The Utah Attorney General accused Bank of America of illegal foreclosure activities using the foreclosure company ReconTrust, N.A. In the letter, Shurtleff said that ReconTrust is in violation of Utah law as set forth in Utah Code Sections 57-1-21 and 57-1-23, which outline the requirements for lawful non-judicial foreclosures. Support for the attorney general's position is found in a recent 10th Circuit case, Shurtleff v. Kleinsmith in which Utah Code Sections 51-1-21 and 57-1-12 were found to be constitutional. The letter said that ReconTrust is in violation of the National Bank Act, which does not allow national banks to operate in contravention of State and local law. ReconTrust's exercise of the fiduciary powers in the State of Utah is a violation of State law, but also applicable federal law, Shurtleff wrote.
These specific points of law are the lynch-pin of a local case, Cox v. ReconTrust, in which state Judge James L. Shumate issued an injunction against ReconTrust. The case was removed to federal court by the Bank of America, where federal Judge Clark Waddoups ruled that ReconTrust was immune to state law and had authority to foreclose.
Attorney John Christian Barlow, subsequently joined by Salt Lake City attorney Craig Smay, appealed the Waddoups decision to the 10th Circuit Court of Appeals where the Utah Attorney General’s office submitted an Amicus Brief in support of Cox’s position, written by Assistant Attorney General Jerrold Jensen, who also represented the State of Utah in the Kleinsmith case. Barlow did the research on the National Bank Act and determined that even as a National Bank, ReconTrust was foreclosing illegally in the State of Utah. This is the premise of the Cox vs ReconTrust case, which is still pending in the 10th Circuit Court.
Barlow, a solo practitioner, who has been successfully defending homeowners against illegal foreclosure for the last 18 months, told KCSG News "It has been difficult to do this. The banks have unlimited resources and often put three or four attorneys on each case.” He said he was grateful for the efforts of the Attorney General in setting forth the defense for Utah homeowners. "Now that the Utah Attorney General has joined the fight for the rights of Utah homeowners, banks will be more inclined to follow the law," Barlow said.
The implications of the Attorney General's letter could be dramatic if Bank of America is found to have been illegally foreclosing on Utah homeowners. Barlow said there could be significant monetary damages awarded to homeowners who have lost their homes in an illegal foreclosure and it's highly probable that Bank of America foreclosures could be stopped again.