Hawaii Foreclosure Defense — Answer, Counterclaims, MFDR Request, TRO to Stay Power-of-Sale, and Loss Mitigation Package

HAWAII FORECLOSURE DEFENSE — ANSWER, COUNTERCLAIMS, MFDR REQUEST, TRO TO STAY POWER-OF-SALE, AND LOSS MITIGATION PACKAGE

PART 1 — PRE-DEFENSE INTAKE CHECKLIST

Client: [_________________________]
Property Address: [_________________________]
TMK: [____-___-___-___:___]
Island / Circuit: [_________________________]
Loan Servicer: [_________________________]
Foreclosing Mortgagee: [_________________________]
Foreclosure Type: ☐ Judicial (Ch. 667 Part I) ☐ Nonjudicial Power of Sale (Ch. 667 Part II / Act 48)
Notice of Default Recorded: [__/__/____]
MFDR Election Deadline (30 days): [__/__/____]
Scheduled Sale Date: [__/__/____]

Intake Items

☐ Determine whether foreclosure is judicial or nonjudicial Act 48 power of sale
☐ Verify owner-occupancy status (required for MFDR eligibility under HRS § 667-75)
☐ Confirm whether borrower received Notice of Default and Intention to Foreclose with required MFDR election form
☐ File MFDR election with DCCA Office of Administrative Hearings within 30 days
☐ Obtain Note, Mortgage, and all recorded assignments/substitutions
☐ Verify MERS chain if applicable
☐ Confirm 60-day cure period under HRS § 667-22
☐ Verify 3-week public notice of sale period under HRS § 667-27 (once weekly for 3 successive weeks; sale at least 14 days after last publication)
☐ Pull RESPA / Reg X correspondence
☐ Confirm 120-day federal pre-foreclosure waiting period (12 C.F.R. § 1024.41)
☐ Pull credit reports (3 bureaus)
☐ SCRA status (50 U.S.C. § 3953)
☐ Evaluate option to compel conversion to judicial foreclosure under HRS § 667-91
☐ Consider Chapter 13 bankruptcy stay

PART 2 — MFDR ELECTION TO PARTICIPATE (Hawaii Owner-Occupants Only)

OWNER-OCCUPANT'S ELECTION TO PARTICIPATE IN MORTGAGE FORECLOSURE DISPUTE RESOLUTION PROGRAM

TO: State of Hawaii, Department of Commerce and Consumer Affairs, Office of Administrative Hearings, MFDR Program

Re: MFDR Case No. (to be assigned)
Mortgagor / Owner-Occupant: [_________________________]
Property Address: [_________________________]
TMK: [____-___-___-___:___]
Mortgagee / Servicer: [_________________________]
Loan No.: [_________________________]
Notice of Default Date: [__/__/____]

Pursuant to HRS § 667-75, the undersigned owner-occupant elects to participate in the Mortgage Foreclosure Dispute Resolution Program and certifies the property is occupied as the owner's principal residence. Enclosed is the required filing fee.

[____________________________________] Date: [__/__/____]
[Owner-Occupant Signature]

[____________________________________]
[Attorney Name], Hawaii Bar No. [______]
[Firm; Address; Phone; Email]

PART 3 — ANSWER, AFFIRMATIVE DEFENSES, AND COUNTERCLAIMS (Judicial Foreclosure)

Court Caption

Civil No.: [____-____-______]
Judge: [_________________________]

DEFENDANT'S ANSWER, AFFIRMATIVE DEFENSES, AND COUNTERCLAIMS

COMES NOW Defendant, by counsel, pursuant to HRCP Rules 8, 12, 13:

Admissions / Denials

1. Defendant [admits / denies / lacks sufficient information] the allegations in Paragraph 1. [Repeat per paragraph.]

AFFIRMATIVE DEFENSES

FIRST — Lack of Standing. Plaintiff has not produced the original Note or a complete chain of assignments. See Bank of Am., N.A. v. Reyes-Toledo, 139 Haw. 361 (2017).

SECOND — Failure to Establish Entitlement to Judgment at Time of Motion. Reyes-Toledo requires evidence of standing as of the date of filing AND date of motion.

THIRD — Failure of Conditions Precedent (Notice of Default; Acceleration).

FOURTH — Violation of 12 C.F.R. § 1024.41 (dual tracking).

FIFTH — Violation of MFDR Procedures (HRS §§ 667-71 et seq.), if applicable.

SIXTH — Statute of Limitations (HRS § 657-1(1) — 6 years on written contract).

SEVENTH — Equitable Estoppel / Promissory Estoppel.

EIGHTH — Payment / Tender / Setoff.

NINTH — SCRA (50 U.S.C. § 3953).

TENTH — Unclean Hands.

ELEVENTH — Violation of HRS § 480-2 (Unfair or Deceptive Acts or Practices).

TWELFTH — TILA Rescission (15 U.S.C. § 1635), if applicable.

THIRTEENTH — Failure to Join Indispensable Party.

COUNTERCLAIMS

COUNT I — Violation of RESPA / Regulation X (12 U.S.C. § 2605; 12 C.F.R. §§ 1024.35, 1024.36, 1024.41)

2. Servicer failed to respond to Notices of Error / Requests for Information and engaged in prohibited dual tracking.
3. Damages: actual, statutory up to $2,000 per violation, costs, attorney's fees.

COUNT II — Violation of FDCPA (15 U.S.C. §§ 1692e, 1692f, 1692g)

COUNT III — Violation of FCRA (15 U.S.C. § 1681s-2(b))

COUNT IV — Violation of HRS § 480-2 (UDAP) and HRS § 480-13

4. Plaintiff engaged in unfair or deceptive acts in the conduct of trade or commerce.
5. Remedies: treble damages (with $1,000 minimum), attorney's fees, costs (HRS § 480-13).

COUNT V — Violation of HRS Chapter 480D (Collection Practices)

COUNT VI — Violation of HRS Chapter 667 Part II / Act 48 (Power of Sale Procedures), if nonjudicially foreclosed

COUNT VII — Breach of Contract / Breach of Implied Covenant of Good Faith and Fair Dealing

COUNT VIII — Quiet Title / Declaratory Relief

PRAYER

A. Dismiss the Complaint with prejudice;
B. Judgment on Counterclaims;
C. Compensatory, statutory, treble, and punitive damages;
D. Attorney's fees and costs;
E. Such further relief as just.

Dated: [__/__/____]

[____________________________________]
[Attorney Name], Hawaii Bar No. [______]
[Firm; Address; Phone; Email]
Attorney for Defendant

VERIFICATION

I declare under penalty of perjury under the laws of the State of Hawaii that the foregoing is true and correct.

[____________________________________] Date: [__/__/____]

PART 4 — MOTION TO DISMISS FOR LACK OF STANDING

DEFENDANT'S MOTION TO DISMISS FOR LACK OF STANDING PURSUANT TO HRCP RULE 12(b)(1)

Under Bank of America, N.A. v. Reyes-Toledo, 139 Haw. 361 (2017), and U.S. Bank Trust, N.A. v. Verhagen, 149 Haw. 315 (2021), Plaintiff must prove standing at the time the complaint was filed AND at the time of summary judgment. Plaintiff has failed to do so.

WHEREFORE, Defendant respectfully requests dismissal.

PART 5 — EMERGENCY TRO AND PRELIMINARY INJUNCTION (To Stay Nonjudicial Power-of-Sale or Foreclosure Auction)

Court Caption

Civil No.: [____-____-______]

VERIFIED COMPLAINT FOR TRO AND PRELIMINARY INJUNCTION

1. Defendants have scheduled a public auction for [__/__/____] at [__:__] pursuant to HRS § 667-27.
2. Plaintiff seeks to restrain the sale pending judicial determination.
3. Plaintiff is likely to succeed on the merits (standing; Act 48 noncompliance; RESPA dual tracking; MFDR procedural failure).
4. Irreparable harm — real property is unique; Hawaii caselaw recognizes the homestead injury as irreparable.
5. Balance of equities and public interest favor injunction.

Prayer

A. Issue TRO under HRCP Rule 65 staying the sale;
B. Set hearing on preliminary injunction;
C. Award fees and costs under HRS § 480-13 and other fee-shifting statutes.

Verification

I declare under penalty of perjury that the foregoing is true and correct.

[____________________________________] Date: [__/__/____]

PART 6 — ELECTION TO CONVERT NONJUDICIAL TO JUDICIAL FORECLOSURE (HRS § 667-91)

NOTICE OF ELECTION TO CONVERT NONJUDICIAL FORECLOSURE TO JUDICIAL FORECLOSURE

Pursuant to HRS § 667-91, the undersigned mortgagor elects to convert the pending nonjudicial power-of-sale foreclosure to a judicial foreclosure proceeding. Service is made on the mortgagee, foreclosing agent, and trustee.

[____________________________________] Date: [__/__/____]

PART 7 — LOSS MITIGATION APPLICATION PACKAGE (Reg X)

Documents

☐ Uniform Borrower Assistance Form (Form 710)
☐ IRS Form 4506-C
☐ Two years tax returns with schedules
☐ Two most recent paystubs (each borrower)
☐ Two most recent bank statements
☐ P&L (self-employed, 90 days)
☐ Signed Hardship Affidavit
☐ Property tax / insurance / AOAO maintenance fee proof
☐ Owner-occupancy proof
☐ Dodd-Frank certification

Hardship Affidavit

I, [_________________________], certify hardship due to:

☐ Loss of income ☐ Reduction in income ☐ Medical ☐ Divorce ☐ Death ☐ Disability ☐ Disaster (e.g., Lahaina fire; hurricane; volcanic activity) ☐ Increased expenses ☐ Other: [_____________]

Hardship began: [__/__/____]

Narrative: [_____________________________________________________
___________________________________________________________________]

[____________________________________] Date: [__/__/____]

PART 8 — LOAN MODIFICATION REQUEST LETTER

[Date]

[Servicer]
Loss Mitigation Department
[Address]

Re: Loan No. [____________]

Pursuant to 12 C.F.R. § 1024.41 and applicable investor guidelines (Fannie Mae Flex; Freddie Mac Flex; FHA-HAMP; VA Affordable Modification; USDA Special Loan Servicing), Borrower requests review for:

1. Reinstatement
2. Repayment plan
3. Forbearance (including disaster forbearance, if applicable)
4. Loan modification
5. Short sale
6. Deed in lieu

Borrower invokes § 1024.41(f) and (g) protections. Confirm receipt within 5 business days.

[____________________________________] Date: [__/__/____]

PART 9 — DISCOVERY DEMAND

Requests for Production

☐ Original Note (wet ink) with all allonges/endorsements
☐ Mortgage and all recorded assignments / substitutions
☐ All MFDR program correspondence and decisioning
☐ Notice of Default and Intention to Foreclose under HRS § 667-22
☐ Public Notice of Sale and all publications under HRS § 667-27
☐ Complete payment history
☐ Servicing notes and call logs
☐ All RESPA notices of error and responses
☐ All loss mitigation files and decisioning
☐ Trust PSA and mortgage loan schedule
☐ Credit furnishing records (e-OSCAR / Metro 2)

Interrogatories

1. Identify every entity that has held the Note from origination.
2. State the date and means of every Notice of Default and Public Notice of Sale.
3. Describe each loss mitigation review.
4. Identify MFDR participation, neutral, and outcome.
5. State payoff and reinstatement amounts as of [__/__/____].

Requests for Admission

☐ Admit Plaintiff did not possess the original Note at the time the complaint was filed.
☐ Admit Plaintiff did not possess the original Note at the time of the summary judgment motion. (Reyes-Toledo; Verhagen)
☐ Admit a complete loss mitigation application was pending when foreclosure proceeded.

PART 10 — BANKRUPTCY REFERRAL

☐ Chapter 13 — cure arrears over 60 months (11 U.S.C. § 1322(b)(5)); automatic stay halts sale upon filing. MUST file before sale and before judicial confirmation.
☐ Chapter 7 — discharge personal liability; orderly surrender.
☐ Refer to: [_________________________], Hawaii Bankruptcy Counsel — [Phone] — [Email]
☐ SCRA analysis: [_________________________]

PART 11 — KEY HAWAII DEADLINES AT-A-GLANCE

SOURCES AND REFERENCES

• HRS Chapter 667 — Foreclosures (Parts I, II)
• HRS §§ 667-71 to 667-87 — MFDR Program (Act 48, SLH 2011, as amended by Act 182, SLH 2012)
• Bank of America, N.A. v. Reyes-Toledo, 139 Haw. 361 (2017) — standing at filing AND motion
• U.S. Bank Trust, N.A. v. Verhagen, 149 Haw. 315 (2021) — standing reaffirmed
• Compton v. Countrywide Fin. Corp., 761 F.3d 1046 (9th Cir. 2014) — Hawaii UDAP applied to mortgage servicing
• 12 C.F.R. § 1024.41 — Regulation X loss mitigation
• DCCA MFDR Program — https://cca.hawaii.gov/hfic/mfdr/