Background
Dionisio and Angelita Pasion owned real property in Honolulu and executed a $500,000 promissory note in May 2006 in favor of ResMAE Mortgage Corporation, secured by a mortgage on the property. The note was endorsed in blank and subsequently acquired by U.S. Bank National Association as trustee for a J.P. Morgan mortgage trust.
The Pasions defaulted in February 2011 and failed to cure. U.S. Bank filed its foreclosure complaint in December 2012. After years of litigation, U.S. Bank filed its third motion for summary judgment in December 2022. The Circuit Court of the First Circuit granted the motion, entering an interlocutory decree of foreclosure and judgment in April 2024. The Pasions, now self-represented, appealed.
On appeal, the Pasions raised three arguments: (1) U.S. Bank lacked standing to foreclose; (2) the bank failed to submit a clear and reliable loan ledger proving default at the time of filing; and (3) the bank failed to submit admissible default notices mailed to each borrower.
The Court’s Holding
The ICA affirmed the foreclosure judgment on all points. On standing, the court applied the framework from Bank of America, N.A. v. Reyes-Toledo, 139 Hawai’i 361 (2017), and U.S. Bank Trust, N.A. v. Verhagen, 149 Hawai’i 315 (2021), which require a foreclosing plaintiff to prove possession of the note at the time of filing suit. U.S. Bank satisfied this burden through the Affidavit of Note Possession from JPMorgan Chase Custody Services, supported by the Chase Collateral Report tracking the physical location of the original endorsed note. The collateral report established that Chase maintained continuous possession from January 2012 through June 2013, encompassing the December 2012 filing date.
On the default notice issue, U.S. Bank established through its servicer’s declaration that Chase mailed acceleration warning letters to the Pasions in April 2011 via first class mail. The Pasions produced no evidence to rebut this showing. The court declined to address the loan ledger argument because it was raised for the first time on appeal and therefore waived, as was a laches argument.
Key Takeaways
- A foreclosing bank can establish note possession at filing through a collateral tracking report authenticated by the custodian, even when the note has since been transferred to another servicer.
- Arguments not raised before the trial court—including challenges to loan payment histories and affirmative defenses like laches—are waived on appeal under Hawai’i law.
- Self-represented appellants are held to the same standards regarding preservation of issues for appeal as represented parties.
Why It Matters
This decision reinforces the evidentiary framework Hawaii courts apply to foreclosure standing challenges following Reyes-Toledo and Verhagen. For borrowers’ counsel, the case underscores the critical importance of raising all defenses—particularly challenges to loan accounting and affirmative defenses—at the trial court level. For lenders’ counsel, the opinion confirms that a well-documented chain of custody for the original note, supported by authenticated business records from the custodian, remains sufficient to establish standing even in cases involving multiple servicer transfers over extended litigation timelines.