Monday, August 13, 2012

Five Hawaii Suits Charge Banksters, Foreclosure Mills Of Illegally Depressing Prices At Foreclosure Sales

In Honolulu, Hawaii, the Honolulu Star Advertiser reports:

  • Hundreds of Hawaii residents should have received higher prices for their properties sold through nonjudicial foreclosure auctions during the past four years, according to lawsuits recently filed on behalf of borrowers who allege unfair and deceptive practices by four major banks.

    A fifth lawsuit alleges that a Washington law firm, Routh Crabtree Olsen (RCO), and others that assisted in the auctions committed multiple violations of the state nonjudicial foreclosure laws during those years and interfered with the residents getting the highest price for their properties.
  • The amount of losses for the residents in the five suits totals in the millions of dollars, their lawyers said. The lawsuits are fallouts from the state nonjudicial foreclosure system aimed at allowing lenders a quicker, less costly alternative to foreclosures handled by state courts.

    The suits against the banks, however, allege a widespread practice that they advertised and conducted nonjudicial foreclosure auctions for quitclaim deeds but provided the winning bidders more valuable limited warranty deeds.

    The banks allegedly advertised auctions for quitclaim deeds, which means the properties are sold "as is" and clear title is not guaranteed. The winning bidders, however, received limited warranty deeds, which are considered more valuable and help ensure fee-simple title, according to the suits.

    The practice of advertising quitclaim auctions discouraged bidders, lowered the amount of winning bids and left the borrowers with higher deficits, the suits said.

    "Shame on them," said Barabara-Ann Delizo-Lima, whose Pearl City high-rise apartment went through a nonjudicial foreclosure auction in 2009. "We could have been in a better place if they did their job." Her lawyers estimate she and her husband would have gotten at least $50,000 more if the sale had been for a limited warranty deed. "It's like they came to my house and took money away from my wallet," husband Lionel Lima Jr. said.

    The couple are the named plaintiffs in a lawsuit against Deutsche Bank National Trust Co. It seeks certification as a class action suit to represent hundreds of other borrowers whose property went through nonjudicial foreclosure by the bank.

    Three similar lawsuits were filed against Bank of America, U.S. Bank N.A. and Wells Fargo Bank N.A. The fifth suit alleges RCO and other plaintiffs who assisted in the auctions also violated the unfair and deceptive practices law as well as the nonjudicial foreclosure law.
  • The five lawsuits are limited to nonjudicial foreclosure sales dating four years from the filing of the complaints from May to July because of the four-year statute of limitations.

    The five suits seek millions of dollars in damages, which, if the residents prevail, would be tripled under the state's unfair and deceptive practices law.
For more, see Borrowers lost out to banks, suits say (Homeowners should have seen their properties sold for higher prices, according to the plaintiffs' court filings).

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