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The Utah Attorney General's Office is preparing to sue Bank of America after sending a warning letter saying the bank was illegally conducting thousands of foreclosures in Utah.
John Swallow, chief deputy attorney general for civil litigation, said Wednesday the office would file suit against the Charlotte, N.C.-based banking giant if its foreclosure arm, ReconTrust Co., continued to file foreclosure proceedings in violation of state law.
"We sent the letter to put them on notice that they are not complying," Swallow said. "Our next step if they don't comply will be to take them to court."
Utah Attorney General Mark Shurt-leff sent the letter dated May 19 to Bank of America President Brian Moynihan, asking him to respond within 30 days.
At issue is whether ReconTrust is violating state law by foreclosing on homes in its own name instead of that of an attorney who is a member of the Utah State Bar or a title company registered to conduct business here as required by state law.
Bank of America believes it is governed by federal banking laws that override state statutes. Bank spokeswoman Jumana Bauwens reiterated Wednesday that the bank stood by its legal interpretation but did not say what the bank might do to defend itself.
Salt Lake County Recorder Gary Ott said Wednesday that ReconTrust is continuing to file foreclosure proceedings under its own name. ReconTrust's website lists about 900 properties for sale in Utah that had been foreclosed on, part of a huge wave of foreclosures that struck Utah as a result of the mortgage meltdown and resulting recession.
Marco Fields, founder and executive director of the homeowner advocacy organization TEEMS Utah, in a statement praised the "diligent efforts of the Utah Attorney General's Office to uphold state law and protect Utah homeowners from the unlawful practices of Bank of America ReconTrust."
In the letter, Shurtleff acknowledges Bank of America's position that federal law, not state law, governs its actions on foreclosures.
But, he said, "This office adamantly disagrees with that position on the basis that the section of the National Bank Act granting national banks authority to act in a fiduciary capacity specifically states that such authority shall be exercised only 'when not in contravention of state or local law.' "
Swallow said the purpose of the Utah law was to give home-owners a local contact to talk to when they have issues with mortgage note holders.
The state also has intervened in a federal lawsuit in which a St. George property owner argued that ReconTrust did not have the legal authority to foreclose on her property. After an adverse ruling in federal court in Salt Lake City, the case is before the 10th Circuit Court of Appeals in Denver, and the Attorney General's Office has asked that it be sent back to Utah so it can defend the state law.
A Utah law that went into effect this month gives homeowners incentives to sue if they suffer an illegal foreclosure. They can win either $2,000 or actual monetary damages they suffered as a result of the illegal foreclosure, plus attorney fees.
Read the letter
O To read the attorney general's letter to Bank of America, go to http://bit.ly/jE62xW.
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