Foreclosure fight brings state Attorney General to North Delridge

Drivers and residents along 25th SW in North Delridge were doing a bit of a head-swivel this past hour, as a knot of camera- and microphone-wielding media clustered around a group of people including state Attorney General (and Republican candidate for governor) Rob McKenna. He was here to announce a lawsuit (see it here) against ReconTrust, a branch of Bank of America, for allegedly violating state law regarding foreclosures. The bungalow that served as a backdrop was chosen because its foreclosure involved ReconTrust; it’s now owned by Fannie Mae and up for sale, and the couple who used to own it – who fell on tough times when the husband was diagnosed with cancer – lives nearby.

(They were unable to attend the media briefing, but two homeowners from other areas of Puget Sound were brought in to tell their stories.) Here’s McKenna explaining what the suit is about:

As he explained, ReconTrust is a foreclosure trustee. In our state, foreclosures do not involve judges – they are non-judicial, and trustees are involved, though they are supposed to act, as the Attorney General’s news release says, “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.” McKenna expressed hope that this would be resolved quickly, as he believes bringing suit will “get (the company and its parent corporation)’s attention.” If you are facing foreclosure, the Attorney General’s Office has resource information here. Their news release (we’ll add it here when we get it as a linkable doc) also points out that Recon Trust’s site for which properties it’s selling locally – go here.

ADDED 12:10 PM: The official news release is now out:

Washington Attorney General Rob McKenna today 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.

The Attorney General’s Office announced the suit during a news conference held outside a foreclosed home in Seattle. McKenna and Sugarman were joined by two women whose homes were foreclosed by ReconTrust and several private attorneys who are also concerned about ReconTrust’s actions.

“My home is being foreclosed on. The situation has caused great pain for my son and myself,” said Myra Cole, a single mother from Spanaway who struggled to find employment after a layoff. Her loan servicer was reviewing her Spanaway home for a loan modification when ReconTrust sold the house at foreclosure.

“I couldn’t understand how this could have happened,” Cole continued. “I got the run-around. I just can’t believe that the company that’s supposed to be helping me is foreclosing on me. … We are trying to save our homes. We’re doing the steps they tell us. In the end, it’s all for nothing. It’s an injustice.”

Ruby Barrus told a similar story about the home where she and her husband live in Marysville. During a time of financial hardship, their loan servicer promised not to foreclose while they worked out a loan modification.

“Our payments were never late,” Barrus said, adding that they only stopped making payments because the bank indicated they needed to default to qualify for the modification. “We just figured they knew what they were doing because they were our servicer. … Months later, we get a letter from ReconTrust saying they’re our foreclosure attorneys. We had never heard of them.”

Both women are in court battles to keep their homes.

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.

The Attorney General’s Office alleges the company:

· Failed to maintain a physical office with telephone service in Washington.

· Failed to identify the actual owner of the promissory notes being foreclosed.

· Provided confusing information regarding how borrowers defaulted and how they can cure that default.

· Failed to conduct foreclosures in a public place, instead holding them at private sites including an office park in Bellevue.

· Created or permitted the use of documents that were improperly executed, notarized or sworn to. Sugarman said notices and agreements contained conflicting dates and improper notarizations and ReconTrust employees sometimes signed as officers of other entities.

· Failed to exercise its duty of good faith toward the borrower by deferring solely to the lender when deciding whether to postpone a foreclosure.

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. 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.”

The complaint asks that the court require ReconTrust to comply with the law and impose civil penalties of up to $2,000 per violation, as well as restitution for consumers.

Based on information obtained during its investigation, the Attorney General’s Office estimates that ReconTrust has issued 9,900 foreclosure notices since January 2008 in King, Pierce and Snohomish counties alone. ReconTrust forecloses across the state. It’s unknown how many of those foreclosures violated homeowner rights, although the Attorney General’s Office believes the problems are systematic and widespread. It’s also unknown how many foreclosures may have been prevented had ReconTrust complied with laws.

In May 2010, the Attorney General’s Consumer Protection Division began investigating reports of lenders and trustee services not properly reviewing foreclosure documents or following other legal procedures. McKenna sent letters in October 2010 and April 2011, outlining concerns and calling on trustees to suspend questionable foreclosures in the state. The office is investigating more than a dozen other trustees for suspected violations.

The office also remains very involved with the multistate investigation into problems in the foreclosure industry.

12 Replies to "Foreclosure fight brings state Attorney General to North Delridge"

  • TripleEEE August 5, 2011 (11:17 am)

    Glad to see McKenna is going after these guys, talk about a conflict of interest. They’re totally owned by Bank of America, guess whose side they’re on? Certainly not the homeowner’s.

  • Fiwa Jcbbb August 5, 2011 (1:45 pm)

    Wow, a Republican attorney general going after a big Republican contributing corporation…how does that make the rich richer? He must be running for something…bet he won’t do anything like that if he wins.

  • OP August 5, 2011 (3:10 pm)

    Fiwa: Oops, McKenna doesn’t fit into your juvenile liberal stereotype of Republicans, now what are you going to do? No, he probably won’t file a lawsuit if wins the governor’s seat; that’s the AG’s job. Geezus, a GOPer does something good, which happens A LOT more than you think it does, and all you can do is carp about it. Fail.

  • 4thGenWestSide August 5, 2011 (4:43 pm)

    Hey McKenna,

    Where were you before election season? The last time you did anything proactive or productive was, oh yeah, before last election season. You are a douche.

  • I heart Delridge August 5, 2011 (6:14 pm)

    I am curious how many properties are under foreclosure in Delridge as compared to the rest of West Seattle and the rest of the city. There are a lot of people down and out around here, losing jobs, unable to pay mortgages. It’s hard to see.

    Thanks for this coverage WSB, I hope there is more cracking down on unscrupulous businesses like ReconTrust who take advantage of people in a weakened state.

    • WSB August 5, 2011 (6:20 pm)

      I browsed the King County link just for this one trustee … and saw several in eastern West Seattle … but also in the west, like a condo in the 4100 block of Beach Drive. Hits all over. You just don’t always see those “Foreclosure Sale” signs pop up – some of these things are very quiet, like the Shoremont Apartments that are now being renovated on Alki, which were bought by a firm to design/build a big modern development a few years back, then wound up being bank/federally owned, now owned by an area investor who’s fixing them up instead of tearing them down … TR

  • cj August 5, 2011 (9:37 pm)

    I don’t believe a word of this helping out is real, but hay that’s one way to get footage for an upcoming campaign. Its a bit confusing as to who owned/controlled what when, especially where Fannie Mae is involved.

  • OP August 6, 2011 (12:43 am)

    4thGenWestSide: He’s been one of our best AGs for quite some time. Why don’t you look up his record before making your empty and thoughtless accusations.

  • MAH August 6, 2011 (9:23 am)

    As a private attorney who was there at the press conference and who has been dealing with these issues for years, I can say that this WILL make a difference in my cases and those of others. Our AG’s office, since at least 2000 when it was in the hands of a Democrat, has done a great job on predatory lending, foreclosure rescue scams and problematic foreclosing trustee issues. They have only a very few staff members and attorneys and they are nevertheless always one of the leaders in larger nationwide actions and extremely supportive of dealing with them here in WA, including supporting changes to legislation. That is partially attributable to the two AGs, but it is more a testament to the people who aren’t the elected officials. They have staff and attorneys who have doing the heavy lifting for years without public praise. So before spouting off, consider the evidence on this topic. You might not like McKenna’s other politics and that’s ok, but he has done a great job on consumer issues – better than any other AG in the country except maybe NY, CA and IL, and they have massively bigger staffs and lots more money. This case is very significant for WA state and for other nonjudicial foreclosure states. Every WA citizen that doesn’t stand up and cheer for our AG’s office for this case and their work on the multistate action related to servicing should be ashamed of themselves. They did a good job of demanding that a national corporation comply with our state laws yesterday and very few AGs are bothering to make those same kinds of arguments – not even CA which has very similar foreclosure laws. Now they just need to file more of these.

  • G August 6, 2011 (9:47 am)

    Some can’t pass up the up the opportunity turn a good deed by a Republican into a cynical caper to grab media attention.

    I’m voting for you, Rob.

  • miws August 6, 2011 (11:06 am)

    Once this case makes its way though the courts, if ReconTrust is found guilty, I hope all parties involved in this on their behalf up to and including top execs, are held accountable and see some lengthy prison time.



  • Breal August 10, 2011 (3:27 pm)

    Mr McKenna, you have my vote. I have no quarrel with companies making profits…even huge profits. I do have a problem with companies who feel they’re to big to follow state laws because it’s more expedient.

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