Clients subject to nonjudicial foreclosures in Hawaii before the foreclosure laws changed felt violated often. The process moved too quickly with chaotic loan modification negotiations. It was a process full of surprises and many of them did not work in the homeowners’ favor.
Attorneys statewide fought and lost cases trying to convince courts to see that nonjudicial foreclosures in Hawaii were conducted illegally. At first, both state and federal judges in Hawaii turned a deaf ear to homeowner complaints and determined that if homeowners owed money and could not pay it, there were never damages awarded to the homeowner if the foreclosure and modification process was not perfect. The logic was if they could not pay the amounts owed, it was a no harm no foul situation.
Hawaii courts also ruled that homeowners had no standing to challenge the legality of robo-signed assignments and faulty securitization of their loans. It did not matter if the lender even owned or held the note they were foreclosing on. Homeowners had no private right of action under HAMP, US Treasury Consent Decrees, and other laws and orders that the big national banks such as Bank of America (including BAC and Countrywide), JP Morgan Chase, US Bank, Wells Fargo, and HSBC. They all knowingly and admittedly violated in their pursuit of foreclosure and alienation of thousands of Hawaii residents from their homes in the past ten years.
Because the Hawaii state and federal courts have by and large been hostile to the claims of fraud and wrongdoing by homeowners thus far, the law office of Paul J. Sulla, Jr., Attorney at Law, often focuses on gaining a decent loan modification and loan reinstatement for clients despite the obvious fact that wrongdoing DID occur and the banks, during the foreclosure crisis, were by and large found over and over again to be bad actors nationwide.
However, a new line of cases in Hawaii may finally find that the nonjudicial foreclosure procedure used by many of the big banks and law firms here was procedurally deficient and thus the nonjudicial foreclosure auction conducted is actually void as a matter of Hawaiian law. In other words, thousands of Hawaiian property owners may still own their foreclosed homes!
In the past few weeks, there is renewed hope in the form of several cases currently pending before the Ninth Circuit Court of Appeal and the Hawaii Supreme Court. Judge Derrick K. Watson of the U.S. District Court of Hawaii has so far ordered a stay of at least three wrongful foreclosure cases pending the Ninth Circuit appeals ruling in the following:
- Gibo v. U.S. Bank National Association et al., No. 1:12-cv-00514-SOM-RLP (on appeal to Ninth Circuit No. 13-16092);
- Lima v. Deutsche Bank National Trust Company et al., No. 1:12-cv-00509-SOM-RLP (on appeal to Ninth Circuit No. 13-16091);
- Bald v. Wells Fargo Bank, N.A. et al., No. 1:13-cv-00135-SOM-KSC (on appeal to Ninth Circuit No. 13-16622);
- Lowther v. U.S. Bank N.A. et al, No. 1:13-cv-00235-LEK-BMK (on appeal to Ninth Circuit No. 14-16345);
- Lizza v. Deutsche Bank National Trust Company et al, No. 1:13-cv-00190-HG-BMK (on appeal to Ninth Circuit No. 14-16483); and
- Sigwart v. U.S. Bank National Association et al., No. 1:13-cv-00529-LEK-RLP (on appeal to Ninth Circuit No. 14-16346).
State court judges are beginning to follow suit, with two pending cases with the same or similar arguments regarding the procedural problems with the foreclosure process used by attorneys Derek Wong, RCO Hawaii, and the Law Office of David Rosen. These appeals include:
- Ilar v. Lava Rock Properties LLC et al., pending in Hawaii state court, No. 11-1-003091; and
- Sigwart v. Rosen, Hawaii state court, No. 13-1-002097 (appeal to Hawaii Supreme Court pending).
While all wrongful foreclosure cases have minor procedural and substantive differences, the same core legal theory often applies. All of the above cases allege that mortgage servicers engages in deceptive practices, failed to comply with Hawaii Revised Statutes (“H.R.S.”) § 667-5, and violated the terms of the foreclosure sale by causing properties foreclosed non-judicially to sell at public auctions after postponing sales without re-publishing the new sale date in the same manner the first sale date had been published.
Because Hawaii’s foreclosure statute requires strict compliance, if the Appeals Courts finds that Hawaii law actually requires a re-publication of postponed foreclosure auction dates, then thousands of foreclosures conducted in the past decade in Hawaii will be invalidated.
This firm represented hundreds of clients with the same stories about surprise foreclosures and unscrupulous practices by servicers and bank counsel during the foreclosure process. It is remarkable that most foreclosures in Hawaii are supported by strikingly similar Affidavits of Foreclosure by RCO and attorneys Derek Wong and David Rosen. However, decorated Honolulu attorney James Bickerton, lead counsel in most of the above cases, has found that these very Affidavits of Foreclosure are the most suspect.
For those of you still in possession of your homes but facing ejectment from a nonjudicial foreclosure that was initially postponed, you should contact an attorney immediately. Hawaii judges should not rush to dispossess residents from their homes if there exists any doubt as to the legality of the foreclosure sale that precipitated eviction in the first place!
Ironically, in cases where the former homeowner is not still in possession of their foreclosed homes, the big banks are asking the court to stay the homeowner lawsuits pending these appeals. However, in the cases where the homeowner retains possession, the big banks are ignoring the effect of the pending appeals. Allowing the foreclosed homeowners to remain in their homes while the issue of whether or not the foreclosure was legal is still on appeal, makes sense. It prevents a potential wrongful dispossession and associated damages and allows the occupant to continue maintenance of the property rather than exist in limbo and contribute to the glut of post-foreclosure unoccupied properties causing community blight.
It is prudent for Hawaii Courts to give the appeals courts time to resolve the most fundamental question: whether or not the foreclosure conducted was legal or whether it is void as a matter of law. If thousands of the Hawaii foreclosures are ultimately found to be void, it will be an amazing, hard-fought, and long-awaited victory for the people of Hawaii.