McKenna
SEATTLE (Legal Newsline) - Washington State Attorney General Rob McKenna said last week his office has settled with a company for failing to comply with the state's laws governing foreclosure trustees.
In a lawsuit filed last year by McKenna, the attorney general accused foreclosure trustee ReconTrust -- owned by mortgage giant Bank of America -- of not following state law.
In Washington, foreclosure trustees like ReconTrust are legally required to be neutral parties with local offices, available to borrowers during the foreclosure process and willing to postpone a foreclosure when they deem it appropriate.
Trustees also must provide accurate information about how homeowners can stop their foreclosure, how much they need to pay to reinstate the loan and to whom the money is owed.
ReconTrust did not have an office in the state, McKenna said.
In addition, the company's illegal practices, he said in a statement, made it "difficult, if not impossible for borrowers who might have a shot at saving their homes to stop those foreclosures."
The attorney general also alleged the company's notices failed to identify the owner of the loan and provided "confusing and contradictory" information about what a borrower must do to stop a foreclosure.
"Our focus all along has been to make sure that those involved in lending and foreclosing follow the law," Assistant Attorney General James Sugarman said in a statement Wednesday.
"That's what today's settlement accomplishes. ReconTrust will not be involved in foreclosures in Washington state unless it provides local offices where borrowers may go to resolve loan foreclosure problems."
The company, which is no longer doing business in the state, paid nearly $1.1 million to settle the case as part of the multistate mortgage settlement with Bank of America.
Under the terms of the settlement filed in U.S. District Court in Seattle, it may only resume foreclosures in Washington if it satisfies a long list of conditions imposed to protect borrowers.
Bank of America is one of five banks that -- after many, many months -- finally reached a deal with federal officials and 49 state attorneys general over its mortgage foreclosure practices.
The others include Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc. and Ally Financial Inc.
The settlement, reached in February, is worth $25 billion but only covers those mortgages held by the five banks, not Fannie Mae or Freddie Mac.
From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.