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Bank of America continued to file foreclosure-related actions in its own name Wednesday, the day after a state law directly aimed at that practice by the mortgage-servicing giant took effect.

The new law allows homeowners who were illegally foreclosed on to go to court to seek payment of damages, penalties of up to $2,000 and legal fees. The Utah Attorney General's Office asserts that ReconTrust, the foreclosure arm of Bank of America, fails to comply with state law when it institutes foreclosure proceedings under its own name.

A 2004 law requires that foreclosures be carried out by an attorney or title company located in the state. But Bank of America believes ReconTrust is governed by federal banking laws and not state law.

Salt Lake County Recorder Gary Ott said that by early Wednesday afternoon, ReconTrust had filed about a dozen notices that it had been named the substitute trustee on property records, a first step toward foreclosing on a property and its sale to repay debts.

That action could escalate the dispute between the Utah Attorney General's Office and Bank of America over what one activist estimates could be about 40,000 foreclosures this year in Utah. The state now has the fourth-highest rate of foreclosure in the nation, according to RealtyTrac, a California company that complies real estate statistics.

A Bank of America spokeswoman said the corporation intended to continue its previous practices in foreclosing in Utah.

"As a national bank, ReconTrust's authority to act as trustee is derived from federal law (the National Bank Act)," Jumana Bauwens, a spokeswoman for Bank of America, wrote in an email in response to a query about the new Utah law.

The AG already has intervened in a lawsuit over the issue by a St. George woman who faced foreclosure by ReconTrust. The state has asked a panel of judges from the 10th U.S. Circuit Court of Appeals to return the case to federal court in Utah so it will be able to argue that the federal law does not preempt state law in foreclosure requirements.

John Swallow, civil division chief deputy attorney general, said ReconTrust must follow state foreclosure laws.

"We'll be doing what we can to hold them accountable under state law," he said.

The Utah law was passed so that Utah homeowners have someone locally [with whom] to discuss their loan problems, Swallow said.

"We want to compel these national banks to have local people here on the ground conducting these sales so that when there is a problem, people are not calling New York or Houston or somewhere else to work things out," he said.

Besides the right to seek damages and a $2,000 penalty, the new law also says homeowners can seek attorney fees if they win a lawsuit, Swallow said.

"In the past, if [homeowners are] out of money and can't make their mortgage payment, they certainly can't afford an attorney," he said. "Now we're giving them the ability to actually go and find a lawyer and say 'Look, if they've broken the law you also get your attorney fees.'

"We hope that will give more resources to the homeowner."

Swallow declined to say what the state would do if ReconTrust continues its same foreclosure practices despite the new law.

"We're trying to create an incentive for these companies to say, 'The game's over, we're going to follow the law,' " he said.

The 2004 Utah law was upheld by the 10th Circuit Court of Appeals, which ruled the qualification requirements for foreclosing trustees were legal.

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