by Ms. Barnett? A few thousand bucks?
Now consider how much this story will cost the bank in terms of adverse
publicity and damaged reputation.
If you were Mr. Thorne, your first thought
should be: How do we make her so happy that she’ll go away and never mention
the mistake we made to anyone again? The Wrongologist suspects it will cost the
bank’s insurance company a lot more than $18,000.00 to dig out from under this
hot, steaming pile of PR mess.
Imagine how this would look to a jury if it
went to trial. Imagine a jury’s reaction to “we won’t pay retail because
some of those items are old.” The First National Bank of Wellston is not
an insurance company. It is closer to being a burglar! Barnett also called the
police after the incident, but the local police did nothing and a few weeks
later told her the case was closed. Probably because what happened was not
theft.
No, INTENT is required for a theft charge.
Mistakes happen in life. Imagine if you were at a meeting and you picked up a
cell phone that was not yours by mistake. While you had the phone you went to
the beach in Maui and the phone was destroyed. You would not be charged with
burglary or theft. It would be a civil matter (as this is). The bank will
probably lose big time in civil court, but crimes need intent.
A rational (and honest) person who made a
mistake makes an honest effort to return or replace the property. Apologies
made, no harm, no foul. But in this case, even after the error was discovered,
the bank made no effort at recompense to Ms. Barnett.
A few years ago, when we heard a story like this one, most
folks thought it was a random error and bought the bank’s explanation and
settled quietly. But her tale now sounds eerily familiar to many Americans who
have suffered from wrongful foreclosures and other bank misdeeds since 2008.
Maybe we need a law that puts high-level
bankers like Big Tony in jail for a few months when this stuff happens. The
banks might be too big to fail, but individual bankers fail all the time. If
these guys actually faced a few months in a country club prison, this would
stop immediately. You may say that the guillotine has appeal, but baby
steps…the only way to curb this behavior is to put CEOs in personal jeopardy.
Financially, or otherwise. That’s all they care about.
Suppose you were planning on dropping off
your mortgage payment at the bank, but your GPS screwed up, and you left it
across the street: Would the bank be OK with that?
You would lose your house.
Heard about this elsewhere. Another example of corporate brute force.