It's mysterious to me how easily banks win most of these cases by default - I guess people who are underwater with their mortgages are often either afraid to show up in court or don't have the money to hire a lawyer to challenge their foreclosure. Perhaps because of this, debt-related legal cases typically seem to proceed in an almost assembly-line fashion, eg http://www.nytimes.com/2010/07/13/business/13collection.html

The perception that banks in particular are too big to fight legally has (IMHO) resulted in their legal departments becoming terribly sloppy, selecting policies and even litigation strategies purely on the basis of whether they will be beneficial rather than defensible. Hence the contractual Terms & Conditions for a checking account or credit card which now run to many tens of pages, require graduate-level reading ability, and rival software licenses for the boldness of their asserted rights. A recent case I've been cackling over is Wells Fargo's attempted defense of their transaction-ordering policies (http://www.law.com/jsp/ca/PubArticleCA.jsp?id=1202463467062).

Like most retail banks, WF had adopted a policy of re-ordering customer transactions made on a given day so as to maximize the likelihood of customers incurring multiple expensive overdraft fees. Say a customer living paycheck-to-paycheck (about 60% of the population) had a balance of $20 in their checking account; they made 3 debit transactions of $5 each in the morning, deposited $30 at lunchtime, and made one further purchase for $35 in the afternoon. Logically, you'd expect the resulting balance to be $20, $15, $10, $5, $35, $0. Instead, the bank would reorder the day's transactions from largest to smallest, yielding $20, $-15, $-50 (due to overdraft fee), $-20, $-25, $-60 (fee), $-65, $-100 (fee), $-105, $-140 (fee). Cha-ching!

This happened to me (at another bank) some years ago following an unlucky combination of bad cash flow and medical emergency, and I was very upset because I had gone to the trouble of calling them first and asking if my planned withdrawal/deposit/withdrawal sequence would be OK. I was told that it would, only to find myself substantially in the red 24 hours later. I was able to get it reversed by going to the branch and literally refusing to accept the telephone handset (to their customer service department) from the branch manager, so that she and I ended up talking with the call center on speakerphone...for over an hour. After multiple instances of Central contradicting themselves or flat-out lying before finally admitting that they ordered transactions chronologically for online banking and posted them instantly, but retroactively re-ordered them for accounting purposes at close of business every day, the manager finally took over and split the refund fees with Central. Since they record all these calls, my objective had been to get this admission in the presence of a local bank officer who could then be called as a witness in small claims court, and I think she realized what I was doing.

Afterwards she explained to me that not only had the bank (and most others) seen the fee profit potential when adopting this policy, but had restructured the company so that the branch network was a separate wholly-owned subsidiary which earned fixed commissions on the sale of financial products (like mortgages or CDs that many people prefer to go into the branch for), out of which all operation expenses were paid. Fee and interest income went on the corporate books, while fee reversals or the administrative costs of defaults were assigned to the Branch Operations subsidiary. This didn't just affect customers. Whereas a decade before employees could begin as tellers and move up to local, regional and eventually corporate management roles, now the branches are not much better than franchise operations and the likelihood of a branch employee ever getting into the 'banking' (financial) division is practically nil. Local operations exist mainly for marketing purpose and any exercise of autonomy by branch managers is evaluated purely in terms of cost; they have zero input into policy, business development, or budgets and as a result are increasingly less able to offer any kind of useful financial advice to their clients.