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A Washington couple who haven't made mortgage payments on their home since December of 2008 can't be evicted because they were improperly foreclosed on by Bank of America, a state judge has ruled.
Fifth District Court Judge Jeffrey Wilcox ruled that because Bank of America's foreclosure arm, ReconTrust, did not follow state law in foreclosing on Samuel and Courtney Adamson, they could not be evicted despite their lack of mortgage and tax payments.
The decision further roils the legal waters in Utah where Bank of America has been fighting numerous lawsuits over whether it violated Utah law in foreclosing on thousands of homes during the real estate market meltdown that began in 2007.
ReconTrust sold the Adamsons' house at a foreclosure sale in January 2010 to another subsidiary of Bank of America but the couple refused to leave and kept trying to negotiate a new mortgage, according to their attorney, Christian Barlow.
That bank subsidiary eventually transferred the house title to a San Diego company called Distressed Asset Solutions Fund I, which then sued to evict the Adamsons.
The couple fought back, saying they shouldn't be evicted because the original foreclosure sale was void. Under state law, only a Utah attorney or title company can carry out a foreclosure and ReconTrust violated that statute when it sold their home using its own personnel, Barlow argued.
Bank of America has been claiming that U.S. bank laws allow ReconTrust to operate under the laws of Texas, where it has its headquarters, even when foreclosing in Utah.
Last year, the Utah Supreme Court ruled that Utah laws and not those of another state govern foreclosures here, a decision Bank of America is attempting to appeal to the U.S. Supreme Court. Different federal judges in other cases have ruled on both sides of the issue and the 10th Circuit Court of Appeals has yet to issue a definitive ruling.
In the meantime, Wilcox's decision in the Adamson case extends the Utah Supreme Court ruling in what's known as the Sundquist case by declaring a foreclosure sale void if it doesn't comply with Utah law.
"This is the first case where the judge took Sundquist and took the next step," said Barlow, a St. George attorney.
Scott Lundberg, a Salt Lake City lawyer whose firm represented the Distressed Asset Solutions Fund I, said his clients had not made a final decision on whether to appeal.
Which state law governs foreclosures was at issue when then-Attorney General Mark Shurtleff personally dismissed a federal court lawsuit in December of 2012 against Bank of America that attorneys in his office felt was their best case to uphold the Utah law.
Among 10 criminal charges Shurtleff now faces is one for "Accepting Employment That Would Impair Judgment," stemming from a job he received a short time after he dismissed the lawsuit from a law firm that has Bank of America as a major client.