NEW YORK — The attorney general for the state of Utah sent Bank of America Corp. Chief Executive Brian Moynihan a letter last week warning him one the bank's units was conducting illegal foreclosures in Utah.
Mark Shurtleff's letter to the bank executive, which is dated May 19 but released Wednesday by the attorney general's office, focuses on ReconTrust N.A., a unit of the bank that processes foreclosures and provides default services for other mortgage servicing companies.
The letter says the only valid trustees with the power of sale, and therefore able to foreclose, are members of the Utah state bar or title insurance companies. ReconTrust is registered instead as a national bank, which means its foreclosures are illegal, the letter says.
It requests Bank of America respond within 30 days with "how you intend to proceed" as the attorney general "intends to enforce Utah's statues."
"ReconTrust will continue to handle foreclosures in compliance with applicable laws," a spokeswoman said in a statement. "Bank of America makes every effort to reach out to delinquent customers to offer home retention options as well as foreclosure avoidance programs. Foreclosure is always our last resort."
Last fall, Bank of America found itself embroiled in the document issues that tripped up many mortgage servicing companies. The bank, the nation's largest by assets, halted foreclosures in all states. It eventually restarted foreclosing slowly, following internal reviews and after new practices were imposed.
After buying Countrywide Financial in 2008, the bank has found itself struggling to deal with mortgages, created in the housing boom, that continue to sour. It has been cutting back on originating new loans and pouring employees into a new unit meant to work with struggling home owners.
ReconTrust, which was a part of Countrywide, is in operation in 16 different states that don't require a judge to rule on the foreclosure. Its website says it provides "timely foreclosure and default solutions with exceptional levels of service" and adheres "to stringent regulatory requirements."
