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Foreclosing on Bank of America

A Florida couple bought a house in 2009 and paid for it with cash, so they were a bit surprised when Bank of America tried to foreclose on their house, even though they had no mortgage at all. Unfortunately, they had to hire a lawyer to straighten out the problem with Bank of America, and a court ordered the bank to reimburse them. But despite repeated attempts to recover the $2,534 in attorney’s fees, the bank never paid.

So the couple foreclosed on the bank for unpaid debt, and showed up at the bank with sheriff’s deputies and proceeded to do what banks normally do when they foreclose on a homeowner — seized cash from the teller’s drawers, furniture, computers, and other property. Within an hour, however, the bank somehow managed to come up with a check for $5,772.88 to cover the original attorney’s fees plus the cost of the foreclosure.

That is ironic enough, but then the bank had to go just that extra step into corporate unreality — they made an excuse for not paying the attorney’s fees, saying: “We apologize to Mr. Nyerges that there was a delay in receiving the funds. The original request went to an outside attorney who is no longer in business.” Can you even imagine if the tables were turned and a homeowner who was being foreclosed on by a bank made some excuse as to why they didn’t pay? Would the bank even care? Hardly.

It is even worse than that, because Mr. Nyerges points out that he didn’t just send his request to their attorney — he went directly to the bank, multiple times, talked to branch managers, and called multiple people before he took the drastic step of instigating a foreclosure. In other words, the bank is lying.

Which is one of my pet peeves about large corporations — the imbalance in power between people and the corporations they have to deal with. Corporations routinely treat people in ways that corporations themselves would not accept from people.

Ironically, this kind of behavior backfires on the banks. A recent study at the University of Chicago showed that homeowners with negative equity (a mortgage that is larger than the value of their home) will generally keep their current mortgage rather than strategically defaulting. However, they found a correlation between people who have a dim view of their bank and their willingness to default. So by treating their customers poorly, banks are increasing chances that their customers will treat them poorly.

What goes around, comes around.



  1. ebdoug wrote:

    Same happens with the USPS. Gosh, they aren’t doing well. Their motto is that the customer is always wrong. For years, I’d put packages in the mail box, put in the money and try to remember to put “parcel post” Last time I dealt with them, I forgot. They charged me $18 to return a very light item that I had 90 days to return. When I complained about them sending it priority mail, they refused to pick up anymore packages anywhere in this area. Meanwhile UPS and FedEx are just waiting for the USPS business. I don’t have to send money. Just gets charged to my charge card.
    I ordered stamps at my local branch. “Make no substitutes.” I got substitutes. Apparently literacy is not required at the post office. She called to apologize. Why didn’t she call when I first ordered?
    I know my business would not have been so successful had I thought the client wrong.

    Wednesday, June 8, 2011 at 8:16 am | Permalink
  2. starluna wrote:

    I love this story.

    EBDoug – I think your experience illustrates IK’s point. You were treated badly and have lost any loyalty you might have had. I actually know the folks in my post office. They are neighbors. We see each other at the supermarket (imagine that in a city!). I also know my local delivery guy. When a substitute delivery person makes a mistake, it is taken care of right away. I always send USPS and prefer to receive by USPS. I cannot say that I have had anything close to that experience with UPS or FedEx.

    My own research on regulatory decisionmaking has also found that relationships matter. My neighborhood post office has people in it who act like neighbors. When they see you repeatedly they start asking about you and you become friendly with them. I remember one time going in to pick up a package that was sent to my husband and a new guy almost wouldn’t give it to me because the names did not match (I hyphenate my name) and of course he didn’t know me or my husband. It was quickly resolved when one of the other staff intervened. Relationships matter. I would never think of using any other service to send my packages.

    Wednesday, June 8, 2011 at 8:49 am | Permalink
  3. Jason Ray wrote:

    There have been many studies done on why customers stop buying from a business, and they all show approximately the same distribution:

    01% – died
    04% – moved away
    11% – no longer needed the service/product
    15% – competitive reasons (price, features)
    69% – Some policy or employee pisses them off (primarily by being disrespectful)

    You would think companies would take these facts into account, but reality is most don’t. They just go on being obnoxious and hope the competition is equally obnoxious.

    Wednesday, June 8, 2011 at 9:36 am | Permalink
  4. An EXCELLENT article/post by IK.

    I can’t resist pointing out the mootness of this, however:

    “Can you even imagine if the tables were turned and a homeowner who was being foreclosed on by a bank made some excuse as to why they didn’t pay? Would the bank even care? Hardly.”

    The bank wouldn’t have to care if that homeowner promptly wrote a check for the amounts owed plus the cost of foreclosure, as the bank did in this case. Their “excuse” wasn’t to defer payment and certainly wasn’t meant to soothe the homeowner; it was a pathetic attempt at whatever P.R. they could muster, to save any face possible with the public. The homeowners in your example don’t have any need for public relations. 🙂

    Wednesday, June 8, 2011 at 3:20 pm | Permalink