The Court House:
How One Family Fought Foreclosure 

Faced with the threat of foreclosure, many homeowners give up and abandon their homes.

Then there's Richard Davet. 

He and his wife, Lynn, lived in a six-bedroom home in this Cleveland suburb for nearly 20 years when, in 1996, he was served with a foreclosure lawsuit. Rather than turn over the keys, he hit the law books. Flooding the courts with papers, Mr. Davet staved off foreclosure for 11 years, until this past January, when a county sheriff's deputy evicted the couple and changed the locks. They didn't make a mortgage payment the entire time.

"Our four Scottish terriers are buried there," says the 63-year-old Mr. Davet. "It was heaven on earth, an unbelievable property, and they took it from us like candy from a baby."

Mr. Davet's case is believed to be the longest residential foreclosure of its kind in the history of Cuyahoga County, which is at the epicenter of the foreclosure crisis currently enveloping Ohio and many other parts of the country. Foreclosure actions are generally routine, typically taking from a few months to a couple of years to get the borrower out of the home. Companies turn the work over to so-called foreclosure-mill law firms, and generally cases are uncontested. 

These days, more homeowners are digging in their heels. They delay foreclosures by filing for bankruptcy on the eve of a court-ordered sale of the property, or by refusing to answer the door when the plaintiff tries to "serve" them with a foreclosure lawsuit. They pay lawyers a few hundred dollars to file a motion that can buy them a little more time.

But few are as dogged as Mr. Davet. And his fight may not be over yet. Though ousted from his home for nearly a year now, he is trying to get the charming 1940s house back, plus damages. He's relying on the legal argument -- currently making headlines -- that a financial institution can only file a foreclosure action if it can prove it actually owns and holds the mortgage and promissory note.

"I give him credit. He truly believes a banking institution did him a great wrong," says Daniel Kalk, one of several lawyers who at various times represented Mr. Davet in the case. "The funny thing is, some of the things he argued 10 years ago -- all of a sudden you see a federal court saying the same thing."

A former jewelry-business owner, Mr. Davet and his wife, a former graphic-arts tutor, bought their home in 1978 for $150,000. As its value increased they borrowed against it. They made their mortgage payments, but on one loan, they allegedly made payments late -- 90 times, according to NationsBanc Mortgage Corp., which assessed the couple some $4,000 in late fees.

After the Davets for two years refused demands to pay the late fees, during which NationsBanc began refusing to accept their regular mortgage payments, the company sued for foreclosure. At the time the couple still owed $80,000 in principal, plus an additional $160,000 on a second mortgage on the home. Mr. Davet insists the late fees were erroneous -- he points to a deposition in which a NationsBanc employee conceded that the company couldn't back up its claims for a chunk of the fees. So he began his full-time crusade in the courts to keep his home. 

He started with the help of lawyers, but those arrangements didn't last. Dan Dreyfuss, who represented the couple when the case was filed, called Mr. Davet's strategy "a recipe for how to confound the courts." He quit after Mr. Davet filed a motion to disqualify a judge against his advice. Mr. Kalk eventually sued Mr. Davet, successfully, for unpaid legal fees.

On his own, as a "pro se" litigant, Mr. Davet was undeterred. Four times a week he went to Case Western Reserve University School of Law to study legal writing and case law in its library. His briefs were angry and colorful, including football analogies and an aside on Enron Corp.

Among his maneuvers: asking a judge to arrest NationsBanc's CEO for initiating a "sham" proceeding against him because the company claimed in error that it owned his loan. (The judge dismissed the request.) He later sought to disqualify the judge because she had accepted campaign contributions from real-estate developers, whose Beachwood developments Mr. Davet had publicly protested before the foreclosure litigation. When he didn't win that motion, Mr. Davet sought to disqualify the judge who had dismissed it. He appealed at every chance he could, which bought him extra years in his home.

"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 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.

All the litigation makes the home's new owner, Paul Mikhli, a dentist, "a little nervous." Should Mr. Davet succeed, he adds, title insurance should cover his expenses.

After spending much of the year living at the homes of friends and family, including their daughter, a university student in Indiana, the Davets recently moved into a small, $900-a-month home in a rural community east of Cleveland. "The money is short," Mr. Davet said on a recent afternoon, adding that one of his siblings, a pawn-shop owner, has been helping financially.

But hope prevails. From time to time, he drives back to Beachwood, just to see how his old home is doing.

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About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, OH  and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with over 450 employees.  Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.