Bringing back the image of the lone Chinese student facing off against government tanks at Tiananmen Square, one Utah homeowner was single-handedly holding up almost 1,000 foreclosures until recently.
But a June 10 court decision re-opened the door for one a St. George, Utah, secretary's foreclosure, unless an appeal gets both the homeowner and the defendant, Bank of America (Stock Quote: BAC), back to square one.
Here’s the back story.
Back in May, Salt Lake City Fifth District Judge James Shumate granted an injunction requested by lawyers for Peni Cox, a homeowner whose house had entered into foreclosure after her hours were cut at her local secretarial job. The injunction stopped Bank of America and its wholly-owned subsidiary ReconTrust from proceeding with any foreclosures in the state of Utah.
Cox’s attorney, J. Christian Barlow, had contended that Bank of America didn’t have legal recourse in foreclosing on homes in Utah because its ReconTrust subsidiary was not registered with the state’s commerce office.
Bank of America immediately sought out a higher court to reverse the decision, claiming the decision had caused “significant harm” to the company (ReconTrust has about 970 properties in foreclosure proceedings in Utah).
In a ruling earlier this week, a U.S. District Court Judge gave Bank of America what it wanted — dissolving the earlier court order in favor of Cox, and allowing ReconTrust to go forward with statewide foreclosures.
Apparently, District Court judge Craig Waddoups was persuaded by bank lawyers that, as a federally charted national bank under the National Bank Act, it didn’t need to seek permission to sign up with the state of Utah. Furthermore, Bank of America contended it was not the original issuer of the home loan to Cox (the initial loan was underwritten by Salt Lake City-based New Line Mortgage). An attorney for the bank told Waddoups that the loan was currently being serviced by Fannie Mae (Stock Quote: FNM), and that he wasn’t sure how the loan was ever traced back to Bank of America (although some media reports have Bank of America servicing the loan at one point).