Computer Keystroke Error Costs Foreclosing Lender $400K As Winning Bidder Snags Home Out From Under Citibank For Pennies On The Dollar

The following facts have been taken from a recent Washington State Court of Appeals ruling:

1. Citibank moves to carry out a non-judicial foreclosure sale in which it is owed $487,000+.


2. Citibank intends to post an opening bid to be $442,837.50.


3. Through the magic of a computer keystroke error, a Citibank employee dropped the "2" and miscommunicated an opening bid in the amount of $44,837.50 to the trustee, which it posted on its website.


4. An employee of a foreclosure research company contacted the trustee to confirm the opening bid amount. The employee pointed out to the person with whom she spoke that she thought the bid seemed low, but the trustee confirmed that the bid was correct.
5. The next day, the foreclosure research company employee contacted the trustee again, who again confirmed that the bid amount was $44,837.50.


6. On the day of the foreclosure sale and upon the trustee's announcement of the beginning of the sale, an interested bidder asked that the trustee confirm the opening bid. The trustee confirmed the bid again to be $44,837.50.


7. But as the trustee began the recitation for the sale, he suspended the sale, stating he was going to make a phone call to confirm the opening bid. The trustee went into an adjacent building and, when he returned, confirmed the opening bid.


8. The interested bidder bid $45,000, which was the only, and winning, bid.


9. Upon discovery of the error, the presumably horrified Citibank instructed the trustee not to deliver the deed to the winning bidder.


10. The trustee notified the winning bidder, stating that the bidding was defective and "the sale would be deemed a nullity."


11. The winning bidder's counsel sent a letter to the trustee demanding the issuance of the deed.


12. The trustee advised the winning bidder that it would not deliver the deed due to defective bidding and it attempted to refund the bid amount to the winning bidder.


13. The same day, the winning bidder filed a complaint seeking to quiet title to the property in himself and damages.


14. After litigation of the issues, the lower court ruled in Citibank's favor, possibly telling the winning bidder "Nice try, but take a hike!"


15. Heeding the judge's advice, the winning bidder took a hike - directly to the appeals court for a review of the ruling.

On appeal, the three-judge panel saw the case differently from the trial judge, finding that the lender's

• "unilateral mistake in the bid price and relaying the erroneous bid price to the trustee does not constitute "defective" bidding under the deed of trust act's consumer protection provision."

Accordingly, the appeals court reversed the trial court's order granting summary judgment in Citibank's favor and remanded with instructions to enter summary judgment quieting title in favor of the winning bidder.

Congratulations to Citibank for another screw-up well done.

For the ruling, see Breiwick v. First American Title Insurance Company, No. 65004-1-I (Wn. App., Div. 1, May 9, 2011) (unpublished).