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The Attorney General's Office is seeking to intervene in a lawsuit in which a federal judge has ruled that Texas law governs foreclosures carried out by a unit of Bank of America in Utah.
The Feb. 8 ruling by U.S. District Judge Ted Stewart "is not something the State of Utah can let pass," Assistant Attorney General Jerrold Jensen wrote in seeking to intervene in the lawsuit.
Federal judges in Utah have split over the question of whether BofA's foreclosure arm, ReconTrust, may have violated state law in thousands of actions taken in recent years against Utah homeowners.
Stewart ruled that because ReconTrust is headquartered in Texas, where it carries out many of its foreclosure functions, the National Bank Act says the bank's actions are governed by that state's laws.
"Texas does not pass banking laws for Utah," Jensen wrote. "And Utah does not pass banking laws for Texas."
Bank of America representatives did not respond to an email seeking comment on the state's actions.
Stewart's ruling dismissed a proposed class-action lawsuit, which claimed that in carrying out foreclosures in Utah under its own name, ReconTrust violated a state law that says only Utah attorneys or title companies can legally foreclose on behalf of a mortgage note holder.
Abraham Bates, one of the attorneys representing homeowners, said that perhaps 10,000 Utah homeowners were foreclosed on by ReconTrust in recent years.
Bates has filed a motion asking Stewart to reconsider his decision and also wants the judge to allow an amended lawsuit to go forward.
If Stewart does not reconsider his opinion, Bates said the case could be paired with another that is being appealed to the 10th Circuit Court of Appeals in Denver.
That case involves a decision by U.S. District Judge Bruce Jenkins who ruled that ReconTrust was governed by Utah laws when foreclosing in this state.
Because of the split over the issues among federal judges in Utah, Bates and attorneys for ReconTrust recently agreed to halt proceedings and take Jenkins' ruling directly to the appeals court.
"It's time to take this to the 10th Circuit and have it resolved," Bates said.
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A divided court
Federal judges in Utah have split over whether ReconTrust illegally foreclosed in Utah.
Decisions in favor of ReconTrust •
Ted Stewart and David Sam
Decisions in favor of homeowners •
Dee Benson, Clark Waddoups and Bruce Jenkins