The Attorney General's Office of Utah has submitted a filing to the courts to try to stop thousands of properties from entering the foreclosure process. The case was against the Bank of America unit, ReconTrust Co. According to the AG Office, Recon is in violation of the law and should not be allowed to conduct sales of foreclosed properties in the state.
Utah is just one of a handful of U.S. states that are trying to prevent properties from being offered to people who buy foreclosures for sale in Salt Lake City and in other parts of the country unless the procedure used has been cleared to have followed legal rules. The state has argued that bundled mortgages, such as the ones handled by Recon, were not registered properly with county records and are, therefore, in violation of state laws.
As of last year, around 10,000 Utah foreclosures have been posted. Recon is said to be accountable to around 4,000 of foreclosure cases each year in the state. The case filed by the AG was reportedly on behalf of a St. George resident who questioned the procedures used by Recon in foreclosing on the property. The case resulted in Bank of America foreclosures being temporarily put on hold in the state.
However, the foreclosure process was allowed to continue after a district judge declared that the state's law is preempted by the National Bank Act. The current appeal filed by the AG Office has been deemed significant by most housing analysts. They stated that this signifies concerted efforts by authorities to clarify the foreclosure procedures used by banks.
The AG has reportedly argued that the state law specifies that only Utah State Bar members or title insurance firms are allowed to sell foreclosures in the state, and since Recon is neither, it cannot be allowed to conduct activities related to foreclosure listings in Utah. In the past, such lawsuits have proven to be unsuccessful, with lenders usually getting a favorable ruling from the courts.
However, analysts stated that the Utah case might be different, particularly after the foreclosure process used by several major lenders was scrutinized last year. Local homeowners are hoping that the case will shed light on the legalities of foreclosures in the state.
John Cutts has been educated in the finer points of the foreclosure market over 5 years.
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