Washington State AG Tags 'Rogue' Trustee In Faulty F'closure Suit Saying 1000s Of State Homeowners Were Victimized By Allegedly Illegal Sale Procedure

From the Office of the Washington State Attorney General:

• Washington Attorney General Rob McKenna [] announced that his office is suing ReconTrust Company, a subsidiary of Bank of America, for conducting illegal foreclosures on thousands of Washington homeowners.



• “ReconTrust ignored our warnings, repeatedly broke the law and refused to provide information requested during our investigation,” McKenna said. “ReconTrust’s illegal practices make it difficult, if not impossible, for borrowers who might have a shot at saving their homes to stop those foreclosures.”



• ReconTrust is a foreclosure trustee that is legally required to act as a neutral party on behalf of both the lender and the borrower while conducting foreclosure proceedings in good faith and in accordance with the law.



• The lawsuit filed in King County Superior Court by McKenna and Assistant Attorney General Jim Sugarman, of the office’s Consumer Protection Division, alleges that “ReconTrust has failed to comply with the Washington Deed of Trust Act, RCW 61.24, in each and every foreclosure it has conducted since at least June 12, 2008.” The company is also accused of violating the state’s Consumer Protection Act.

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• McKenna said an essential requirement of the Deed of Trust statute is that a trustee maintains an office in the state where homeowners can go to ask questions, make last-minute payments and request a foreclosure be postponed for a legitimate reason. But ReconTrust doesn’t have an office in Washington. “ReconTrust’s claim that the company doesn’t have to follow Washington law and procedures because it is a national bank is wrong,” McKenna added.

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• The complaint states that homeowners facing foreclosure are “captive to ReconTrust’s services” and that the company’s failures to abide by the law have concealed material information needed by homeowners to assert rights and defenses, negotiate a loan modification, cure defaults, and postpone or stop a foreclosure sale.



• Sugarman said, “It is particularly important right now for trustees to understand and strictly comply with Washington foreclosure law.(1) There have been several changes including a new right for homeowners to request mediation to discuss a possible loan modification or forbearance before the bank pursues foreclosure.”

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• Private lawsuits against ReconTrust have been filed in Utah, Nevada, California, Oregon and Arizona concerning its role in foreclosures in those states, as well as by private attorneys in Washington. The Attorney General of Utah sent a public letter to Bank of America threatening suit if ReconTrust continued to violate Utah foreclosure law.

For the Washington State AG press release, see Washington Attorney General sues ReconTrust for illegal foreclosures (McKenna raps trustee’s claim that it doesn’t have to abide with state law).

For the lawsuit, see State of Washington v. ReconTrust Company, N.A. (King County Superior Court No. 11-2-26867-5).

(1) See Albice v. Premier Mortgage Services Of Washington, Inc., 157 Wn. App. 912; 239 P.3d 1148 (Wn. Ct. of App., Div. 2, September 28, 2010) for a recent Washington State intermediate appeals court ruling that suggests that a failure to strictly comply with foreclosure procedure could result in a sale that could later be found to be absolutely void, and that any subsequent purchasers of the foreclosed title acquire nothing, notwithstanding any protected status they may otherwise qualify for as bona fide purchasers.

Albice has been accepted for review by the Washington State Supreme Court. Albice v. Premier Mortgage Services Of Washington, Inc., 170 Wash.2d 1024, 249 P.3d 623 (2011).

For the briefs filed with the state high court, see 85260-0 - Christa Albice, et al. v. Ron Dickinson, et al. Hearing Date - 09/22/2011:

• Answer,
• Appellant Brief,
• Petition for Review,
• Reply to Response,
• Reply,
• Respondent Brief,
• Supplemental Brief of Petitioners,
• Supplemental Brief of Respondents.

For the lower appellate court briefs filed in Albice, see:

• Albice - Opening Brief,
• Albice - Respondent's Brief,
• Albice - Reply Brief.

For rulings by the Washington State Supreme Court that are consistent with the proposition that procedural irregularities (as opposed to substantive irregularities) that defeat a trustee's authority to sell property at a foreclosure sale may render the sale void, see:

• Udall v. TD Escrow Services, Inc., 159 Wn.2d 903, 154 P. 3d 882 (2007),
• Cox v. Helenius, 103 Wn.2d 383, 693 P. 2d 683 (1985).