Antitrust Law Daily Wrap Up, RICO—E.D. Tex.: Bank of America dodges claims it illegally securitized homeowners’ mortgage, (Oct 3, 2014)

By Greg Hammond, J.D.

Homeowners were unable to state valid Racketeer Influenced and Corrupt Organizations Act (RICO) claims against Bank of America, arising from the bank’s allegedly illegal securitization of the homeowners’ mortgage. In dismissing the complaint with prejudice, the federal district court in Sherman, Texas, determined that there were no facts that gave rise to “any cognizable claims recognized by this Circuit” (Wolf v. Bank of America, N.A., September 30, 2014, Bush, D.).

Marcia A. Wolf and Richard B. Wolf filed suit against Bank of America and other defendants, challenging the handling of their mortgage loan modification for their property in Plano, Texas. The Wolfs alleged—in part—that Bank of America illegally securitized their mortgage, in violation of RICO. Further, they argued that the securitization of their loan separated the “wet ink” Promissory Note from the Deed of Trust, effectively nullifying the deed and rendering any collection on the loan unlawful. Bank of America moved to dismiss the complaint, arguing that the Wolfs failed to state a claim for relief under RICO.

RICO claim. To state a valid RICO claim, the Wolfs were required to allege facts demonstration: (1) a person who engages in (2) a pattern of racketeering activity, and (3) connected to the acquisition, establishment, conduct, or control of an enterprise. An enterprise, according to the court, is a group of persons or entities associating together for the common purpose of engaging in a course of conduct.

The court concluded that the Wolfs failed to show standing to assert their RICO claim, and further failed to allege any facts demonstrating an enterprise of individuals associated in fact with Bank of America. Further, because the challenges to the securitization of the Promissory Note and “wet ink” copy of the Note failed—as there is no legal authority holding that the securitization of debt renders the Note and Deed of Trust unenforceable—the RICO claims were dismissed with prejudice.

The case number is 4:13CV212.

Attorneys: Nathan Templeton Anderson (McGlinchey Stafford, PLLC) for Bank of America, NA.

Companies: Bank of America, NA

Cases: RICO TexasNews