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Washington Attorney General Accuses ReconTrust of Illegal Foreclosures

Washington Attorney General Rob McKenna and Assistant Attorney General Jim Sugarman have filed suit against ReconTrust Company, a subsidiary of Bank of America, for illegally foreclosing thousands of Washington homes.

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McKenna and Sugarman are requesting the court require ReconTrust to abide by state laws in addition to inflicting civil penalties of up to $2,000 per violation and restitution for affected homeowners.

According to Washington's Deed of Trust statute, trustees must have an office in the state so homeowners can make last-minute payments, ask questions, or request a postponement on foreclosures. ReconTrust does not have an office in the state of Washington.

Mckenna and Sugarman also allege that the company gave homeowners confusing information on how they defaulted and how they could cure their default.

They also maintain that ReconTrust did not identify the actual owner of the promissory notes and created and used improper documentation in the foreclosure process.

""ReconTrust ignored our warnings, repeatedly broke the law and refused to provide information requested during our investigation,"" McKenna said. ""ReconTrust's illegal

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practices make it difficult, if not impossible, for borrowers who might have a shot at saving their homes to stop those foreclosures.""

The attorney general's office estimates ReconTrust has foreclosed 9,900 homes in just three Washington counties and many more throughout the state.

McKenna and Sugarman - with two foreclosed homeowners and several private attorneys - announced the lawsuit against ReconTrust in a news conference held outside a foreclosed home in Seattle.

The two women present at the press conference are currently involved in lawsuits regarding the foreclosure of their homes.

Myra Cole says her servicer was reviewing her home for a loan modification when ReconTrust sold the house at foreclosure.

""I couldn't understand how this could have happened,"" Cole said. ""I got the run-around.""

Ruby Barrus states a similar claim. She says during a time of financial hardship, she turned to her servicer for a loan modification.

Barrus claims her servicer advised her to stop making payments because she needed to default in order to qualify for a modification. Prior to that, she said, ""Our payments were never late.""

""We just figured they knew what they were doing because they were our servicer,"" Barrus stated. ""Months later, we get a letter from ReconTrust saying they're our foreclosure attorneys. We had never heard of them.""

McKenna's office began investigating reports of illegal acts by lenders and servicers in May 2010. In October 2010 and April 2011, McKenna sent letters to lenders and servicers expressing concern and calling on trustees to abide by state laws.

ReconTrust is one of more than a dozen trustees McKenna suspects of violations.

About Author: Krista Franks Brock

Krista Franks Brock is a professional writer and editor who has covered the mortgage banking and default servicing sectors since 2011. Previously, she served as managing editor of DS News and Southern Distinction, a regional lifestyle publication. Her work has appeared in a variety of print and online publications, including Consumers Digest, Dallas Style and Design, DS News and DSNews.com, MReport and theMReport.com. She holds degrees in journalism and art from the University of Georgia.
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