BofA Unit’s Utah Foreclosures Violate Law, State Says
By David McLaughlin - Feb 17, 2011 3:37 PM GMT-0600
A Bank of America Corp. unit is breaking the law by foreclosing on homeowners in Utah because it doesn’t meet state requirements, the state attorney general’s office said in a federal appeals court case.
ReconTrust Co., a subsidiary of Bank of America, the biggest U.S. lender by assets, isn’t a member of the state bar or a title insurance company and is unqualified to carry out trustee foreclosures, Utah Attorney General Mark Shurtleff wrote in court papers filed yesterday with the U.S. Court of Appeals in Denver.
“ReconTrust Co. N.A. is a non-depository national bank initiating approximately 4,000 home foreclosures in Utah each year in violation of Utah law,” the attorney general’s office said.
The court filing was made in a homeowner’s lawsuit against ReconTrust and Bank of America.
“National banks must abide by state law,” said John Christian Barlow, an attorney for the homeowner, Peni Cox. “ReconTrust just wants to foreclose, period,” he said.
[Barlow's familiar with CUOMO V CLEARINGHOUSE BY US SUPREME COURT, JUNE, 2009.]
Cuomo v. Clearing House - Preemption Case
A Utah state judge issued an injunction last year blocking ReconTrust from trustee foreclosure sales in the state, Barlow said. A federal judge later lifted the injunction.
‘Applicable Laws’
“It is Bank of America and its related affiliates’ policy to handle foreclosures in compliance with applicable laws,” Jumana Bauwens, a spokeswoman for Bank of America, said in an e- mailed statement. “We believe the district court was correct in its ruling in our favor and believe the ruling should not change as a result of this appeal.”
Recontrust also was stopped from conducting nonjudicial foreclosures, or those that don’t require court supervision, in Nevada by a state judge. A Nevada federal judge later dissolved the state court order, allowing foreclosures to proceed.
Bank of America, based in Charlotte, North Carolina, argued in court papers that it has the authority to conduct foreclosures in Utah under the federal National Bank Act. Under that law, only statutes of the state where the bank is located can be applied to fiduciary activities, Bank of America said.
[Bank of America is missing a very important point: in any State where a National Bank (or any entity) is acting as a mortgage servicer (collecting mortgage payments d on real property located in that State) or using a state court to litigate a foreclosure cause of action against a Defendant who lives in that State, they must be registered in that State with the Secretary of State as doing business in that State, and they must be licensed with the State's Banking Commissioner. Otherwise, the entity (or National Bank) is breaking the law.]
No other state laws limiting or establishing preconditions are applicable to national banks, it said. ReconTrust is based in California and its trust operations for Utah foreclosures take place in Texas, according to the court filing.
The case is Cox v. ReconTrust Co., 10-04117, U.S. Court of Appeals for the 10th Circuit (Denver).
To contact the reporter on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net.
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