Colin Barr

Following the money in banking, economics, and Washington

BofA's unfunny foreclosure tricks

September 23, 2010: 11:12 AM ET

Bank of America has outdone itself yet again.

The irresponsible foreclosure practices of banks have been in the headlines. Employees of both GMAC and JPMorgan Chase (JPM) have admitted to signing off on foreclosure documents without actually having read them. The reports have led to renewed questions about the banks' foreclosure practices.

Not a happy sight

But as usual, the no holds barred winner in the irresponsible bank tricks department is BofA (BAC).

The bank recently foreclosed on a Florida property that doesn't even have a mortgage, the Sun Sentinel of Fort Lauderdale reported. The foreclosure was started in 2008 by Countrywide, the notorious subprime mill the bank acquired in a fire sale that year. It continued with the proceedings even after the current owner, Jason Grodensky, paid cash for the house last December.

"I feel like I'm hanging in the wind and I'm scared to death," said Grodensky. "How did some attorney put through a foreclosure illegally?"

BofA admitted the mistake and is fixing it at its own expense, a spokeswoman tells the paper. But you'd have to say this isn't the bank's first turn at unfunny foreclosure tricks.

Last year, BofA locked out one Texas homeowner and turned off his power in a foreclosure proceeding. BofA eventually conceded that Alan Schroit owned the house outright, but not before he had the pleasure of returning to the house and finding 75 pounds of spoiled fish in the fridge.

In another 2009 case, the bank went a step further. Not satisfied simply to lock out a Pittsburgh-area homeowner, Angela Iannelli, who was current on her payments, the bank decided to shut off the utilities and take her pet parrot. She is suing the bank, which apologized for the "stress" its errors caused, though surely BofA was privately pleased with itself for at least having targeted someone with an actual mortgage.

The BofA response in these cases seems to be to say that mistakes happen.

"We sincerely apologize to the homeowners affected for the confusion and stress these errors have caused," a spokeswoman said in the Schroit case. "We are working aggressively to improve our process through formal training, enhanced checklists and improved communication."

Not aggressively enough, it seems. Barry Ritholtz says at his blog that the only way the banks will ever learn is if they lose big judgments in court – a notion that seems to be borne out by another aspect of the Schroit debacle.

He reached an undisclosed settlement, his attorney said. Court documents showed that Schroit wanted compensation that would be "adequate to deter BOA's arrogance."

So much for that.

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About This Author
Colin Barr
Colin Barr
Senior Writer, Fortune

Colin Barr has covered finance for since November 2007. Previously he was a writer and editor for, winning a 2006 Society of American Business Editors and Writers award for "The Five Dumbest Things on Wall Street," and for Dow Jones Newswires. He is a 1991 graduate of Penn State and lives in Port Washington, N.Y., with his wife Meena Bose and their two kids.

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