Class Claims U.S. Bank Chilled Home Auctions
HONOLULU (CN) - U.S. Bank manipulated the market to suppress public participation, drive down the price of foreclosed real property at auction and defraud Hawaii homeowners, a class action claims in state court.
The 30-page lawsuit is a virtual "how to" manual on unfair foreclosure sales.
Lead plaintiff Nancy L. Manchester claims the defendants "chilled competitive bidding" by changing the location of advertised auctions without publishing a new notice;
changed auction dates with such frequency that most sale dates advertised were not the actual auction dates;
changed sale dates unilaterally and without publishing notices of the rescheduled actions' new dates and times;
advertised the auctions of properties by quitclaim deed when in fact all buyers other than defendants received limited warranty deeds;
included as a term of sale an unreasonable expectation that bidders were to close their sales within 30 days of their auctions;
and implied that a foreclosing mortgagee could render a sale illusory on a whim.
These practices, according to the complaint in the First Circuit Court, reduced the competition between U.S. Bank and bidders at nonjudicial auction, "allowing defendant U.S. Bank to purchase foreclosure properties cheaply on credit bid, with no or minimal competition from prospective third-party bidders, for later resale at higher prices," in violation of state law that says a mortgagee exercising a power of sale must act as the "attorney of agent" of the mortgagor.
Manchester sued U.S. Bank, acting as mortgagee exercising a power of sale; Routh Crabtree Olsen P.S., a professional service corporation that provides legal representation on foreclosing mortgagees; Crabtree's company RCO Hawaii LLLC; and Derek Wong, a Hawaii-licensed attorney.
Manchester claims the defendants "breached duties to act in good faith to sell the properties to the owners' best advantage and to use reasonable diligence to secure the best possible price."
The class consists of all persons who owned and mortgaged property in Maui County, Kauai County or the City and County of Honolulu who were subjected to a notice of foreclosure sale signed on behalf of U.S. Bank by Wong or another attorney employed by defendants, claiming for the bank the rights of a mortgagee with a power of sale, whose auctions' location was changed from the location published in the original notice of sale without any new noticed being published, and for which a deed was recorded on or after July 11, 2010 transferring title to the high auction bidder.
Manchester seeks damages and declaratory relief stating that the publication of notices of foreclosure under power of sale with offers of quitclaim deeds, and the failure to publish notices of postponement violated defendants' legal duties and should be without legal effect.
She is represented by James Bickerton, with Bickerton Lee Dang Sullivan Meheula.