September 19, 2012
Those who have followed recent foreclosure history in Hawai’i know of the prior enactment of what is known as “Act 48”, which mandated that foreclosures be instituted judicially. This legislation was a reaction to the rampant fraud and irregularities filed in non-judicial foreclosures. Although Act 48 technically expired in July of 2012, the present non-judicial foreclosure statute requires that before the institution of a non-judicial foreclosure, the foreclosing party must apply to the Department of Commerce and Concumer Affaird (DCCA) of the State of Hawai’i and pay a fee for permission to file a nonjudicial foreclosure. Part of this process requires proof that there was a face-to-face meeting with the homeowner in an attempt to resolve the claim, and that all alternatives to foreclosure (e.g. loan modification) were discussed during a Dispute Resolution Program.
If the meeting was held and there was no resolution, the homeowner can convert any non-judicial foreclosure to a judicial foreclosure. Given that protection, there have been almost no non-judicial foreclosure filings, with the foreclosing parties simply electing to institute judicial foreclosures.
Further, Act 182, which became effective June 28, 2012 (and is retroactive), requires a personal Affirmation from an attorney in the form of an Affidavit that the attorneys signs that he personally reviewed the documents which grant standing upon his client in any judicial foreclosure action. The Affidavit, which must be filed in all judicial foreclosures before or at the summary judgment stage, is subject to the following statutory language:
During and after August 2010, numerous and widespread insufficiencies in foreclosure filings in various courts around the nation were reported by major mortgage lenders and other authorities, including failure to review documents and files to establish standing and other foreclosure requisites; filing of notarized affidavits that falsely attest to such review and to other critical facts in the foreclosure process, and “robosignature” of documents. Based upon my communication with (employee of the bank), as well as upon my own inspection and other reasonable inquiry under the circumstances, I affirm that, to the best of my knowledge, information, and belief, the Summons, Complaint, and other papers filed or submitted to the Court in this matter contain no false statements of fact or law and that plaintiff has the legal standing to bring this foreclosure action. I understand my continuing obligation to amend this Affirmation in light of newly discovered material facts following its filing. I am aware of my obligations under the Hawaii Rules of Processional Conduct.
New Jersey enacted similar amendments to its judicial foreclosure processes last year (which were reported on this website) which require the filing of a Certification (a type of Affidavit) that the attorney personally spoke to an identified person who is a representative of the foreclosing Plaintiff as to the accuracy of the information in the foreclosure Complaint, etc. Now that Courts from NJ and HI are apparently thinking the same way, we hope this will spread to all jurisdictions between these two.
Judicial foreclosures are inherently fairer and afford the proper due process. The non-judicial procedure essentially presumes that a homeowner is guilty from the getgo, and the homeowner has to (a) file an action in court with supporting Affidavit; (b) seek as Temporary Restraining Order against a foreclosure sale; (c) obtain a Preliminary Injunction prohibiting any sale during the pendancy of the foreclosure challenge; and, in certain instances (d) post a bond in order to obtain this protection. Thus, not only does the homeowner have to undertake significant legal proceedings in order to be afforded the right to assert defenses, but has to pay significant sums of money to exercise their rights as well.
The judicial process, alternatively (and correctly) requires the foreclosing party to prove its case first, just as all other types of civil cases do, before relief can be obtained. In a judicial foreclosure, there can be no sale date until the case results in a Final Judgment in favor of the foreclosing party, and there is no bond requirement to stop any sale during the litigation, as the property cannot be sold unless and until the foreclosing party proves that it has the right to do so. During the litigation, the homeowner also has the benefit of the discovery process.
From litigating foreclosure cases across the United States since 2008, it has become abundantly clear to us that the nonjudicial foreclosure process should be abandoned and abrogated, as it is essentially unconstitutional. By forcing a homeowner to pay for the right to defend themself, and forcing them to engage in a costly and intensive legal proceeding just to halt the sale of their home when the foreclosing party does not even have to prove that it has the right to foreclose, the process denies numerous fundamental rights, and utilizes a procedure which is not used in any other type of civil litigation. There is no justifiable reason why a foreclosing party, who is seeking to take someone’s home away, should not be forced to prove their case first, and rather to have the ability to foreclosue simply by filing a few pieces of paper in the public records (a Notice of Default, Notice of Substitution of Trustee, and Notice of Sale) without any of these documents ever being tested for validity, unless of course the homeowner goes through the expense of filing a lawsuit and forcing the issues.
It is obvious that the non-judicial system had bred corruption, the perpetration of fraudulent documents, and the rampant stealing of homes without any court scrutiny. Enough is enough. The non-judicial foreclosure process has no place in the current mortgage market, which is rife with resales, multiple assignments, securitizations, and the like. The non-judicial process is a dinosaur, and should be declared extinct accordingly.
Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com