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August 06, 2011
Attorney General Files Suit Against Recontrust Company NA
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Attorney General Files Suit Against Recontrust Company NA
Posted by: Jason Anderson
August 06, 2011
Topic: Introduction
The Washington Attorney General filed a lawsuit against Recontrust Company NA on August 5, 2011. This lawsuit alleges that every foreclosure conducted by Recontrust since 2008 was conducted in violation of Washington law.
Recontrust Company, NA is a National Bank wholly owned by Bank of America NA and acts as a trustee for nonjudicial foreclosures requested by Bank of America NA and its related companies. Two things about this lawsuit pop out to me. The first is timing, and the second is the state of Washington's direct challenge to Bank of America's position that federal law preempts the Washington Deed of Trust Act.
A coalition of 50 state attorney generals is in ongoing negotiations with Bank of America regarding a global settlement of foreclosure fraud allegations. There are rumors that a settlement is close but nothing final. The filing of this lawsuit may serve to (1) ramp up the pressure on Bank of America to make a more favorable settlement, or (2) it may serve to preserve specific state law claims and insure that those state law claims are not included in the settlement. The attorney general did emphasize in his public appearance that Recontrust was not Bank of America and the lawsuit was not against Bank of America.
The principle legal issue raised by the Attorney General in the complaint was that Recontrust Company NA does not maintain an office in the state. Since 2008, Washington law has required every trustee to maintain a physical office in the state for service of process, to answer phone calls and to provide a physical location in the state for delivery of payments or other documents. Recontrust Company NA takes the position that the National Banking Act preempts this requirement and it is not required to maintain an office in the state.
I will share my thoughts on the legal merits of this position in the next blog post.
