After skipping required notices, BNYM wanted a do-over. Hawaii's appeals court said no
A Hawaii court just delivered a clear message: if you skip required steps in your foreclosure, you can't simply hit the reset button yourself.
The Intermediate Court of Appeals of the State of Hawaii handed down its decision on February 6, 2026, reversing a lower court ruling that would have let The Bank of New York Mellon undo a foreclosure from 2009. The takeaway for servicers? When you skip required steps during a nonjudicial foreclosure, only the borrower gets to decide whether the sale stands or falls.
Here’s the sequence. Pancho Deleon Abalos and Cassie Lei Almanzor Abalos took out a mortgage in Hawaii. They defaulted. BNYM moved to foreclose and published the required notice setting a public auction for April 28, 2009.
Then came the postponements. April 28 got pushed to May 28. May 28 moved to August 4. August 4 shifted to September 4. The property finally sold to BNYM at that September auction. The bank recorded its foreclosure affidavit on October 1, 2009, and took title.
So, what went wrong? BNYM never published notice of any of those three postponements. Not one. The mortgage contract required it. Hawaii law required it under Section 667-5. The bank just didn't do it.
Fast forward a decade. The borrowers had vacated. The property had remained vacant for ten years. And BNYM filed suit to void its own foreclosure, reinstate the mortgage, and start fresh with a judicial foreclosure instead.
The trial court went along with it. On February 15, 2023, the Circuit Court of the First Circuit declared the 2009 foreclosure "null and void," ordered the mortgage reinstated, and told BNYM to wipe the foreclosure affidavit from the Land Court records.
The Association of Apartment Owners of Palm Villas II, which had its own stake in the property through unpaid maintenance fees, appealed. The homeowners association argued that Hawaii law doesn't let lenders void their own foreclosures.
The appeals court agreed. In a summary disposition order, the three-judge panel cited a string of Hawaii Supreme Court decisions establishing a clear rule: wrongful nonjudicial foreclosures are voidable at the election of the borrower. Period.
The court pointed to the 2021 Delapinia case, which held that when a foreclosure violates the rules, whether those violations are statutory or contractual, the sale becomes voidable. But that right belongs to the mortgagor, not the mortgagee.
There's a wrinkle here that matters. When property gets sold to a good faith third party purchaser, borrowers lose the option to void the sale and get their property back. Their only remedy at that point is money damages. But when the lender buys the property itself, as BNYM did, that purchaser protection doesn't apply. The lender remains tied to whatever dispute it created.
Still, that doesn't mean the lender gets to call a mulligan. The court noted that BNYM presented zero evidence that either of the Abalos borrowers had elected to void the foreclosure. The record showed they had vacated the property.
Without the borrowers making that choice, BNYM had no grounds to void the sale itself. The bank failed to meet its burden of proof for its claims seeking declaratory relief and rescission.
The appeals court vacated the February 15, 2023 judgment and sent the case back to the trial court for further proceedings.
For mortgage servicers, the lesson cuts two ways. First, publish those postponement notices. Every single one. The requirements aren't suggestions. Second, if you skip steps and the foreclosure goes through anyway, you can't unilaterally unwind it years later just because you'd prefer a different outcome. That decision belongs to the borrower, and only the borrower.
The case also highlights the timeline of foreclosure errors. BNYM's failure to publish postponement notices in 2009 led to litigation that stretched into 2026, with a property sitting vacant for over a decade.
The court made clear that strict compliance with foreclosure procedures isn't optional, but when violations occur, the remedy lies with the borrower who was harmed, not with the lender who created the problem.
