Burt Reynolds May Be A Victim Of Foreclosure Fraud

On Tuesday, as Bank of America CEO Brian Moynihan and Legacy Asset Chief Ron D. Sturzenegger sat high atop the Bank of America Tower in Charlotte, North Carolina, playing their rendition of Dueling Banjos,  Martin County Circuit Judge James McCann ruled against legendary actor Burt Reynolds in his foreclosure fight with Bank of America and allows Bank of America to foreclosure on Reynolds’ ocean side home in Hobe Sound.

Burt Reynolds’ attorney James Bonfiglio and two other attorneys failed to convince Judge McCann that the lawsuit should be dismissed because the wrong creditor filed the suit in 2012, after Merrill Lynch merged with Bank of America. Reynolds’ lawyers contended Bank of America lacked the legal standing required to sue Burt Reynolds for foreclosure.

If the press reports of James Bonfiglio’s arguments are accurate, it appears Bank of America does lack standing to foreclose on Reynolds. Unfortunately, it appears Bonfiglio and the other two attorneys representing Burt Reynolds may have inaccurately argued Reynolds’ case.

This tales goes back to 1994, Burt Reynolds had just broken up with Loni Anderson, CBS had just canceled Evening Shade and the Florida Citrus Growers fired him as their spokes person, Burt Reynolds needed some quick cash and refinanced his 12,500 square-foot ocean front home for $1.5 million with Merrill Lynch Credit Corporation (MLCC).

In May of 1996,  MLCC recorded a mortgage assignment dated 8/26/1994 assigning the mortgage to a Merrill Lynch Mortgage Backed Securities Trust named MLCC Sovereign/Subordinate Trust 1994-A which is a separate and independent company from MLCC. In 2001, Merrill Lynch filed another mortgage assignment assigning this loan to MLCC Sovereign/Subordinate Trust 1994-A (Trust).

In August of 2012, after nearly seven years of attempting to sell the property, Reynolds was served a Lis Pendens and foreclosure complaint from MLCC (now part of Bank of America) suing him for foreclosure claiming they were the owner of the mortgage and the note.

Bank of America’s allegations as a plaintiff push into the area of foreclosure fraud and this is where James Bonfiglio struck out. Bonfiglio argued that Merrill Lynch had to be the one who foreclosed. Unfortunately for Bonfiglio, “Operation of Law” applies here. This means that because Bank of America acquired the corporate entity of Merrill Lynch including Merrill Lynch’s assets and liabilities, Bank of America inherited legal standing to foreclose.

On 10/15/2013, over a year after Merrill Lynch filed the foreclosure lawsuit against Reynolds, MLCC/Bank of America filed a mortgage assignment assigning the mortgage from the Trust to Bank of America. If this is correct and if Merrill Lynch abided by the terms of the Trust, the Trust should be named as the Plaintiff in the foreclosure complaint not Merrill Lynch or Bank of America.

Burt Reynolds has several advantages in his fight with Bank of America. The first advantage is that Bank of America turned the migration of the tens of thousands of loans held by Merrill Lynch into a chaotic mess when they integrated the two systems.  If Bonfiglio presses Bank of America hard enough to see the original copy of the note that Bank of America alleges they have, they more then likely will not be able to produce it. The second advantage Reynolds’ has is his 1996 bankruptcy.

In most bankruptcies, the note gets extinguished so in a post bankruptcy foreclosure the lender can only foreclose on the mortgage.

If there is indeed a break in the chain of ownership in the mortgage, as MFI-Miami’s analysis would indicate, then the fat lady in the Viking hat has sung her final opera and the curtain will fall on Bank of America.