Foreclosure Workshop #57: LCP-Maui vs. Tucker — What Every Homeowner Facing Foreclosure Needs To Know About Deficiency Judgments

Your Host: Attorney Gary Victor Dubin
Co-Host:  Former Hawaii Governor John D. Waihee 

In most States, as one of the most vicious aspects of the foreclosure system, if the auction sale price is not enough to pay off the balance of a loan, the lender or its collection agency assignee is entitled to a deficiency money judgment.

Deficiency collection can then consist of aggressively garnishing wages, seizing bank accounts, and foreclosing on a borrower’s other real property if any, forcing many borrowers into bankruptcy, further increasing the emotional trauma and financial loss due to being foreclosed on.

Some State Legislatures in response have enacted anti-deficiency statutes and some State Courts have established judicial limitations on deficiency judgments on their own, and individual borrowers therefore need to consult the deficiency laws in their own jurisdiction to see what their deficiency judgment exposure may be.

A good initial source of such information is the Treatise on Foreclosures published by the National Consumer Law Center, which is offering a 15% purchase discount to our listeners.

For details, listen to this Sunday’s live show and view the NCLC information shortly to be published on our website found at

On today’s live broadcast we address the Hawaii case of LCP-Maui vs. Tucker, representing a typical deficiency judgment outrage that unfortunately occurs weekly in most American jurisdictions, which urgently needs reform, illustrating once again the wisdom of Justice Oliver Wendell Holmes who once remarked, equally relevant today, that it is no justification to have no better reason for a rule of law than that it was laid down in the time of Henry IV.

Hawaii has, since Territorial days, calculated deficiency judgments using the common law judge-made majority approach of merely subtracting the net auction sale proceeds from the loan balance, regardless of the true value of the property at time of sale confirmation, ignoring the fact that a forced foreclosure auction sale rarely if ever yields the fair market value of the real property being foreclosed on.

Today, John Waihee and I will explore why that mechanical approach is not only highly unfair and contrary to the contractual obligation of good faith and fair dealing, but as a brazen forfeiture of homeowner equity it is also arguably in violation of Due Process of Law, for as U.S. Supreme Court Justice Douglas said in Gelfert v. National City Bank of New York, 313 U.S. 221, 233 (1941):

“Mortgagees are constitutionally entitled to no more than payment in full”.

The Tucker case is now before the Hawaii Supreme Court on Application for a Writ of Certiorari, and the contents of the Application will be discussed on this Sunday’s show and posted along with the audio of this live broadcast in the past broadcast section of our website as soon the audio becomes available, usually within hours of our broadcasts.

The outcome of Tucker’s Application could have enormous positive consequences for homeowners not only in Hawaii but as persuasive authority throughout the United States, not only reducing or eliminating deficiency judgments altogether in many if not most foreclosure situations, but also saving hundreds of millions of dollars in homeowner equity otherwise mindlessly and unfairly and unconstitutionally lost through forced foreclosure sales.

Gary Victor Dubin
Dubin Law Offices
Suite 3100, Harbor Court
55 Merchant Street
Honolulu, Hawaii 96813

Office: (808) 537-2300
Cellular: (808) 392-9191
Facsimile: (808) 523-7733


Licensed in California and Hawaii


1 thought on “Foreclosure Workshop #57: LCP-Maui vs. Tucker — What Every Homeowner Facing Foreclosure Needs To Know About Deficiency Judgments

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s