Special News Alert from Register of Deeds John L. O’Brien

Southern Essex District Register John O’Brien requests the Department of Revenue file

  legal action against “Fannie Mae” and “Freddy Mac”

Contact: Kevin Harvey 1^st Assistant Register

 978-542-1724

 kevin.harvey@sec.state.ma.us

Southern Essex District Register of Deeds John O’Brien today is asking the Massachusetts Department of Revenue to file legal action against mortgage giants Federal National Mortgage Association (“Fannie Mae”) and Federal Home Loan Mortgage Corporation (“Freddy Mac”) for their failure to pay deeds excise tax, on property transfers in Register O’Brien’s District. According to O’Brien his district alone is owed approximately $4.2 Million.  O’Brien was notified late Friday that a United States District Judge in Michigan concluded that Fannie Mae and Freddy Mac were not entitled to an exemption from excise taxes in Michigan.  The Michigan Court cited numerous cases; two of significant interests were a 2011 Nevada case involving Countrywide Home Loans and 1988 United States Supreme Court case involving Wells Fargo Bank. In Nevada, the Court concluded that Fannie Mae was essentially a privately owned mortgage banker and not a federal instrumentality for tax purposes. In the Wells Fargo Case, the United States Supreme Court concluded that a transfer tax is a form of excise tax and are not direct taxes.  The Supreme Court decided that direct taxes were exempt, however transfer taxes were not.

According to O’Brien, since 1991 Fannie Mae and Freddy Mac have been involved in property transfers with total sales values of over $920 Million Dollars in his district.  These transactions would have generated close to $4.2 Million Dollars in tax revenue to the Commonwealth for his district alone had Freddy Mac and Fannie Mae paid the excise tax rather then claiming exemptions. If a private citizen or corporation sells a piece of Massachusetts real estate, they are required to pay a deeds excise tax of $4.56 per thousand dollars of the purchase price, however Fannie Mae and Freddy Mac pay nothing.   Certain tax exemptions are given to governmental entities, however O’Brien points out that Fannie Mae and Freddy Mac although originally created as government entities are now publicly traded companies owned by investors.  O’Brien notes that these private corporate entities that have shareholders and are paying their top executives millions of dollars in salaries and bonuses are wrongfully claiming the excise tax exemptions. “This lost revenue goes a long way in providing key services for the people of Massachusetts.  The message in our Commonwealth to all those that think that they can circumvent the system should be loud and clear; pay like everyone else, or deal with the consequences.”

IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT

________________________
No. 10-14618
________________________
D.C. Docket No. 1:09-cv-02437-JEC

MICHAEL BOURFF,
Plaintiff – Appellant,

versus

RUBIN LUBLIN, LLC,
Defendant – Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
________________________
(March 15, 2012)

Before EDMONDSON and PRYOR, Circuit Judges, and BOWDRE,* District
Judge.
*

PER CURIAM:
This appeal involves a Fair Dept Collection Practices Act claim in which a
“false representation” has been alleged. Michael Bourff appeals the district
court’s dismissal of his civil action under 15 U.S.C. §1692, the Fair Debt
Collection Practices Act (“FDCPA”), for failure to state a claim. The district court
concluded that Bourff’s claim was covered by the FDCPA but that Bourff did not
allege acts that violated the FDCPA. We vacate the dismissal and remand the case
for further proceedings.

Background

This case involves a $195,000 loan by America’s Wholesale Lender
(“AWL”) to Michael Bourff. The loan was evidenced by a note, was used to
purchase property in Fulton County, Georgia, and was secured by a deed to the
property purchased.1

The basics of this case are not in dispute. In April 2009 Bourff failed to
make a payment on the loan and caused default under the terms of the note. AWL
later assigned the loan and the security deed to BAC Home Loan Servicing, LP
f/k/a Countrywide Home Loans Servicing, LP (“BAC”) for the purpose of
collecting on the note. BAC in turn hired defendant law firm, Rubin Lublin, LLC
(“Rubin Lublin”), to assist in collection efforts. In late May 2009 Rubin Lublin
sent a notice to Bourff stating that they had been retained to help collect on the
loan. The notice clearly stated that it was being sent as “NOTICE PURSUANT
TO FAIR DEBT COLLECTION PRACTICES ACT 15 U.S.C. § 1692[,]” and that
it was “AN ATTEMPT TO COLLECT A DEBT.” The notice also identified BAC
as “the creditor on the above-referenced loan.” (Compl. Ex. A.)

Shortly after receiving the notice, Bourff filed this civil action against Rubin
Lublin pursuant to the FDCPA. Bourff claimed that the notice sent by Rubin
Lublin violated §1692e of the FDCPA by falsely representing that BAC was the
“creditor” on the loan, despite entities in BAC’s position being specifically
excluded from the definition of “creditor” by the language of the FDCPA. Rubin
Lublin filed a motion to dismiss under Rule 12(b)(6), and the district court
dismissed the action for failure to state a claim under the FDCPA. The district
court concluded that BAC was a “creditor” according to the ordinary meaning of
the term and that, even if BAC was no creditor, the error in listing it as such was a
harmless mistake in the use of the term because BAC had the power to foreclose
on the property or otherwise to act as the creditor on the loan. (Order 11.)

Standard of Review

We review the grant of a motion to dismiss de novo; and in so doing, we
accept the allegations in the complaint as true while construing them in the light
most favorable to the Plaintiff. Powell v. Thomas, 643 F.3d 1300, 1302 (11th Cir.
2011). The interpretation of a statute is likewise reviewed de novo as a purely
legal matter. Belanger v. Salvation Army, 556 F.3d 1153, 1155 (11th Cir. 2009).
A “complaint must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 129 S.Ct.
1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1974
(2007)). Stating a plausible claim for relief requires pleading “factual content that
allows the court to draw the reasonable inference that the defendant is liable for
the misconduct alleged”: which means “more than a sheer possibility that a
defendant has acted unlawfully.” Id.

DISCUSSION

The FDCPA limits what is acceptable in attempting debt collection. The
FDCPA applies to the notice here in question because the notice was an attempt at
debt collection. The notice stated that Rubin Lublin had been retained to “collect
the loan,” stated in bold capital letters that it was “an attempt to collect a debt,”
and advised Bourff to contact Rubin Lublin to “find out the total current amount
needed to either bring your loan current or to pay off your loan in full.” (Compl.
Ex. A.)

The FDCPA, among other things, mandates that, as part of noticing a debt, a
“debt collector” must “send the consumer a written notice containing” — along
with other information — “the name of the creditor to whom the debt is owed[.]”
15 U.S.C. §1692g(a)(2). In addition, the Act prohibits a “debt collector” from
using “any false, deceptive, or misleading representation or means in connection
with the collection of any debt.” 15 U.S.C. §1692e. The use of “or” in §1692e
means that, to violate the FDCPA, a representation by a “debt collector” must
merely be false, or deceptive, or misleading. A false representation in connection
with the collection of a debt is sufficient to violate the FDCPA facially, even
where no misleading or deception is claimed.

Plaintiff claims that Rubin Lublin violated the prohibition on “false,
deceptive, or misleading representation[s]” by falsely stating in its collection
notice that BAC was the “creditor” on Bourff’s loan. The identity of the
“creditor” in these notices is a serious matter. For the FDCPA, “creditor” is
defined this way:

“The term ‘creditor’ means any person who offers or extends credit
creating a debt or to whom a debt is owed, but such term does not include
any person to the extent that he receives an assignment or transfer of a debt
in default solely for the purpose of facilitating collection of such debt for
another.” 15 U.S.C. §1692a(4).

Plaintiff’s complaint alleges that Bourff defaulted on the loan in April 2009
by failing to tender the required monthly payment. The complaint further alleges
that BAC “received an assignment of the security deed and debt on June 19, 2009 .
. ., while the Plaintiff’s loan was in default, for the purpose of facilitating
collection of such debt for another, presently unknown, entity.” (Compl. ¶13)
Accepting Plaintiff’s allegations as true and construing them in the light most
favorable to the Plaintiff, the statement on the May 2009 notice that BAC was
Plaintiff’s “creditor” was a false representation and was made by a “debt collector”
as defined in §1692a of the FDCPA.

The FDCPA provides that “any debt collector who fails to comply with any
provision of this subchapter with respect to any person is liable to such person…”
for potential damages and costs. 15 U.S.C. §1692k(a). The complaint on its face,
taken as true and viewed in the light most favorable to Plaintiff, states a claim
upon which relief may be granted under the FDCPA. As such, we vacate the
dismissal and remand this case to the district court for further proceedings.

VACATED and REMANDED.

[ipaper docId=86990152 access_key=key-5azmw02aa85hl0uo1bk height=600 width=600 /]

John P. Hunt

Richard Stanton

University of California, Berkeley – Finance Group

Nancy Wallace

University of California, Berkeley – Real Estate Group

February 3, 2012

UC Davis Legal Studies Research Paper No. 269

Abstract:     
Mortgage Electronic Registration Systems, Inc. (“MERS, Inc.”) owns legal title to some 30 million mortgages in the United States. The company, which was a key part of the mortgage securitization apparatus in the late 1990s and 2000s, is now under intense pressure from public and private lawsuits and investigations and faces a very real threat of insolvency. Policymakers are looking ahead to potential replacements for MERS, Inc., as a recent Fed staff proposal for a substitute system indicates. This Article examines what might happen to the mortgages that MERS, Inc. at least nominally owns in the event that the company enters bankruptcy, a question that apparently has never been explored in a publicly available analysis.

Although the legal analysis underlying the design of MERS, Inc. does not appear to be publicly available, a key assumption seems to have been that if the company ever entered bankruptcy, the mortgages in its hands would not enter the company’s bankruptcy estate and would not be available to creditors. This Article challenges that assumption, pointing to the broad authority the Bankruptcy Code confers on the bankruptcy trustee with respect to interests in real property, such as mortgages. Most courts that have considered the issue have found that the bankruptcy trustee can bring into the estate any real property interest that the debtor could have conveyed to a good-faith purchaser. There is a significant risk that MERS, Inc. can convey MERS mortgages to a purchaser acting in good faith.

Although part of that risk arises from the company’s conduct in making and acquiescing in claims in court that the company can sell the mortgages, has constitutionally protected property interests in the mortgages, is a creditor of mortgage borrowers, and owns a beneficial interest in the mortgages, part of the risk is inherent in any mortgage recording system that operates nationally and holds mortgages as an agent. Policymakers should consider that risk as they consider whether MERS should be replaced and what form the replacement should take.

[ipaper docId=86987796 access_key=key-1h1qxgl3zxlw0l1hxq94 height=600 width=600 /]

“Never imagine yourself not to be otherwise than what it might appear to others that what you were or might have been was not otherwise than what you had been would have appeared to them to be otherwise.”1

Excerpt:

While MERS may be named as the actual mortgagee
or its equivalent on the security instrument, in
substance its role is that of a nominee or agent.23
The language in the mortgage generally states:
“‘MERS’ is Mortgage Electronic Registration
Systems, Inc. MERS is a separate corporation that
is acting solely as nominee for Lender and
Lender’s successors and assigns. MERS is the
mortgagee under this Security Instrument.”24 Here
then begins the magic that is MERS—the dual claim
that it is both a principal (mortgagee) and
nominee/agent of the lender/factual mortgagee.25
MERS undertakes these roles but never lends
money and never gives value for the mortgage, nor
does it benefit from the proceeds of foreclosure
and/or collection actions.26 Were MERS’s
involvement in the mortgage market insignificant,
it might not pose much of a legal problem;however,
MERS appears to be involved in sixty
million loans—roughly half of all U.S. home
mortgages.27 The legal role MERS attempts to fill
and MERS’s argument as to standing is: 1) provide
a mortgage clearinghouse and eliminate recording
obligations by having MERS itself act as mortgagee
of record;28 2) allow the promissory note
evidencing the debt to be transferred freely among
MERS members ad infinitum; and 3) when default
occurs, act as the nominee of the current note
holder and mortgagee of record (rejoining the two
interests) even though the current “lender” did
not appoint MERS as mortgagee and may never have
had the right to do so. Ultimately, the argument
is something akin to a merger argument where MERS
claims that the severed interests, that of
security interest and note, are recombined in MERS
at a later date even though it received those
interests from separate entities. As others have
pointed out, MERS is attempting to derive powers
as an agent greater than the sum of the powers of
its principals.29

[ipaper docId=86987723 access_key=key-2k44k0z1xng0exhlu51n height=600 width=600 /]

The End of Mortgage Securitization? Electronic
Registration as a Threat to Bankruptcy Remoteness

John Patrick Hunt,
Richard Stantonz and Nancy Wallacex

August 10, 2011

Abstract

A central tenet of asset securitization in the United States|that assets are bankruptcy remote from their sponsors|may be threatened by innovations in the transfer of mortgage loans from the loan-originators (sponsors) to the legal entities that own the mortgage pools (the Special Purpose Vehicles (SPVs)). The major legal argument advanced in the paper is that because the mortgage is an interest in real property, the bankruptcy-remoteness rules applicable to real property, including x544(a)(3) of the Bankruptcy Code, create a risk to the bankruptcy remoteness of mortgage transactions unless proper recording occurs. We review the traditional mortgage transfer process and discuss why the real-property characteristics of mortgages makes them special. We then discuss how the chain of title transfer using traditional recorded assignment at the local jurisdiction helps to assure that the promissory note and the mortgage that are transferred into the SPVs are, indeed, bankruptcy remote from the loan originators and sponsors. We then discuss why the more recently introduced Mortgage Electronic Registration System (MERS) method of transfer introduces significant vulnerability into the mortgage transfer process and leads to a significant risk that bankruptcy remoteness will fail. Our arguments address scholarly and case-law theories of the legal foundations of achieving bankruptcy remoteness for mortgage transfers, the eligibility requirements for “true-sale” accounting treatment of transferred mortgages under Financial Accounting Standards (FAS 140), and the finance literature that addresses the economics of securitization through bankruptcy remoteness. We conclude with a first step toward policy prescriptions concerning possible promissory note and mortgage transfer processes that could achieve bankruptcy remoteness and the associated economic efficiency objectives of mortgage securitization.

[ipaper docId=86987573 access_key=key-2mds05j1ckkam3x529pq height=600 width=600 /]

© 2010-19 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.

OREGON DEPARTMENT OF JUSTICE SEEKS TO STOP LENDERS FROM WRONGFULLY FORECLOSING

March 27, 2012

Contact:

Kate Medema, 503-569-3027, kate.e.medema@doj.state.or.us

source: doj.state.or.us

NYT-

In February, JPMorgan Chase donated a home to an Iraq war veteran in Bucoda, Wash., and Bank of America waived the $140,000 debt that a Florida man still owed after the sale of his foreclosed home. Over the last year, Wells Fargo has demolished about a dozen houses in Cleveland.

Banks do things like this — real estate transactions that do nothing to prevent foreclosure — all the time. But beginning this month, they can count such activities as part of their new commitment to help people stay in their homes.

 That commitment comes under the landmark $25 billion foreclosure abuse settlement between the government and five major banks announced last month. The settlement promises that of the $25 billion, the banks will give $17 billion “in assistance to borrowers who have the intent and ability to stay in their homes,” according to a summary of the settlement. But more than half of that money can be used in ways that will not stop foreclosures, including some activities that are already standard bank practices.

For example, the banks can wipe out more than $2 billion of their obligation by donating or demolishing abandoned houses. Almost $1 billion can be used to help families that have already defaulted move out.

[NEW YORK TIMES]

Ok! Now read the bold text below and the gist of this story… Now exactly who are these 5 regulators back in October and did they have anything to do with the settlement discussion? Maybe the media should have put this puzzle together for us and explained it in a better report.

Bloomberg-

To make their case in Washington, banks and trade associations have been pressing a coordinated campaign to get regulators from five federal agencies to scale back the draft of the proprietary-trading rule issued in October, according to public and internal documents and interviews. They recruited money managers, industrial companies, municipal officials and foreign governments to their side.

“The regulators are under a lot of pressure,” said Marcus Stanley, policy director of Americans for Financial Reform, an advocacy coalition that filed a comment letter urging that the draft rule be strengthened rather than watered down.

[BLOOMBERG]

A search shows Andrew Wordes recent comments posted on a media site that he was someone who was compassionate.

R.I.P.

My Fox Atlantic-

A Roswell man who fought to keep chickens on his property is presumed dead after an explosion rocked his home on Monday. Authorities said Andrew Wordes, who became known as “The Chicken Man,” had fallen behind on his mortgage payments and was facing eviction after several code violations landed him in jail.

Authorities say Fulton County marshals arrived at Wordes’ home around 10:45 a.m. to deliver his eviction notice. After about two hours of trying to reason with him, the negotiations went sour. Around 12:45 p.m. a massive explosion took place from inside the home.

[MY FOX ATLANTIC]

Alison Frankel-

Ordinarily, a $32.5 million settlement of a securities class action against Deutsche Bank wouldn’t get much attention. But when the case is based on mortgage-backed securities and it’s only the third known class action resolution, you have to pay heed . In MBS litigation, every new settlement means that damages estimates in hundreds of pending securities cases become a little more reality-based.

The settlement papers filed Monday by the co-lead counsel in the Deutsche Bank case, Robbins Geller Rudman & Dowd and Labaton Sucharow, indicate that the $32.5 million represents $12.80 for every $1,000 in initial certificate value for the two Deutsche Bank trusts in the case. That may not sound like much, but it’s a lot more than the $2.70 per $1,000 that plaintiffs got in the first MBS class action settlement, a $125 million deal with Wells Fargo last July. In last December’s $315 million settlement with Merrill Lynch, class counsel at Bernstein Litowitz Berger & Grossmann obtained $19.05 per $1,000 in initial certificate value for plaintiffs. That case, however, was farther along than the Deutsche Bank MBS litigation; at the time of the settlement, U.S. Senior District Judge Jed Rakoff of federal court in Manhattan had already certified a class of Merrill MBS noteholders and had set a pretrial schedule.

[REUTERS LEGAL]

“Hunger Games”

Palm Beach Post-

The pool guy, plumber and lawn man for a Palm Beach Gardens homeowner who recently won an $18 million settlement in a foreclosure-related lawsuit are being sought for questioning by the bank still seeking to repossess her home.

Lynn Szymoniak, a 63-year-old attorney who specializes in white collar crime, shot to national fame last year when she was featured on the CBS news show 60 minutes for her role in uncovering widespread mortgage and foreclosure fraud after finding it in her own 2008 case.

This month, it was announced she would receive $18 million from a whistle-blower lawsuit filed under the federal False Claims Act, which allows the government to bring civil actions against entities that knowingly use or cause the use of false documents to obtain money from the government.

[PALM BEACH POST]

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

In re: MARGERY KANAMU-
KALEHUANANI KEKAUOHA-ALISA,
Debtor,

MARGERY KANAMU-KALEHUANANI
KEKAUOHA-ALISA,
Appellant,

v.

AMERIQUEST MORTGAGE COMPANY;
JPMC SPECIALTY MORTGAGE, LLC,
FKA WM Specialty Mortgage,
LLC,
Appellees.

Appeal from the Ninth Circuit
Bankruptcy Appellate Panel
Pappas, Dunn, and Jury, Bankruptcy Judges, Presiding

Argued and Submitted
February 15, 2012—Honolulu, Hawaii

Filed March 26, 2012

Before: Alfred T. Goodwin, Stephen S. Trott, and
Mary H. Murguia, Circuit Judges.

Opinion by Judge Trott

COUNSEL

Lissa D. Shults and Bradley R. Tamm, Shults & Tamm, ALC,
Honolulu, Hawaii, for the appellant.

Paul Alston and Tina L. Colman, Alston Hunt Floyd & Ing,
Honolulu, Hawaii, for the appellees.

OPINION

TROTT, Senior Circuit Judge:

This case requires us to determine whether a mortgage
company violated Hawaii state law when it did not publicly
 announce the postponement of a foreclosure sale of property
owned by Appellant Margery Kanamu-Kalehuanani
Kekauoha-Alisa, and if so, to ascertain the proper remedy for
that violation. A federal bankruptcy court held that Appellees’
failure publicly to announce the foreclosure violated the
requirements of Hawaii’s nonjudicial foreclosure procedure
under Hawaii Revised Statute (HRS) § 667-5, as well as its
consumer protection law, HRS § 480-2. The court voided the
sale of the Appellant’s property and awarded her treble dam-
ages of $417,761.66 under HRS § 480-13 for violation of the
consumer protection statute. The Bankruptcy Appellate Panel
reversed, ruling that the mortgagee’s actions did not violate
state law.

We hold that (1) the lack of public announcement did vio-
late Hawaii’s nonjudicial foreclosure statute, and (2) this
defect was a deceptive practice under state law. Accordingly,
we affirm the bankruptcy court’s avoidance of the foreclosure
sale. However, we remand to the bankruptcy court for a
proper calculation of attorneys’ fees and damages under HRS
§ 480-13.

I BACKGROUND

In 2002, Margery Kanamu-Kalehuanani Kekauoha-Alisa
(Debtor) refinanced a mortgage on her property on Hawaii
Island and executed a promissory note to Ameriquest Mort-
gage Company in the amount of $127,500. Debtor defaulted
on her loan eight times, causing Ameriquest to initiate fore-
closure proceedings in early 2005. On April 6, 2005 Ameri-
quest assigned its interest in the mortgage to WM Speciality
Mortgage LLC, which later became JPMC Mortgage, the
named party in this action. The assignment notwithstanding,
Ameriquest continued to service Debtor’s mortgage (hereaf-
ter, Ameriquest and JPMC Mortgage are referred to collec-
tively as “Lenders”). A foreclosure sale was scheduled for
May 13, 2005.

On May 10, 2005, three days before the scheduled foreclo-
sure sale, Debtor filed for Chapter 13 bankruptcy, triggering
an automatic stay of the sale. To comply with the stay, a law
firm employed by Lenders postponed the scheduled foreclo-
sure sale. HRS § 667-51 authorizes a foreclosure sale to be
“postponed from time to time by public announcement made
by the mortgagee or by a person acting on the mortgagee’s
behalf.” The law firm properly announced the postponement
of the sale three times from May 13, 2005 until September 23,
2005.

On September 23, 2005, the law firm attempted to postpone
the sale yet again, a fourth and final time. The auction was
scheduled to occur at noon at a flagpole located in front of
Hale Halewai, a local community center. The firm delegated
the task to a legal secretary who had never before postponed
a foreclosure sale. The secretary arrived ten or fifteen minutes
before noon. Rather than shouting out the postponement to all
those present, the secretary asked several of the people pres-
ent if they were interested in Debtor’s property. Everyone she
spoke to said they were not. She did not attempt to speak to
those individuals who appeared to be there for another auction
that was occurring at the same time, and she did not speak to
everyone in the area. She did not tell those she spoke with that
the auction was postponed to December 2, 2005. The secre-
tary stayed at the flagpole until approximately 12:25 PM, after
the other auction had finished and the area was deserted. She
left without ever announcing or posting the information that
the sale of Debtor’s property had been postponed.

On November 1, 2005, Lenders moved for relief from the
stay to allow them to proceed on the foreclosure sale. On
November 21, after Debtor failed to respond, the bankruptcy
court granted Lenders’ motion. The foreclosure sale took
place on December 2. The successful — and only bid — was
a credit bid made by the auctioneer on behalf of Lenders. A
quitclaim deed to the property was recorded on December 27,
2005. Lenders initiated an ejectment action in state court in
January, 2006. Lenders obtained a judgment in their favor on
April 11, 2006, which Debtor appealed. That appeal is still
pending in state court — apparently waiting for our decision.

On April 26, 2006, Debtor filed a complaint in the bank-
ruptcy court, alleging, inter alia, that the sale had violated the
automatic stay, breached the terms of the mortgage contract,
constituted an unfair and deceptive trade practice under HRS
§ 480-2, violated various requirements of nonjudicial foreclo-
sure procedure under HRS § 667-5, and constituted a fraudu-
lent transfer under HRS § 651C-7. The bankruptcy court
dismissed on summary judgment Debtor’s claims alleging a
violation of the stay and fraudulent transfer.

After a five-day bench trial on the remaining claims, the
bankruptcy court issued amended findings of fact and conclu-
sions of law. The court concluded that Lenders’ failure to
publicly pronounce the postponement of the foreclosure sale
on September 23, 2005, violated the “public announcement”
requirement of HRS § 667-5 as well as the terms of the mort-
gage contract. Contrary to Debtor’s assertion on appeal, the
court found only a single violation of HRS § 667-5. As a rem-
edy, the court voided the foreclosure sale. The court held that
the improper postponement was also a breach of the mortgage
contract, because the contract required that Lenders comply
with state law in any foreclosure proceeding.

In addition, the court ruled that the improper postponement
was an unfair and deceptive trade practice under HRS § 480-
2. It awarded Debtor treble damages, under HRS § 480-13,
for damages sustained as a result of the violation of § 480-2,
calculating the damages sustained as (1) Debtor’s lost equity
in her house, (2) the rental value of the house for the time dur-
ing which she lost possession of it, and (3) the attorneys’ fees

Debtor expended defending against the state court ejectment
action. The total money judgment was $417,761.66.

Finally, the court awarded Debtor additional attorneys’ fees
under two Hawaii statutes: HRS § 607-14, allowing fees for
the prevailing party in contract claims, and HRS § 480-
13(b)(1), allowing fees for the party establishing a violation
of HRS § 480-2. The court allocated attorneys’ fees equally
between the contract claim and the HRS § 480-2 claim.
Because HRS § 607-14 limits attorneys fees to twenty-five
percent of the judgment on a contract claim, the court allowed
recovery of only $38,945.01 for that portion of the attorneys’
fees claim, a sum which it arrived at by calculating twenty-
five percent of the value of Debtor’s equity in the mortgaged
property.

Lenders appealed the bankruptcy court’s decision to the
Bankruptcy Appellate Panel (“BAP”), challenging both the
bankruptcy court’s findings of liability and its calculation of
damages and attorneys’ fees. Debtor cross-appealed, challeng-
ing only the bankruptcy court’s ruling that attorneys’ fees
under HRS § 607-14 should be limited to twenty-five percent
of the value of Debtor’s equity in the foreclosed property.

The BAP reversed the bankruptcy court on its findings of
liability, holding that Lenders’ actions (1) met the public
announcement requirement of HRS § 667-5, (2) did not
breach the mortgage contract, and (3) did not constitute an
unfair or deceptive practice under HRS § 480-2. Because it
found in favor of Lenders on the liability issues, the BAP did
not reach the parties’ challenges to damages and attorneys’
fees. Debtor now appeals the decision of the BAP.

II STANDARD OF REVIEW

We review the decisions of the BAP de novo. Wood v.
Stratos Prod. Dev., LLC (In re Ahaza Sys., Inc.), 482 F.3d
1118, 1123 (9th Cir. 2007). We apply the same standard of
 review that the BAP applied to the bankruptcy court’s ruling.
Id. We review the bankruptcy court’s legal conclusions de
novo and its factual findings for clear error. Stevens v. Nw.
Nat’l Ins. Co. (In re Siriani), 967 F.2d 302, 303-04 (9th Cir.
1992).

III ANALYSIS

A. Hawaii Revised Statute § 667-5

[1] HRS § 667-5 authorizes a foreclosure sale to be “post-
poned from time to time by public announcement made by the
mortgagee or by a person acting on the mortgagee’s behalf.”
In this case, we must first address whether the secretary’s
actions on September 23rd constituted a “public announce-
ment” under the meaning of Hawaii law. When interpreting
state law, we are bound by the decision of the highest state
court. Sec. Pac. Nat’l Bank v. Kirkland (In re Kirkland), 915
F.2d 1236, 1238 (9th Cir. 1990). Absent a controlling state
court decision, our duty is to predict how the highest state
court would decide the issue. Id. at 1239.

[2] Neither HRS § 667-5 nor Hawaii case law defines the
term “public announcement.” Therefore, we apply Hawaii’s
rules of statutory construction to interpret the term. Hawaii
courts follow “certain well-established principles of statutory
construction.” Haw. Gov’t Emps. Ass’n, AFSCME Local 152,
AFL–CIO v. Lingle, 239 P.3d 1, 6 (Haw. 2010). Under those
principles, “ ‘where the statutory language is plain and unam-
biguous, our sole duty is to give effect to its plain and obvious
meaning.’ ” Id. (quoting Awakuni v. Awana, 165 P.3d 1027,
1034 (Haw. 2007)). If there is ambiguity, we may consider
context and legislative purpose to determine the meaning of
the word or phrase. Id. at 6, 11 n.16.

[3] Applying these principles, it is clear that any reason-
able meaning of “public announcement” does not encompass
Lenders’ actions in this instance. The bankruptcy court turned
to the dictionary, noting that Merriam-Websters defines “an-
nounce” as “to make known publicly: PROCLAIM” and “an-
nouncement” as “public notification or declaration.” No party
suggests a different definition, and this interpretation captures
the essence of what the statute requires: Mortgagees shall
publicly announce the postponement of a foreclosure sale to
a subsequent date.

[4] In this case, the secretary engaged in several conversa-
tions with individuals whom, based on the secretary’s judg-
ment, appeared as if they might have been present because
they were interested in the foreclosure of Debtor’s property.
Even in these conversations, the secretary did not communi-
cate that the sale had been postponed. The secretary did not,
in private conversation or otherwise, announce that the Debt-
or’s property would be sold on December 2, 2005. The bank-
ruptcy court’s conclusion, based on these facts, was that the
secretary “never made an open, oral announcement to all
those present of the date and time to which the auction was
being postponed and she did not post or display such an
announcement in written form.” Lenders do not dispute this
finding of fact, and it suffices to establish under the plain
meaning of HRS § 667-5 that there was no public announce-
ment of a postponement.

The BAP acknowledged that “[i]t is undisputed that the
secretary did not make a ‘public announcement’ within its
commonly understood or dictionary meaning.” Nonetheless, it
reasoned that the phrase must be given a “fair and reasonable
construction” and interpreted in light of the purpose of the
statute. The BAP concluded that the requirements of the stat-
ute could be met by “any mode of communication that reason-
ably achieves the spirit and purpose of the ‘public
announcement’ requirement,” which they reasoned was to
“inform those who appeared at a foreclosure sale that it has
been postponed.”

[5] The BAP erred in relying on statutory context and pur-
pose to introduce ambiguity into the meaning of “public
 announcement” because, as it acknowledged, the meaning of
the phrase is plain on its face. See Ross v. Stouffer Hotel Co.
Ltd., 879 P.2d 1037, 1044 (Haw. 1994) (“[W]here the terms
of a statute are plain, unambiguous and explicit, we are not at
liberty to look beyond that language for a different mean-
ing.”). However, even if use of these tools of statutory inter-
pretation were appropriate, we would not find the BAP’s
conclusion persuasive. Hawaii’s nonjudicial foreclosure stat-
ute affords mortgagees a quick and inexpensive alternative to
judicial foreclosure but balances that accommodation by man-
dating compliance with minimal procedural requirements to
protect mortgagors’ interest in their property. Lee v. HSBC
Bank USA, 218 P.3d 775, 779-80 (Haw. 2009). That statutory
balance would be upset if mortgagees could dispense with
those procedures they perceive as futile, or substitute proce-
dures they believe achieve the “spirit and purpose” of the law.
A reviewing court would frequently have no evidence of the
adequacy of those substitute procedures other than the testi-
mony of the mortgagee’s agent. In this case, for instance, the
bankruptcy court would be required to rely on the rough
assessment of a legal secretary undertaking her first foreclo-
sure postponement that none of the individuals present was
interested in Debtor’s property. Moreover, the secretary
admitted she had signed a declaration stating that she had
publicly announced the postponement when she knew she had
not made a public announcement. We reject an approach that
would force a trial court to rely upon evidence of this sort,
and hold that Lenders’ actions violated the plain meaning of
“public announcement” in HRS § 667-5.

[6] We turn to the question of the proper remedy for Lend-
ers’ violation of HRS § 667-5. Hawaii law does not specify a
remedy. The bankruptcy court, based on its reading of Silva
v. Lopez, 5 Haw. 262, 1884 WL 6695 (1884), ruled that
improper postponement required voiding the subsequent fore-
closure sale. The BAP, on the other hand, believed that Silva
does not provide controlling precedent, and reasoned that the
Hawaii Supreme Court would have to look to other jurisdic-
tions to decide the issue. Relying on the trend in the majority
of states, the BAP concluded that the Hawaii Supreme Court
would draw a distinction between technical violations of fore-
closure procedures which do not prejudice a mortgagor and
substantive violations which do. The BAP held that a foreclo-
sure sale should be voided only when a procedural violation
is “significant, material, causes prejudice or otherwise con-
tributes to the inadequacy of the price or other injury.” The
BAP concluded in this instance that Debtor had shown no
prejudice from the foreclosure and was not entitled to any
relief.

[7] With all respect to the BAP, we agree with the bank-
ruptcy court that Hawaii precedent is clear and controlling.
Mortgagee violation of the nonjudicial foreclosure require-
ments of HRS § 667-5, whether those violations are griev-
ously prejudicial or merely technical, voids a subsequent
foreclosure sale. Id. at *7. In Silva, the Hawaii Supreme Court
voided a mortgage sale of real estate and livestock because
the mortgagee did not comply with the conditions of the
power of sale set out in the mortgage contract. Id. The Silva
mortgagee erred by scheduling the foreclosure sale one day
too early: under the mortgage contract, the power of sale
could be exercised only after three weeks of notice and the
Silva mortgagee had scheduled the sale after only twenty days
of notice. Id. at *3, *5. The Silva court affirmed the trial
court’s ruling that “if the notice is insufficient, the sale under
it is void and not merely voidable.” Id. at *7. Silva establishes
that under Hawaii law, even technical violations of foreclo-
sure procedures void a subsequent foreclosure sale.

The BAP attempted to distinguish Silva on two grounds.
First, the BAP noted that the Silva court did not explain why
strict, rather than substantial compliance, with foreclosure
procedure is required. However, this undercuts, rather than
supports, the BAP’s conclusion. The fact that the Silva court
did not discuss prejudice or substantial compliance demon-
 strates that this factor is irrelevant to the mortgagor’s remedy
under Hawaii law.

The BAP also distinguished Silva on the ground that there
“the defect in the notice requirement was coupled with
another irregularity — the livestock was not available for
inspection at the auction sale.” This assertion misreads Silva.
In fact, the Silva court voided the sale of real estate solely on
the basis of inadequate notice, and not because of the failure
to display the auctioned cattle. The decision makes this clear:
“[T]he third objection to the sale [that the mortgagee failed to
display the cattle to bidders] . . . applies only to the sale of the
chattels.” Silva, 1884 WL 6695, at *3 (emphasis added).

That Hawaii law requires strict compliance with statutory
foreclosure procedures is confirmed by the Hawaii Supreme
Court’s recent decision in Lee, a decision that was not avail-
able at the time the BAP issued its decision. The Lee court,
answering a question certified to it by a federal district court,
held that a foreclosure sale conducted after the mortgagors
had cured their default was not valid. The court cited Silva for
the proposition that the “foreclosure sale did not comply with
the requirements of HRS section 667-5 and was, thus, inval-
id.” Lee, 218 P.3d at 779. As in Silva, there was no discussion
in Lee of the degree to which the violation of HRS § 667-5
prejudiced the mortgagor that would suggest that prejudicial
impact is relevant under Hawaii’s law. While Lee involved
the violation of a different requirement of HRS § 667-5 than
is at issue here, the court’s reasoning encompasses the facts
of this case.

Finally, we note that a strict compliance requirement is not
so out of step with the law of other jurisdictions that we have
reason to second-guess our interpretation of Hawaii law. The
BAP is accurate in noting that the majority of states draw a
distinction between procedural defects that are insignificant
and those that are prejudicial enough to render a foreclosure
sale void or voidable. See, e.g., Gilroy v. Ryberg, 667 N.W.2d
544, 553-54 (Neb. 2003) (describing the majority approach
and collecting cases). However, this trend is far from unani-
mous. Several states have long required strict compliance
with nonjudicial foreclosure statutes. See Univ. Sav. Ass’n v.
Springwoods Shopping Ctr., 644 S.W.2d 705, 706 (Tex.
1982) (mortgagee’s failure to perform “ministerial act” of
recording appointment of successor trustee grounds for void-
ing sale); Bottomly v. Kabachnick, 434 N.E.2d 667, 669-70
(Mass. App. Ct. 1982) (failure in notice of sale to identify the
holder of mortgage voids sale). Other states have begun to
strictly construe the terms of recently enacted statutes
designed to protect mortgagors. See Aurora Loan Servs., LLC
v. Weisblum, 923 N.Y.S.2d 609, 614 (N.Y. App. Div. 2011)
(strict compliance with statutorily mandated notice require-
ments is condition precedent to foreclosure, without consider-
ation of prejudice to mortgagor); EMC Mortg. Corp. v.
Chaudhri, 946 A.2d 578, 586 (N.J. Super. Ct. App. Div.
2008) (“[A] lender’s substantial compliance with the contents
of a notice of intent, sent by a lender prior to initiation of fore-
closure, . . . was not authorized by the statute’s terms.” (inter-
nal quotation marks omitted)). Hawaii’s approach, therefore,
might place it in the minority, but does not place it out of the
mainstream.

[8] We conclude that Lenders’ failure to postpone properly
the foreclosure sale did violate HRS § 667-5 and that the
proper remedy was avoidance of the sale.

B. Breach of Contract

[9] The bankruptcy court ruled that the terms of the par-
ties’ mortgage agreement specified that Lenders could fore-
close only in compliance with the procedural requirements of
HRS § 667-5. Lenders do not dispute the court’s interpreta-
tion of the contractual language. Therefore, because Lenders’
improper postponement of the foreclosure sale violated HRS
§ 667-5, it also constituted a breach of contract.

[10] Lenders’ contractual breach is an alternative ground
upon which the bankruptcy court properly voided the foreclo-
sure sale. Lenders argue, however, that damages for the
breach of contract should be subject to standard causation
requirements, and that the breach was not the cause of the
foreclosure. Lenders’ discussion of general contract principles
of causation is not persuasive in the context of the mortgage
at issue. The bankruptcy court read the mortgage contract as
requiring compliance with the nonjudicial foreclosure statute
as a condition precedent to Lenders’ right to exercise the
power of sale in the contract. We agree. In the context of this
interpretation of the mortgage, the avoidance of the sale is
consistent both with case law particular to mortgage agree-
ments and with general contract principles. See Silva, 1884
WL 6695, at *7; Stevens v. Cliffs at Princeville Assocs., 684
P.2d 965, 969 (Haw. 1984) (“If the condition is not fulfilled,
the right to enforce the contract does not come into exis-
tence.” (internal quotation marks omitted)).

C. Hawaii Revised Statute § 480-2 and § 480-13

[11] HRS § 480-2(a) prohibits “unfair or deceptive acts or
practices in the conduct of any trade or commerce.” Consum-
ers who establish a violation of § 480-2 are entitled to three-
fold damages under HRS § 480-13 for those “damages
sustained” as a result of the defendant’s deceptive actions.
HRS § 480-13(a)(1). Whether a practice is deceptive or unfair
is “ordinarily a question of fact,” Balthazar v. Verizon
Hawaii, Inc., 123 P.3d 194, 197 n.4 (Haw. 2005), subject to
review under a clearly erroneous standard.

The test for whether a practice is “deceptive” under HRS
§ 480-2 is distinct from whether a practice is “unfair,” and
both tests are established by case law rather than by statute.
State ex rel. Bronster v. U.S. Steel Corp., 919 P.2d 294, 313
(Haw. 1996). “A deceptive act or practice is ‘(1) a representa-
tion, omission, or practice that (2) is likely to mislead con-
sumers acting reasonably under the circumstances where (3)
the representation, omission, or practice is material.’ ”
Yokoyama v. Midland Nat’l Life Ins. Co., 594 F.3d 1087,
1092 (9th Cir. 2010) (quoting Courbat v. Dahana Ranch, Inc.,
141 P.3d 427, 435 (Haw. 2006)) (alterations omitted). This
inquiry is objective — the test is whether the practice was
“capable of misleading a reasonable consumer.” Id. at 1089.
There need not be an intent to deceive nor actual deceit. Cour-
bat, 141 P.3d at 435 n.9.

[12] The bankruptcy court found that failure to make a
public announcement “is likely to mislead a consumer acting
reasonably under the circumstances . . . . Proper notice of the
actual date of a foreclosure auction is essential to ensure that
foreclosed properties bring adequate prices and that the public
has an appropriate opportunity to bid.” The court’s factual
finding is a reasonable one to which we must defer.

The BAP’s reversal of this finding is premised on two
errors. First, by focusing on whether there were, in fact, any
consumers in the vicinity that would have heard a public
announcement, the BAP failed properly to apply the requisite
objective test. Given that “actual deception need not be
shown; the capacity to deceive is sufficient,” State ex rel.
Bronster, 919 P.2d at 313, the BAP’s concern with the fact
that no potential buyers appeared to be present was an
improperly subjective inquiry into whether there was actual
deception.

Second, the BAP did not afford the bankruptcy court’s fac-
tual finding the required degree of deference when it reasoned
that it was “not required to accept [the bankruptcy court’s]
conclusions as to the legal effect of [its factual findings].”
Whether a reasonable consumer would likely be misled by a
practice is a question of fact unless “no reasonable person
would determine the issue in any way but one.” Courbat, 141
P.3d at 436 (internal quotation marks omitted). Under this
standard, the bankruptcy court’s determination that improper
postponement of this sort would deceive a reasonable con-
 sumer is not clearly erroneous. See Anderson v. City of Besse-
mer City, 470 U.S. 564, 574 (1985) (“Where there are two
permissible views of the evidence, the factfinder’s choice
between them cannot be clearly erroneous.”).

Because we affirm the bankruptcy court’s finding that
Lenders’ improper postponement was a deceptive practice
under HRS § 480-2, we need not consider whether it was also
an unfair practice.

[13] However, our conclusion that Lenders’ improper post-
ponement amounted to a deceptive practice does not automat-
ically entitle Debtor to monetary damages.2 Under HRS
§ 480-13(b)(1), a consumer injured by a violation of § 480-2
“[m]ay sue for damages sustained by the consumer, and, if the
judgment is for the plaintiff, the plaintiff shall be awarded a
sum not less than $1,000 or threefold damages.” Under this
statute, consumers are entitled to damages for a violation of
HRS § 480-2 only if they show that those acts “cause private
damage.” Ai v. Frank Huff Agency, Ltd., 607 P.2d 1304, 1312
(Haw. 1980), overruled in part on other grounds by Robert’s
Haw. Sch. Bus. Inc. v. Laupahoehoe Transp. Co., 982 P.2d
853 (Haw. 1999); see also Haw. Med. Ass’n v. Haw. Med.
Serv. Ass’n, 148 P.3d 1179, 1216 (Haw. 2006) (to receive
damages under HRS § 480-13 the injured consumer must
show “(1) a violation of HRS chapter 480; (2) injury to the
plaintiff ’s business or property resulting from such violation;
and (3) proof of the amount of damages” (footnotes omitted)).

Any injury must be fairly traceable to the defendant’s
actions. Flores v. Rawlings Co., LLC, 177 P.3d 341, 355 n.23

We do not consider Lenders’ argument that they cannot be held vicari-
ously liable for the actions of an independent contractor because that argu-
ment was not made before the BAP and was therefore forfeited. See
Resolution Trust Corp. v. First Am. Bank, 155 F.3d 1126, 1129 (9th Cir.
1998) (issues raised for first time before appellate court are generally for-
feited).

(Haw. 2008). Under HRS § 480-13, the injury is measured
through standard expectation damages, i.e., damages suffi-
cient to make the plaintiff whole. Leibert v. Fin. Factors, Ltd.,
788 P.2d 833, 836-37 (Haw. 1990). The Hawaii Supreme
Court has emphasized that “ ‘[d]eception [is] the evil that con-
sumer fraud statutes seek to rectify.’ ” Flores, 177 P.3d at 357
(second alteration in original) (quoting Zanakis-Pico v. Cutter
Dodge, Inc., 47 P.3d 1222, 1231 (Haw. 2002)).

[14] The proper calculation of damages and causation are
questions of fact under Hawaii law, which we do not disturb
unless they are clearly erroneous. Kato v. Funari, 191 P.3d
1052, 1058 (Haw. 2008) (damages are question of fact); Doe
Parents No. 1 v. State Dep’t of Educ., 58 P.3d 545, 569 (Haw.
2002) (causation is question of fact). In this instance, how-
ever, the bankruptcy court failed to make the requisite factual
findings. See Jess v. Carey (In re Jess), 169 F.3d 1204, 1208-
09 (9th Cir. 1999) (Bankruptcy Rule 7052 requires the bank-
ruptcy court to make findings of fact and conclusions of law).
While the bankruptcy court’s decision acknowledges that cau-
sation is a required element of Debtor’s case, the court made
no finding — explicit or otherwise — that the enumerated
damages were caused by and fairly traceable to Lenders’
improper postponement. Rather, the court simply listed as
damages Debtor’s loss of equity in her property, the rental
value of the property for the time Debtor was apparently
excluded from possession, and attorneys’ fees accrued in the
state court ejectment action.

Debtor urges us to overlook this omission and to construe
the bankruptcy court’s calculation of damages as including an
implicit factual finding of causation. If we were to adopt
Debtor’s suggestion, which we do not, we would be com-
pelled by the record to conclude that the bankruptcy court’s
“implicit” finding of causation was clearly erroneous. The
damages the bankruptcy court awarded all flow from the fore-
closure on Debtor’s home and appear to give Debtor an inap-
propriate windfall. This seems irreconcilable with the
 bankruptcy court’s finding that Debtor did not experience
foreclosure of her home because of Lenders’ imperfect post-
ponement procedure. As the bankruptcy court phrased it,
“There is no question, . . . that the Mortgage was in default
and that the mortgagee was entitled to foreclose. The only
question is whether the proper party foreclosed the Mortgage
in the proper manner.” In sum, the court’s findings of fact
appear to establish that Debtor’s losses “result[ed] from” her
default, rather than Lenders’ failure to shout out the postpone-
ment of the foreclosure. Haw. Med. Ass’n, 148 P.3d at 1216.

[15] However, rather than reading an erroneous finding of
causation into the bankruptcy court’s decision, we follow our
ordinary procedure when a necessary factual finding is absent,
and remand the case to the bankruptcy court to make the
proper requisite findings of fact under HRS § 480-13. See
Graves v. Myrvang (In re Myrvang), 232 F.3d 1116, 1124
(9th Cir. 2000). This is the appropriate course because the fac-
tual record may not be complete — Debtor suggests, for
example, that she can prove that but for Lenders’ improper
postponement, she might have succeeded in curing her
default. This fact, if proven, might establish that Debtor’s
temporary loss of possession of the property was “fairly trace-
able” to Lenders’ deceptive practice. Flores, 177 P.3d at 355
n.23. Therefore, on remand the bankruptcy court must deter-
mine the difference, if any, between Debtor’s situation had
Lenders properly postponed the foreclosure sale and Debtor’s
actual situation, given that the sale was improperly postponed.
This framing properly narrows the inquiry to the damage
caused by Lenders’ deceptive postponement. Id. at 357.

D. Attorneys’ Fees

[16] We also vacate the bankruptcy court’s order awarding
attorneys’ fees and remand for calculation of reasonable attor-
neys’ fees in light of our remand of the damages-causation
issue in Debtor’s HRS § 480-13 claim. See UFJ Bank Ltd. v.
Ieda, 123 P.3d 1232, 1233 (Haw. 2005) (vacatur of attorneys’
fees judgment and remand appropriate where judgment on
which fees are based is remanded). Because the issues are
“likely to arise again on remand” we address the parties’ chal-
lenges to the bankruptcy court’s original calculation of attor-
neys’ fees. Everett v. Perez (In re Perez), 30 F.3d 1209, 1216
(9th Cir. 1994).

First, on remand, the bankruptcy court may, in its discre-
tion, consider evidence of the settlement offer purportedly
made by Lenders early in the course of this litigation. The
bankruptcy court initially ruled that it was prohibited from
admitting evidence of the settlement offer by Federal Rule of
Evidence Rule 408. With the benefit of our recent decision in
Ingram v. Oroudjian, 647 F.3d 925 (9th Cir. 2011) (per
curiam), it is now clear that this evidence is admissible. In
Ingram we adopted the reasoning of the Third Circuit’s opin-
ion in Lohman v. Duryea Borough, 574 F.3d 163 (3d Cir.
2009), and held that Rule 408 does not preclude admission of
evidence of a settlement agreement for the purpose of calcula-
tion of attorneys’ fees. Ingram, 647 F.3d at 927. Therefore,
the bankruptcy court may consider evidence of a settlement
offer to the degree such evidence is relevant to the calculation
of reasonable attorneys’ fees under Hawaii law.

[17] Second, Debtor challenges the bankruptcy court’s
decision limiting the portion of attorneys’ fees allotted to the
breach of contract claim to twenty-five percent of Debtor’s
lost equity on the house. The bankruptcy court’s ruling was
based on the twenty-five percent limit contained in HRS
§ 607-14, the statute governing attorneys’ fees in contract
cases. That statute states that “[I]n all actions in the nature of
assumpsit . . . there shall be taxed as attorneys’ fees, to be
paid by the losing party . . . a fee that the court determines to
be reasonable; . . . provided that this amount shall not exceed
twenty-five per cent of the judgment.” HRS § 607-14.

Debtor argues that the twenty-five percent limit does not
apply to her under the exception created in Food Pantry, Ltd.
 v. Waikiki Business Plaza, Inc., 575 P.2d 869, 880 (Haw.
1978), because the avoidance of the foreclosure sale was not
a monetary judgment subject to the twenty-five percent limit.
In Food Pantry, the Hawaii Supreme Court held that an action
to enforce a lease did not trigger the twenty-five percent limit
because it “could not result in a money judgment to which the
twenty-five percent limitation could be applied.” Id.

[18] The bankruptcy court did not err in applying the
twenty-five percent limit on attorneys’ fees. The Food Pantry
exception applies only “if no money damages are sought or
awarded, as in a complaint for declaratory judgment, [where]
there is no monetary amount on the basis of which to calcu-
late the twenty-five percent statutory ceiling.” Amfac, Inc. v.
Waikiki Beachcomber Inv. Co., 839 P.2d 10, 35 (Haw. 1992).
Debtor’s complaint requested only damages and attorneys’
fees for her breach of contract claim. The monetary damages
for the contract claim were easily discernible as Debtor’s lost
equity in her property, and the bankruptcy court noted that
Debtor later “elected to recover the Mortgaged Property” in
lieu of monetary damages. Debtor’s election of remedies does
not render the value returned to Debtor an “economic incident
of the judgment” that can escape the twenty-five percent limit.
DFS Group L.P. v. Paiea Props., 131 P.3d 500, 504 n.5
(Haw. 2006).

IV CONCLUSION

We AFFIRM the decision of the bankruptcy court with
respect to its findings of liability for a violation of HRS
§ 667-5, a violation of HRS § 480-2, and breach of contract.
We also AFFIRM the bankruptcy court’s order voiding the
foreclosure sale of Debtor’s property. We VACATE the bank-
ruptcy court’s award of money damages under § 480-13 and
attorneys’ fees under HRS § 607-14 and HRS § 480-13(b)(1),
and we REMAND so that the bankruptcy court may (1) make
the necessary findings of causation and damages under HRS
§ 480-13 and (2) properly calculate attorneys’ fees.

AFFIRMED in part, VACATED and REMANDED in part.

The parties shall bear their own costs on this appeal.

[ipaper docId=86846596 access_key=key-1t94qpfdxtjy52ft185h height=600 width=600 /]

First posted on SFF last week, Michigan’s Oakland County Victory against the DC Twins.

M-Live-

The county could be in line for a half-million-dollar payout from mortgage giants Fannie Mae and Freddie Mac if a U.S. District Court decision Friday stands up to a likely appeal.

County Treasurer Deb Cherry said today that Friday’s decision by Judge Victoria A. Roberts could provide an unexpected revenue boost to the county and immediately urged that the payout be used to help fix problems that have been created by mortgage and tax foreclosures.

[M LIVE]

The LIBOR trading scandal could turn out to be far worse for Wall Street than its mortgage troubles.

CNN Money-

FORTUNE — Much of the talk about bad behavior on Wall Street since the financial crisis has been about mortgages with a little bit of insider trading sprinkled in. And that makes sense. Everyone immediately understands what a mortgage is. And the housing bust that resulted from all those bad home loans affected us all. And Hollywood has taught us to ooh and ah over insider trading.

But there is another scandal that has come out of the financial crisis that at least to me makes the mortgage underwriting scandal look like small peanuts, and it has been heating up lately. Two weeks ago, the government disclosed that it is looking into bringing criminal cases against traders and banks that manipulated a key bank lending rate, called LIBOR. A source close to the case says the government’s “may” will be dropped soon. Both Barclays and Deutsche Bank have disclosed that they have been the focus of investigations. Banks have suspended dozens of traders. Today, Credit Suisse announced that it was cooperating with regulators on the case. Traders at UBS reportedly are already working with the government on its investigation. Looking for instances in which Wall Streeters go to jail, unlike mortgages, this may be the one.

[CNN MONEY]

Common Wealth Magazine-

John O’Brien is a national folk hero to anti-foreclosure activists. The Southern Essex Register of Deeds has garnered national attention by accusing big banks of acting like a “criminal enterprise.” After an audit revealed widespread flaws in banks’ handling of mortgage paperwork, O’Brien likened his Salem registry to a crime scene.

So when a New York law firm began soliciting local registries to join a class action lawsuit against an embattled mortgage clearinghouse, O’Brien should’ve been the first to sign on. He wasn’t. O’Brien was told he didn’t have the authority to join the effort. Deed registries in Norfolk, Bristol, and Plymouth counties are now pushing ahead with the case, while O’Brien is left standing on the sidelines.

O’Brien’s inability to sue over mortgage paperwork filed in his own registry highlights a quirk in Massachusetts state government. The state eliminated most of its county governments more than a decade ago, even as it retained some of the trappings of county government. District attorneys and sheriffs are still elected at the county level, for example, but they’re funded by the state. The consolidation of county governments also left the state’s 21 registries of deeds intact.

[COMMON WEALTH MAGAZINE]

Lets not confuse the word “Flaw” with “Fraud”…There is a major difference!

HW-

John Walsh, acting Comptroller of the Currency, said the recent $25 billion mortgage servicing settlement reached between the big banks and state attorneys general does not conflict or double-up on requirements servicers have to follow in consent agreements banks signed with the OCC and other regulators last year. 

In 2010, regulators, including the OCC, examined 14 large federally regulated mortgage servicers and thrifts.

Last year, the agencies issued enforcement orders against all 14 institutions forcing them to take steps to review their foreclosure review processes and to offer aid to borrowers who suffered from flawed foreclosure practices.

[HOUSING WIRE]

Statement of the Hon. Arthur M. Schack, Meghan Faux, Edward Pinto

“FAILURE TO RECOVER: The State OF Housing Markets, Mortgage Servicing Practices and Foreclosures”

March 19, 2012

Think this applies to MERS after you read this case from the 1800’s? Carpenter v. Longan, 83 US 271 – Sup. Court | The note and mtg are inseparable…ASMNT of the note carries the mtg with it, while an ASMNT of the latter alone is a nullity.

Baker, Donelson, Bearman, Caldwell & Berkowitz, PC-

Who is entitled to enforce a mortgage note?

How can the owner of a note effectively transfer ownership?

What is the effect of such a transfer?

May an assignee who has not obtained a recordable assignment of a secured interest in the mortgaged property take steps to become the assignee of record?

While you might expect that these questions would have a different answer in each state, the Permanent Editorial Board (PEB) for the Uniform Commercial Code sought to answer these questions for the nation as a whole in a report it issued on November 14, 2011.

While acknowledging that foreclosure law is largely the province of the states, the board declared nevertheless that the UCC is relevant under state law and, further, that “legal determinations made pursuant to the […] Report will, in many cases, be central to the administration of [state foreclosure] law.” Report, pp. 1 & 14.  The board therefore issued the report with the stated intent to further a more consistent, nationwide application of the UCC principles to state real property law in an era when “not all courts and attorneys are familiar with them.” Report, p. 1.

The UCC is a model code sponsored by the American Law Institute and the Uniform Law Commission that governs commercial transactions and has been enacted, in one form or another, in each of the 50 states.  Generally, Articles 3 and 9 of the UCC are relevant to mortgage loans. If the note is considered a negotiable instrument, Article 3 provides rules governing both the obligations of parties to a note as well as enforcement of those obligations. Article 9 governs the transfer of notes, whether the note is a negotiable instrument or not. The UCC constitutes enforceable law in each state only to the extent that it has been adopted by the state legislature.

Who is entitled to enforce a mortgage note?

Continue reading …[Baker, Donelson, Bearman, Caldwell & Berkowitz, PC]

Copy of the Permanent Editorial Board (PEB) for the Uniform Commercial Code is below but please read the link above first:

ED DeMARCO is a marked man.

NYT-

The acting director of the Federal Housing Finance Agency and overseer of Fannie Mae and Freddie Mac, Mr. DeMarco is a soft-spoken, career public servant — and under fire. In the thankless job of conservator for the loss-ridden mortgage finance giants, he has a duty to ensure that the companies operate in the best interests of the taxpayers who own them. That means working to keep a lid on the companies’ losses, which now total $183 billion.

But in recent weeks, Mr. DeMarco has come under increasing pressure to chuck his obligation to taxpayers and make Fannie and Freddie write down principal on mortgages held by troubled borrowers. He says, with reason, that such a program would run counter to his legal obligation to pursue only those activities that pose the least cost to taxpayers.

[NEW YORK TIMES]

H/T DAN MARSH

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION

OAKLAND COUNTY, ET AL.,
Plaintiffs,

vs

FEDERAL HOUSING FINANCE AGENCY
AS CONSERVATOR FOR FEDERAL
NATIONAL MORTGAGE ASSOCIATION AND
FEDERAL HOME LOAN MORTGAGE COMPANY;
FEDERAL NATIONAL MORTGAGE ASSOCIATION;
AND FEDERAL HOME LOAN MORTGAGE COMPANY,
Defendants.
________________________________/

ORDER GRANTING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT AND
DENYING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT

EXCERPT:

IV. CONCLUSION

In the end, this case turns on a single question: whether a statutory exemption
from “all taxation” includes excise taxes such as the Michigan Transfer Taxes. Wells
Fargo dictates that it does not. Accordingly, the Enterprises are liable for the Transfer
Taxes.

Plaintiffs’ and State Plaintiff’s motion for summary judgment is GRANTED.
Defendants’ motion is DENIED. The issue of damages remains.

IT IS ORDERED.

S/Victoria A. Roberts
Victoria A. Roberts
United States District Judge
Dated: March 23, 2012

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