As foreclosure fights rage in the nation’s courts, the battle over Shahida and Ather Ali’s house in Diamond Bar looks like a classic mismatch.

In one corner, weighing in at $2.5 trillion in assets, sits Deutsche Bank, which is attempting to evict the Alis from their home of 24 years.

In the other is Zeenat Ali, the couple’s diminutive 23-year-old daughter, who dropped out of medical school and sued Deutsche Bank after it foreclosed on the property. Hoping to reclaim title for her parents, Ali has spent half a year litigating in state and federal courts without the help of a lawyer. And though she has no formal legal training, the soft-voiced, 120-pound bantam is more than holding her own.

Using online legal filings as models, she has staved off the eviction and even turned the tables, winning judgments that enabled her to seek $1.7 billion from Deutsche Bank and two other financial firms involved in the deal, Downey Savings and Central Mortgage Co. All three declined to comment on her suit, filed in March in Los Angeles County Superior Court in Pomona. It accuses them of fraud, botching foreclosure paperwork and violating laws requiring lenders to seek alternatives before they put delinquent borrowers out on the street.

Ali’s victories so far have been mainly procedural. Experts say she stands little chance of winning a large damage award. And her parents are likely to lose their home.

Still, legal veterans have been impressed by the smarts and tenacity of the neophyte with the long dark hair and the focused gaze. Ali’s occasionally wavering voice belies exacting preparation and a formidable resolve.

The banks have learned not to underestimate her. In a challenge to her budding legal skills, they sought in May to move her lawsuit to federal court in Los Angeles, where they thought they’d have an easier go of it. Ali responded with 170 pages of legal filings. After reviewing them, U.S. District Judge Gary Feess sided with Ali and last month sent the case back to Pomona Superior.

It was a victory that Elizabeth Mann, chairwoman of the executive committee of the Los Angeles County Bar Assn.'s litigation section, called “remarkable.”

“Federal judges don’t do people favors because they like them,” Mann said. “She earned it.”

Ali said all she wants is to force the banks to work out a good-faith deal with her parents. The foreclosure cost the Pakistani immigrants their business by putting a second loan into default.

“We lost the home and the business so suddenly that we literally hit rock bottom,” she said Tuesday.

Down and out is an unfamiliar place for the Ali family. Ali’s father was an engineer; her mother was a physician. Her two siblings are studying medicine. She said she has 18 cousins living in the Chicago area, all of whom are doctors.

Known by the nickname “Zee,” Ali, a Muslim, was a standout at Pomona Catholic High School, a small all-girls school that accepts students of all faiths. Her math teacher Roger Wallace said Ali would complete assignments in the way he had instructed the class, then program her calculator to find the same answers using different methods that she preferred.

“She just thought it was more efficient her way,” he said. “When she thought something was right, she was going to pursue it.”

The four-bedroom, modestly furnished home at the center of her struggle sits in a well-tended hillside neighborhood looking up to the San Gabriel Mountains. Ali works mainly in the small bedroom of her childhood, which is decorated with a “Lion King” poster and a shelf of Harry Potter books. Her self-taught lawyering includes hours of Internet research on Google Scholar and Westlaw. She said it’s now second nature to attach a list of points and authorities to her motions, including a table of contents for filings of over 20 pages.

The family’s troubles stem from a decision in 2005, when her parents opened a day-care center for seriously ill adults. With the housing bubble still inflated, they pledged their home as collateral for an $800,000 Small Business Administration loan. They also refinanced their house with a $250,000 Downey Savings pay-option mortgage.

The home loan allowed them to opt for ultra-low monthly payments, freeing up proceeds for the business. But that made the loan balance rise until higher, hard-to-afford payments kicked in.

When Deutsche Bank foreclosed, three days before last Christmas, the Alis owed $451,000, property records show. Their debt is now well over $500,000 on a house that real estate information site Zillow.com estimates is worth $469,500.

The foreclosure caused the SBA to demand $250,000 in new collateral or $10,000 more per month in loan payments, Ali said. Unable to comply, the Alis stopped paying the SBA loan four months ago and closed the day-care center.

Ali’s suit claims that Downey portrayed toxic loans as beneficial, and that Deutsche Bank, a nonparticipant in President Obama’s anti-foreclosure program, seized the home without providing proper legal notice. But what really angered and motivated her, she said, was an alleged bait-and-switch offer to modify the loan.

The Alis mailed Central Mortgage $30,000 in late November as a step toward a payment catch-up plan. She said the company returned the check, telling them they must first apply to have the loan modified. The family turned in the modification paperwork within a week, she said, along with the $30,000 check; two weeks later the check arrived back in the mail a second time.

“In those two weeks, they foreclosed the property without us even knowing,” she said. “We were under the impression that they were processing the loan modification and everything was fine.”

Representatives of Deutsche Bank and Central Mortgage declined to comment on the Alis’ loan. Downey Savings, which failed in November 2008, could not be reached, and the chief lawyer representing all three defendants, William G. Malcolm of Irvine, did not return calls seeking comment.

One veteran of such battles, L.A. bankruptcy and foreclosure attorney J. Scott Bovitz, predicted the Alis ultimately would lose their home.

Procedural errors by banks may slow an eviction, Bovitz said, but documenting intentional fraud is tough. Even if punitive damages were awarded, he said, they would amount at most to several times the actual equity the Alis have in the home — which appears to be little or nothing.

“I am sympathetic — an awful lot of people out there are losing their houses and feeling life is not fair,” Bovitz said. “But I think beneath it all, everyone understands that if you don’t pay the bill, the bank will eventually take your house.”

Facing the prospect that Judge Michael M. Duggan could allow the banks to evict her family, Ali reluctantly hired an attorney, Kenneth Zwick of Costa Mesa, to assist her at Thursday’s hearing.

“This is my baby,” she said. “It’s hard for me to give it up.”

Zwick said Ali possesses the most formidable combination of intelligence and passion he has ever seen. The plucky “Zee” also has won fans in Department 5, the Pomona courtroom where a court commissioner previously stayed the eviction notice.

“It’s like, whoa, Zee!” said Deputy Sheriff Ray Bernasconi, the court bailiff. “She seems really well versed in the law. She’s really, really smart. And she’s one small person taking on this big corporate giant with all their attorneys.

“I think I speak for everyone here when I say we’re all happy she won that judgment” against the banks, he said.

Ali says she’d like to resolve the dispute and return to medical school. She also dreams of starting a nonprofit to help others battle foreclosures, based on her own experience.

“Maybe it will give some hope to other people that they can fight this horrible situation,” she said.

scott.reckard@latimes.com