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Financial Services Law Insights and Observations

Hawaii Supreme Court: Bank bears burden of establishing borrower’s alleged default

Courts State Issues Mortgages Consumer Finance

Courts

On May 28, the Hawaii Supreme Court vacated summary judgment in favor of a national bank, ruling that the “bank seeking to foreclose on a mortgage and note” did not meet its “burden of establishing that the borrower defaulted under the terms of the agreements.” The bank sought a judicial foreclosure of the borrower’s residence and submitted a ledger in order to prove the borrower had defaulted. However, the state’s Supreme Court determined that the Intermediate Court of Appeals erred in affirming the lower court’s order because the bank failed to explain how to read the entries. According to the Supreme Court, the ledger was “ambiguous” and presented “genuine issues of material fact” as to whether the bank was entitled to bill the borrower for lender-placed insurance and whether the borrower “actually owed the amounts that forced her into the alleged default” when the bank “apparently redirected her payments to cover the cost of lender-placed insurance.”

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