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November 25, 2015

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Bank of America: Overturn order halting 8,900 Nevada foreclosures


Bloomberg News

A foreclosed home is shown in the Silverado neighborhood of Las Vegas.

Bank of America says a Nye County judge's order blocking foreclosures throughout Nevada by a subsidiary has halted progress on more than 8,900 foreclosures -- and it wants the order overturned.

The case involves Pahrump homeowner Suzanne A. North, who sued the bank Jan. 11 charging it and subsidiaries including ReconTrust Company N.A. have been fraudulently trying to foreclose on her home.

Nye County District Court Judge Robert Lane on Jan. 20 issued a temporary restraining order and preliminary injunction against ReconTrust, ordering it not to proceed with non-judicial foreclosures in Nevada on behalf of any lender at least until a Feb. 28 hearing.

An attorney for Bank of America moved the case to federal court in Las Vegas this week and complained in a court filing Thursday that Lane's order was improper as it was issued without notice to ReconTrust and that North will ultimately fail in her lawsuit since Bank of America and ReconTrust have complied with Nevada foreclosure laws.

"The order has created enormous upheaval and confusion in the foreclosure process across Nevada and immediate review is required," said the bank's motion asking for an emergency order to dissolve Lane's order or to at least modify it so it applies to North's loan only -- not the thousands of other loans ReconTrust Company is foreclosing on in the state. "ReconTrust is trustee on thousands of loans that are in some stage of foreclosure and approximately 8,920 of such loans have already been directly affected by this injunction."

Besides that, the bank said, the order has brought to a halt all mediations under the Nevada Foreclosure Mediation Program involving ReconTrust, B of A said.

While North complained that ReconTrust filed foreclosure papers at a time when it was not the trustee, Bank of America said in Thursday's filing that ReconTrust -- a B of A subsidiary -- was acting as its agent and that procedure has been found in other cases to be proper.

"ReconTrust ... filed the notice of default not as the trustee, but rather as the agent for the beneficiary (Bank of America), pursuant to," Nevada law, the bank's filing said.

"Courts have repeatedly rejected challenges to a notice of default on the grounds that a party was substituted as trustee after it issued the notice of default when the party substituted as trustee filed the notice of default as an agent of the beneficiary, not as the trustee," the filing said.

Bank of America also disputed claims by North that ReconTrust must be licensed in Pahrump and with the state of Nevada to execute foreclosures, saying that as a national bank it's exempted from such licensing rules.

In seeking to overturn Lane's order, the bank argued:

"The cost associated with delaying one foreclosure is severe, but when multiplied by the thousands of foreclosures in Nevada that cost is enormous. In addition, (the Bank of America) defendants have contractual obligations to investors and other obligations to regulators to conduct foreclosure proceedings," the bank's filing said.

"The harm caused to the public interest is overwhelming. Treasury Secretary Tim Geithner opined that ceasing the foreclosure process is `very damaging' and harms the public as communities are forced to live longer with empty homes, there is increased downward pressure on home prices and increasing blight," the bank argued. "The order also harms those subject to the foreclosure process because those individuals, especially those in mediation trying to stay in their homes, are now forced into a state of limbo for an unspecified duration."

Bank of America and its subsidiaries are represented in the litigation by Las Vegas attorney Ariel Stern of the law firm Akerman Senterfitt LLP.

It's unclear when the federal court may rule on its motion.

North, who initially represented herself in the case, is now working with St. George, Utah, attorney John Christian Barlow, who couldn't immediately be reached for comment.

Barlow told Bloomberg News he will seek class-action status for the lawsuit to represent other homeowners facing foreclosure by ReconTrust.

"If a company’s going to foreclose, they’ve got to do it right," he told Bloomberg.

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