Former homeowners sue Bank of America

LIHUE — Three people who lost their homes on Kauai are suing Bank of America for purportedly using deceptive, unethical and illegal business practices to manipulate the outcome of foreclosure auctions.

A lawsuit in Fifth Circuit Court claims that Bank of America representatives engaged in a years-long scheme to hold foreclosure sales in a manner that increased the likelihood the bank would be the successful bidder at “the vast majority of auctions.”

The alleged scheme involved the bank’s use of attorney agents, who were licensed to practice law in the state but “failed to follow the custom and practice of other Hawaii lawyers” and violated state laws regarding home foreclosures, according to the civil complaint filed last week on behalf of Beverly Camat, a one-time Kapaa homeowner, and Ronald and Zornitsa Carlson, Missouri residents who lost the house they purchased in Princeville.

The 22-page civil complaint says Bank of America agents never published the date, location or terms of the property sales, a violation of state laws requiring specific descriptions of all foreclosure auctions to be printed in a local publication prior to sale.

The lawsuit argues that the methods used by Bank of America agents to conduct the foreclosure essentially invalidated the sale of the two homes, both of which were auctioned off nearly a decade ago. Attorneys for Camat and the Carlsons are asking the court to return the properties to their clients and force the bank to pay for the decreased market value of the homes, unearned rental revenue and moving expenses.

A claim for punitive damages is also spelled out in the civil complaint, asking the court to order payment in an amount “sufficient to adequately punish” Bank of America and “deter it from such conduct in the future.”

Those damages are based primarily on the lawsuit’s sweeping claims regarding the conduct of bank representatives throughout the course of the foreclosure process, describing attempts to manipulate proceedings as knowing, willful, wanton, reckless and negligent, demonstrating “a conscious disregard for the rights of others.”

If their efforts to reduce attendance at the auction were unsuccessful, Bank of America representatives would regularly attempt to deceive those who did show up and bid, the lawsuit says.

The plaintiff’s attorneys describe occasions when third parties appeared at the auctions and bid successfully, the bank’s agents would transfer ownership of the property to them via deeds containing stipulations that protected the sellers but left the buyers high and dry in the event of a dispute following the sale.

In order to frustrate its customers and confound their efforts to stall foreclosure proceedings, the lawsuit says Bank of America encouraged its borrowers to miss payments, kept its loan modification departments short staffed and intentionally lost or refused to review applications submitted by customers requesting short sales or loan revisions.

A Bank of America spokesperson on Monday asked for a copy of the lawsuit to forward to the corporation’s legal experts but did not provide any comment on the matter by Tuesday evening.

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Caleb Loehrer, staff writer, can be reached at 245-0441 or cloehrer@thegardenisland.com.