David and Tammara Robinson of Ivins Utah arrived home Monday to find a Notice of Sale posted by ReconTrust Company on their door stating their home would be sold on November 9, 2010 at foreclosure auction. Robinson’s attorney John Christian Barlow told KCSG News, “This action only demonstrates the great lengths Bank of America will go to cover up its fraudulent activity in the mortgage industry. The bank is desperate to foreclose on homes because once it's foreclosed the evidence of wrongdoing is gone," he said.
The Robinson's saga is typical of many homeowners whose loans are serviced by Bank of America. The Robinsons built their dream home in 2002. After a series of loan transfers their home loan finally landed with Countrywide Home Loans which went bankrupt and was acquired in a $4.1 billion dollar stock transaction completed July 1, 2008.
In 2008 when the economy tanked, the Robinson's income decreased. Eventually, they were able to make up the payments and had nearly caught up their mortgage. However, upon submitting a substantial payment to bring their mortgage current, Bank of America rejected the payment. When the Robinsons called Bank of America to find out why, they were told that the home was in active foreclosure and the bank would not accept the payment.
The Robinsons had previously attempted to obtain a modification of their mortgage, but the Bank of America denied any modification even though the Robinsons met the criteria for a loan modification. “The Robinsons have the ability to make the mortgage payments on their home," said Barlow, "but the bank doesn't want the money, they want the home.
KCSG News asked Barlow to explain, "Starting in about 1997 with the emergence of Mortgage Electronic Registration Systems (MERS), the Bank of America began to securitize mortgage loans called Mortgage Backed Securities (MBS)," he said. "Securities (mortgages) were bundled together and sold into trusts. Investors who purchased heavily in the MBS trusts were teachers unions, police officer, and fireman’s retirement funds. Often, the mortgages were removed from the original trust and placed in another trust and resold," Barlow continued.
"Upon default of the mortgage, a trust would receive the mortgage insurance, and in most cases there were multiple insurance policies taken out on the mortgage, enabling the trust to collect many times over the value of the home," Barlow said. "Most investors in the trust were not aware of what was happening and did not receive the default mortgage insurance funds," he said. "The trusts that usually benefitted from the default insurance proceeds were owned by Chinese banks, such as HSBC Bank, The Hong Kong and Shanghai Banking Corporation, to name a few,” Barlow stated.
As the servicer of these default mortgages, Bank of America was free to foreclose on the home and retain the proceeds from foreclosure sale of the home as payment for facilitating the fraud.
“Bank of America wants you to believe that it has stopped foreclosures to avoid any opposition since the average homeowner likely wouldn't know that their home is being sold," said Barlow. "If there has been notice of the sale posted, likely no other notices will be posted to alert unsuspecting homeowners to the impending loss of their home,” cautioned Barlow.
"Homeowners have been calling on deaf ears. Utah lawmakers and those empowered to stop the fraudulent activities of national banks are doing nothing to enforce the rights of the state and protect its citizens," said Barlow. "And, if the loss of 'citizen's due process rights' isn't enough," he added, "the state and county governments have lost millions by not enforcing laws requiring the recording of an interest in real property."
Barlow should know. The Willamette law school grad holds an MBA degree from Loyola-Chicago and is a sole practitioner in a "David & Goliath" showdown with the ReconTrust Company, a subsidiary of Bank of America. He and co-counsel E. Craig Smay represent Peni Cox vs. ReconTrust, a case still before Utah District federal Judge Clark Waddoups after a rehearing August 31, 2010 over Cox's petition asking the Court to remand the case to state court and reinstate an injunction halting Bank of America foreclosures in Utah. The case has also been appealed to the Tenth Circuit Court in Denver. The Appeals Court has delayed action on the case until Judge Waddoups makes his ruling.
“It's a fierce battle between attorneys who fight for the due process rights of homeowners and the bank legal teams hired to steal the due process rights of homeowners," Barlow said.
According to the ReconTrust Company website, there are 1218 Utah homeowners in foreclosure this month and 244 Utah homes have already been foreclosed.