Winters claimed the foreclosure shouldn’t have happened at all. She alleged serious servicing failures by both the original lender, Fremont Investment & Loan, and later Litton Loan Servicing, which allegedly failed to process payments, miscommunicated loan ownership, and ignored her debt dispute and loan modification attempts. Her counterclaims included wrongful foreclosure, breach of contract, violations of the Truth in Lending Act (TILA), and the Real Estate Settlement Procedures Act (RESPA), as well as unfair and deceptive practices under Hawaii law.
According to the court’s opinion, Winters said she made her March and April 2008 payments by phone as instructed. In May, Fremont told her they were closing and wouldn’t accept further payments. Litton entered the picture in June but didn’t provide written instructions or confirm her requests for a payoff amount. She eventually entered a repayment plan and wired a $5,000 payment—but was told it was $100 short. Litton allegedly proceeded with foreclosure anyway.
She also claimed Litton forced insurance on the property despite her having coverage, and never responded to her written dispute in December 2008. In June 2009, she sent a rescission letter under TILA but said she never received a response. Deutsche Bank completed the nonjudicial foreclosure and recorded the deed in August 2010.
The trial court had dismissed most of Winters’ counterclaims and granted partial summary judgment in favor of Deutsche Bank. But the appellate court reversed that, ruling that her claims—supported by declarations and documentation—raised genuine issues that should be heard in court. It also found she had standing as trustee, since the property was held in her name through a revocable trust, and that the claims were timely under Hawaii law.
Notably, the court rejected the idea that Winters needed to tender full repayment of the mortgage in order to bring a quiet title claim. Because she was not seeking to erase the debt but to reinstate the loan, the judges ruled that the “tender rule” didn’t apply in this context.