State AG sues B of A company

Subsidiary accused of improperly handling foreclosures

By Gordon Oliver, Columbian business editor

Published:

 

Washington state is suing a Bank of America subsidiary, saying that the company has improperly handled thousands of foreclosures in the state dating to 2008, Attorney General Rob McKenna announced Friday in Seattle.

The state argues that ReconTrust Co., the California-based subsidiary that operates in at least 15 states, has failed in its legal obligation to act as a neutral party on behalf of both the lender and the borrower during foreclosure proceedings, instead deferring solely to the lender.

ReconTrust’s website lists 134 Clark County properties available for auction, mostly at the gazebo outside the Clark County Courthouse, between Aug. 12 and Nov. 4. That’s the fourth-highest count of upcoming foreclosures among the state’s 39 counties.

The lawsuit filed in King County Superior Court also says the company violated state law by “failing to maintain a physical presence with telephone service at that address” within the state. It also says the company has not adequately notified homeowners of their rights, including the possibility of negotiating a loan modification or postponing or stopping a foreclosure sale. The company also failed to identify the actual owner of the loan subject to foreclosure, and created or permitted use of improperly executed or notarized documents, the state claims.

Many of the issues are tied to the state’s Deed of Trust Act. The state says ReconTrust has consciously failed to comply with that act, taking the position that the state law is pre-empted by federal law. Assistant Attorney General James Sugarman said in an interview that ReconTrust takes the position that it is subject to the laws of California.

A call to ReconTrust was referred to Bank of America, which challenged the state’s assertions.

“ReconTrust operates in compliance with applicable state and federal laws,” said Jumana Bauwens, a media relations representative for Bank of America, in a prepared statement. “We disagree with the attorney general’s concerns on this issue and will vigorously defend the services of ReconTrust against this challenge.”

Bauwens said Bank of America has established physical locations, including five banking centers in Olympia, where it provides support to customers at risk of foreclosure. She said face-to-face counseling is not available in Clark County but the company plans to begin offering that service soon in the local area.

The lawsuit seeks civil penalties of up to $2,000 per violation as well as restitution for consumers.

The attorney general’s office estimates that ReconTrust has issued 9,900 foreclosure notices since January 2008 in King, Pierce and Snohomish counties alone. It said private lawsuits against ReconTrust have been filed in Utah, Nevada, California, Oregon and Arizona as well as in Washington.