The Hawaii Intermediate Court of Appeals recently ruled in favor of Bank of America, N.A. (Bank) in a foreclosure case involving Constance May Magalong. The court upheld a lower court's decision that allows the Bank to continue its foreclosure process on a property linked to Magalong. This ruling affects homeowners facing similar situations and clarifies legal standards regarding mortgage modifications and loan endorsements.
The case, titled Bank of America, N.A. v. Magalong, was filed under docket number CAAP-25-0000518. Magalong appealed a June 16, 2025, ruling from the Circuit Court of the First Circuit that granted summary judgment to the Bank. The court's decision is significant as it addresses key issues related to mortgage servicing and the rights of borrowers and trustees.
The parties involved in the case include Bank of America as the plaintiff and Constance May Magalong, who is also known as Constance M. Magalong, as the defendant. Magalong is the successor trustee to the Ricardo Ebia, Sr. Trust, which is connected to the property in question. The dispute arose when the Bank sought to foreclose on the property after Magalong's father, Ricardo Ebia, Sr., passed away in 2013. The Bank's foreclosure efforts began in 2017, but Magalong argued that the Bank had violated state laws regarding loan modifications and the validity of the promissory note.
Magalong's appeal focused on three main arguments. First, she claimed that the Bank violated Hawaii Revised Statutes (HRS) § 454M-5.5 by refusing to modify the loan despite her efforts from 2012 to 2016. Second, she contended that the Bank failed to prove the promissory note was validly endorsed. Lastly, she argued that the Bank did not establish that its documents were trustworthy. However, the court found that these arguments were not sufficient to overturn the lower court's decision.
The court ruled that Magalong's claim regarding the loan modification was waived since she did not raise this issue during the trial. The court stated, "the appellate court... need not consider a point that was not presented in the trial court in an appropriate manner." Additionally, the court noted that Magalong is not a borrower under the promissory note, and therefore, the Bank had no obligation to modify the loan under HRS § 454M-5.5.
Regarding the endorsement of the note, the court found that the Bank had provided sufficient evidence to demonstrate that it possessed the original note, which was endorsed in blank. The court emphasized that signatures on an endorsement are presumed to be authentic and authorized unless specifically denied in the pleadings. Magalong did not present evidence to challenge the authenticity of the signatures, leading the court to uphold the validity of the note.
Furthermore, the court addressed Magalong's concerns about the trustworthiness of the Bank's records. The court ruled that the Bank's servicing agent provided adequate declarations regarding the integration of previous servicer records into its own. The court concluded that the Bank had established the authenticity and trustworthiness of the documents, which supported its right to proceed with foreclosure.
This ruling has implications for homeowners and lenders in Hawaii. It clarifies the responsibilities of mortgage servicers and the legal standards for loan modifications. The court's decision reinforces the importance of following proper legal procedures when challenging foreclosure actions. Homeowners seeking modifications must ensure they present their arguments effectively at trial to avoid waiving their rights on appeal.
Looking ahead, it is unclear whether Magalong plans to appeal this decision to a higher court. The ruling from the Hawaii Intermediate Court of Appeals is significant as it sets a precedent for future foreclosure cases in the state. The case highlights the importance of understanding the rights and obligations of both borrowers and lenders in the complex landscape of mortgage servicing.