Hawaii appeals court hands U.S. Bank two foreclosure wins in one day

Hawaiʻi's appeals court handed U.S. Bank two foreclosure wins in one day – one on note possession, one a sharp lesson on surplus equity.

Both summary disposition orders came out of the Intermediate Court of Appeals of the State of Hawaiʻi on May 22, 2026. Different panels, different facts, both naming U.S. Bank as trustee for a pre-crisis private-label trust. Read together, they read as a same-day signal to foreclosing trustees and the servicers running their files. 

The first ruling, U.S. Bank as Trustee v. Goodwin, was decided by Presiding Judge Katherine G. Leonard with Associate Judges Keith K. Hiraoka and Kimberly T. Guidry. The court affirmed a foreclosure decree against borrower David D. Goodwin over a Honolulu property. 

The loan dates to April 2006. Goodwin signed a promissory note in favor of National City Bank of Indiana, indorsed in blank, and backed it with a mortgage in favor of National City Mortgage. The note eventually moved into the Washington Mutual Mortgage Pass-Through Certificates WMALT Series 2006-AR6 Trust, with U.S. Bank as trustee and Select Portfolio Servicing, Inc., or SPS, as servicer. 

The appeal turned on a date. Goodwin argued U.S. Bank had to prove it could enforce the note as of December 3, 2008, when an earlier lender, La Salle Bank NA, had filed its own foreclosure over the same property. That earlier case essentially stalled. Between August 2012 and February 2024, there were no party filings. La Salle finally dismissed it without prejudice on February 5, 2024. 

U.S. Bank filed its own complaint on September 25, 2017. The trial court ruled that was the date that counted for standing. The appeals court agreed. U.S. Bank could not have been a party to the 2008 case anyway, because it did not acquire the note until June 25, 2014. 

On the central question - who held the note – U.S. Bank put up one trial witness: Patrick Pittman, a litigation director at SPS with about 22 years at the company. He walked the court through SPS's vault tracking report, its document tracking report, the collateral file holding the original note, and the bailee letter showing transmission to the bank's counsel on April 12, 2024. The file landed in SPS's on-site vault on June 25, 2014, he testified, and stayed there until it left for counsel. He also explained how SPS validates records inherited from a prior servicer: a data vetting process that has to clear before a loan boards. The trial judge found him credible. The appeals court found no clear error. 

The second ruling is the harder lesson. In U.S. Bank as Trustee v. Lake, Chief Judge Karen T. Nakasone sat with Associate Judges Katherine G. Leonard and Clyde J. Wadsworth. The court affirmed an order steering most of a $411,700 foreclosure surplus away from the LLC that held title to the property. 

Out of the $411,700, the commissioner took $7,673.08 and U.S. Bank received $208,847.19 covering attorney's fees, costs, principal, and other charges. The trial court ordered the rest go to the original owner, Marcus Pono Lake, and the Estate of Viola Lake Fao, jointly and severally – not to 1326 Keeaumoku, LLC. 

How 1326 Keeaumoku had ended up with title is the story. Years earlier, Lanikuhana Patio Homes, an association, ran a non-judicial foreclosure over $16,102.24 in unpaid maintenance fees after Fao's death. Lake says he was not served with the February 4, 2014 notice of default. At the association's public sale, 1326 Keeaumoku paid $35,000 for the property. Its tax-assessed value as of February 20, 2014 was $260,000. The property later sold for $410,000 in the underlying judicial foreclosure in 2023. Lanikuhana conveyed title to 1326 Keeaumoku by quitclaim deed recorded September 9, 2014. On September 2, 2015 – within the one-year window – Lake tendered payment to redeem. Lanikuhana treated it as timely. 1326 Keeaumoku refused to honor it. 

At the confirmation hearing, the trial judge described the association sale as not arm's length and not designed to capture fair market value. He read Hawaiʻi's surplus statute, which directs any remainder to the owner of the mortgaged property, to mean the original owner rather than a later buyer who acquired title through a distressed sale. The appeals court found no abuse of discretion. 

The panel also affirmed the $205,000 supersedeas bond the trial court set, calculated from $41,000 a year in interest on the $410,000 sale price over four years for the appeal, plus a fifth year for fees and costs. 1326 Keeaumoku posted the bond on June 30, 2023. 

For trustees and the servicers running their files, the takeaway from one day in Honolulu is practical. Clean recordkeeping and a litigation director who can speak to the chain of possession will carry a foreclosure trial. But a Hawaiʻi court sitting in equity can still look past the certificate of title and decide that the surplus belongs somewhere else.