In the News
Utah's attorney general revived a potential billion-dollar battle with Bank of America Corp. over foreclosure practices after two of his predecessors were charged with corruption for abandoning the fight.
The lawsuit is deja vu for U.S. District Judge Bruce Jenkins, who last week allowed Utah Attorney General Sean Reyes to join a homeowner's case accusing Bank of America unit ReconTrust Co. of illegally foreclosing on Utahans' homes.
Jenkins expressed puzzlement when outgoing Attorney General Mark Shurtleff bowed out of a similar case two years ago, just months after the judge ruled the suit could head to trial.
Last year, prosecutors provided an explanation: They charged Shurtleff and a deputy elected to succeed him, John Swallow, in a wide-ranging bribery case.
The allegations included charges that they did illicit favors for several businessmen. The two officials allegedly dropped the state's case against ReconTrust after a homeowner who sued got a mortgage modification. The man had previously contributed to Swallow's election campaign, prosecutors said.
Shurtleff and Swallow have pleaded not guilty.
The homeowner lawsuit Reyes is joining is based on the "same set of facts" as the one Shurtleff dropped, said Tyler Ayres, an attorney for the plaintiff. Ayres said he estimates ReconTrust illegally foreclosed on at least 8,000 homes worth on average of $250,000, meaning damages may total as much as $2 billion.
He didn't provide details on how he came by the total. Charlotte, N.C.-based Bank of America says Ayres' damages estimate is overblown, arguing that the case will affect only 3,000 to 4,000 homeowners.
The lawyer's "astronomical damages claim is absurd, without a basis in the law, and has never been brought up in the litigation proceedings," the bank said in a statement last week.
Ayres said that when one of Reyes's deputies contacted him to discuss joining forces, the state lawyer "wasn't happy" about Shurtleff's decision to pull out of the earlier case.
Ayres said he filed his lawsuit after the Utah Supreme Court ruled that ReconTrust broke state law when it failed to use either a title company or a Utah-licensed lawyer to foreclose on homes.
"This happened thousands upon thousands of times," said Ayres, who's seeking to bring the case as a class action. ReconTrust "had no right to take those homes."
ReconTrust argued Utah's statutes are trumped by federal law, which authorizes the company to "exercise the power of sale for