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pahunkboy -> BofA wants judge to allow Utah foreclosure sales (6/14/2010 10:19:19 PM)
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BofA wants judge to allow Utah foreclosure sales
In court ยป Ruling expected today; hundreds of trustee sales halted.
The power of a top U.S. bank to sell foreclosed homes in Utah hung in the balance Thursday. A federal judge heard legal arguments on an order that has temporarily halted hundreds of trustee sales by lending behemoth Bank of America and its foreclosure arm ReconTrust. His ruling is expected today. Bank attorneys attacked a preliminary injunction that was issued May 22 on behalf of St. George homeowner Peni Cox. Her lawyer contends that Bank of America and its affiliates lacked legal standing to conduct those sales in Utah because ReconTrust isn't registered as a business entity with the Utah Department of Commerce.
``If it wants the power of foreclosure, it must comply with state law,'' attorney Christian Barlow of St. George told U.S. District Court Judge Clark Waddoups. ``If a bank is foreclosing in the state of Utah, it should have offices in Utah and allow people to negotiate with it face to face.'' But bank attorney Roy Arnold argued that 5th District Court Judge James L. Shumate in St. George had run afoul of proper legal procedure, saying he issued the injunction without a hearing or adequate notice to bank officials. Homeowner Cox also had not posted a security bond as required by law, Arnold said. Bank lawyers attacked the legal basis for the injunction as well, arguing that state laws requiring companies to register when transacting business in Utah do not apply to national financial institutions. Their contention: those banks are instead covered by federal laws and regulations under the National Bank Act.
The preliminary injunction is too broad and has caused BofA ``significant harm'' by impeding to its ability to foreclose on all delinquent Utah owners, of both commercial and residential properties across Utah, Arnold said. In pointed questioning, Judge Waddoups challenged Barlow as to why Cox's individual case had halted all BofA foreclosure sales. ``I don't think she has standing,'' the judge said. ``It's not a class action.'' Barlow, who said Cox has been out of her home for months, responded that Judge Shumate had been bound by state law to stop all the sales when BofA's legal basis for conducting them came into question. ReconTrust has about 970 trustee sales now pending in the state, according to its website.
Coming amid a surge of foreclosures across Utah, the case highlights frustration felt by thousands of delinquent Utah homeowners who have tried in vain to contact and negotiate with the true owner of their loans. Cox said in an interview that she filed her lawsuit after months of frustrated attempts to negotiate a short sale of the property with Bank of America's loan servicing company, BAC Home Loan Services. ``Peni is not asking for a free house,'' her attorney said. ``We just don't know who holds the note, and Bank of America cannot prove they own Peni's loan.'' Most mortgages are sold shortly after they are signed and subsequently bundled into investment securities, commonly making direct talks between the loan holder and the distressed homeowner all but impossible. Arnold, the BofA lawyer, told Waddoups that Salt Lake company New Line Mortgage had originally written Cox's mortgage; BAC Home Loan Services was servicing the loan; Mortgage Electronic Registration Systems, or MERS, a Virginia-based mortgage data registry was ``the beneficiary acting on behalf of the note holder;'' and that he believed the note itself was held by government-backed lender Fannie Mae. He said at one point it was unclear why Bank of America had even been drawn into the case. Attorney Craig Smay of Salt Lake City, who also argued on Cox's behalf, said after the hearing that Cox's case was typical of the convoluted trail most owners in foreclosure face in tracing the ownership their mortgage.
Smay's firm is pursuing at least 30 similar cases in federal court, challenging the legal status of various parties filing foreclosures. The case has sent ripples through the wide community of homeowners, real-estate officials, trustees, lenders and attorneys involved in foreclosures in Utah. Benches in the courtroom were packed Thursday. Andrea Dailey of South Jordan watched Thursday's proceedings closely. She said later she had lost her home to foreclosure following the death last year of her husband Tim. After failed attempts to negotiate with Bank of America, she said she opted instead to try to buy back the property in the Daybreak subdivision when it came up for at foreclosure auction. The latest auction date, scheduled for Thursday, had to be canceled pending the outcome in Cox's case, the sixth such postponement. ``I just want my home back,'' Dailey said.
http://www.sltrib.com/ci_15269949?source=most_viewed
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