Foreclosure fight, potential class action lawsuit?

Foreclosure

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Everybody knows the rules. Skip your mortgage and you could face foreclosure. But what about when the banks themselves are accused of skipping some of their duties?

Thousands of people are thought to be potentially affected by banking practices that appear headed toward class action lawsuits in Hawaii.

A recently settled case could influence the outcome.

A widow, Margery Kekauoha-Alisa, has ended a years-long foreclosure battle that led to bankruptcy. She thought the Hawaii Belt Road home she had owned on the Big Island with her now deceased husband was gone.

The case record shows they had missed their mortgage eight times. The bank had to foreclose.

That was 2005 and she wasn’t alone. Banks were taking homes en masse.

“Just looking at the four largest ones, we’ve calculated that just between them they took about 4,000 homes in this method in Hawaii alone, just in this state,” attorney Jim Bickerton said.

They had a right to do it, right there in black and white in the mortgage. Can’t pay your bills? The bank is going to sell your home.

By the same token, the bank promised to sell it according to law and for a fair price. And that’s what the banks weren’t doing.

“For example in Mrs. Kekauoha’s case the bank didn’t tell anyone when the auction was going to be. So how is she ever going to get a fair price for her home?” Bickerton said.

That led to a long and costly case for Kekauoha-Alisa against Ameriquest and JP Morgan Chase that was settled last week in U.S. bankruptcy court.

According to case records, a local law firm assistant who was supposed to postpone a foreclosure auction for Ameriquest did not. In the settlement last week, Ameriquest agreed to pay Kekauoha $675,000, and she gets the house back free and clear.  Kekauoha-Alisa had bought the house for $147,606 in 2005, and now the home is worth $203,300.

Does this case set a precedent for others who lost or may lose their homes to foreclosure?

“It’s a settled case so it doesn’t set a binding precedent. But it does give some guidance to people in other cases,” replied Bickerton.

Cases like those pending in Hawaii against four banks; Wells Fargo, Bank of America, Deutsche Bank, and U.S. Bank.

What are some of the other ways the banks allegedly caused harm to people?

“They bait and switch and get the auctions to run the way they want them to,” responded Bickerton. “The whole idea of a foreclosure auction it’s a knockdown price, it’s very cheap, the bank doesn’t want to let it go that cheap.”

Attorneys say there could be a class action here with potentially several thousand people in Hawaii.

Attorneys for Ameriquest settlement and for the other pending cases did not yet respond to calls for comment.

“The local banks aren’t involved in this. All of these practices came out of the system where loans were bought in bundles. Packaged and resold on the mainland. One mainland bank allegedly sold foreclosed houses for $10 million more by scooping them up themselves at poorly-attended auctions, then selling on the private market,” Bickerton said.

A person’s home is their castle, it’s not the bank’s castle.

“If you’re going to mess around with that, you better be prepared to pay some big damages if you’re called out,” Bickerton said.

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