Honorable Judge Eric G. Romanchak flew into Hana, Maui to hold monthly court in the “Little House on the Prairie-style” Hana Courthouse and hear the arguments presented on the foreclosure and eviction issues relating to the Phillips-Tehiva family and their Hawaiian family land.
The Wells Fargo, as Trustee v. Phillips-Tehiva case has been the focus of local and international media attention causing emotions
to run at very high levels.
Judge Romanchak was remarkable. At 10:00 am Judge Romanchak sequestered the attorneys in the courthouse. All the windows and doors were closed as the Judge reviewed the case and discussion of settlement between the attorneys.
An hour later the windows and doors opened up and the public followed the Tehiva-Phillips family inside. Judge Romanchak explained to a full court room that he had read the files, but he was not prepared to rule on the bench, that he would take the matters under advisement and that in one month he would be prepared to make a ruling. The Judge further stated that the discussions between the attorneys included some possible resolutions and that “the longer this drags on the more difficult it gets for everybody” but if there were possibilities for settlement he may hold off on ruling in order to allow Wells Fargo and Phillips-Tehiva to work it out.
Judge Romanchak shared that the Hawaii judiciary are very aware of the rising number of these foreclosure and ejectment cases that are coming up in the courts, that some jurisdictions are overwhelmed by these actions and that the appellate courts are trying to get these cases immediately into mediation.
While the courts appear to want settlements – it’s apparent that there is a disconnect between the judiciary, the lawmakers and a comprehensive understanding of the shadow banking scheme. The Phillips-Tehiva loan is alleged to be in a trust – but never timely entered the REMIC trust and by New York trust law which governs the trust, any assignment AFTER the trust closes is void.
The Phillips-Tehiva loan was originated by Option One aka Sand Canyon which is no longer in the mortgage real estate business… and Option One was already paid by someone… possibly the Depositor for the Trust – but failed to record the sale and transfer of the loan in the Hawaii Bureau of Conveyances until 3 years after the Trust closed – and 2 years AFTER it went OUT OF BUSINESS. Now, by New York statutes it appears that the assignment is void.
In most trusts, in order to make modifications, the servicer must buy the loan out of the trust at face value; and in order to reduce the principal or modify the loan they have to be willing to take a loss. This is complicated by the fact that on Bloomberg Terminal the loan in the 1A1 tranche of the Trust [where it is allegedly located] is current – fully paid to date.
Even if the Tehiva loan were lawfully in the Trust – the loan is apparently paid – the tranche history show no losses. Nearly half of the loans and tranches have been closed out – the assets are rapidly depleting as the Trust is apparently winding down.
What the courts need to realize is that, for example in this case, Wells Fargo is merely the Trustee on behalf of the certificate-holders of a Trust and it doesn’t want another toxic asset on its books.
In fact, its doubtful that they have room to hold another loan if the regulators were to assess these Trust loans as assets of the bank.
Wells Fargo is stuck with the position of protecting the certificate-holders from thousands of $$$ in litigation, possibly another $3 million judgment or maybe just walking away to pay for the sins of its predecessors. They certainly do not want a jury trial on Maui.
Think about it Wells Fargo:
March 28, 2012 A Maui jury has awarded nearly $4 million in damages to a Molokai couple who sued their condo association and individual directors…
Oct. 14, 2010 A Texas woman visiting relatives on Maui in 2007 slipped and fell at a McDonald’s in Kahului. A jury awarded her $5.67 million…
March 3, 2010 A circuit court jury on Maui has awarded more than $53 million to a group of homeowners…