The Flipping Pad

Posted by Erika R. on Jun 16, 2010 7:24pm

There may be permanent help for homeowners in Utah who are facing foreclosure. A court order was issued by Judge James Shumate of St. George, Utah in May stopping all foreclosure proceedings in the state by Home Loans Serving LP, Recon Trust Company, Bank of America Corporation, and Bank of America FSB.

If the court order is allowed to become permanent, it will force mortgage companies that have loans in Utah to stick to the Utah laws that require lenders to register in the state and have an office where the homeowners who are facing foreclosure can negotiate with the lender in person. This is how state lawmakers intended for things to be, according to the Utah Code 57-1-21(1)(a)(i).

The lawsuit came about when a former Weber State University student who also earned his master’s degree in business and city management decided that Bank of America and other mortgage companies not following Utah state rules should have to just like everyone else.

He felt so strongly about the case, that he issued a preliminary injunction order to halt the foreclosure process. However, the attorneys for Bank of America acted quickly and filed to move the case to federal court. The case was moved to federal court in the 5^th District Court of Utah.

Since the law is so clear in Utah, the Judge found it easy to make his decision. And now, Bank of America and other big mortgage companies will have to be registered and have offices in the state of Utah to do business.

There was a second part to the motion that was filed. It claims that no one, not the lender or the defendant, has any remaining interest in the mortgage promissory note once it has been sold. Once the note has been bundled and sold with other notes, the note becomes unsecured. In Utah, this means that a person or entity holding the trust deed will suffer no default because only the note holder is entitled to payment. In essence, the security becomes worthless to anyone except the person who has the right to implement the responsibility and it cannot be foreclosed or enforced any other way.

Stopping the many foreclosures from happening in Utah should help much more in the state’s recovery efforts.