Judge erases 525k mortgage; tries to kill mortgage system

A Long Island couple is home free after an outraged judge gave them an amazing Thanksgiving present -- canceling their debt to ruthless bankers trying to toss them out on the street.

Suffolk Judge Jeffrey Spinner wiped out $525,000 in mortgage payments demanded by a California bank, blasting its "harsh, repugnant, shocking and repulsive" acts.

The bombshell decision leaves Diane Yano-Horoski and her husband, Greg Horoski, owing absolutely no money on their ranch house in East Patchogue.

Spinner pulled no punches as he smacked down the bankers at OneWest -- who took an $814.2 million federal bailout but have a record of coldbloodedly foreclosing on any homeowner owing money.

"The bank was so intransigent that he [the judge] decided to punish them," Greg Horoski, 55, said about Spinner's scathing ruling last Thursday against OneWest and its IndyMac mortgage division.

It erased up to $291,000 in principal and $235,000 in interest and penalties.

The Horoskis -- who had been paying only interest on their mortgage -- had no equity in the home.

Horoski, who had begged the bankers to let him restructure the loan, said, "I think the judge felt it was almost a personal vendetta." Dealing with the bank, he said, was "like dealing with organized crime."

OneWest said, "We respectfully disagree with the lower court's unprecedented ruling and we expect that it will be overturned on appeal."

It claimed it "has been extremely active in working with consumers on home loan modifications through the Obama administration's Home Affordable Modification Program and other loan modification initiatives."

The bank is owned by a private equity group that purchased the failed IndyMac bank.

Yano-Horoski, a college professor of English and cognitive reason, and Horoski, who sells collectible dolls online, bought their 3,400-square-foot, one-level house 15 years ago for less than $200,000.

In 2004, court records show, they refinanced, paying off their original mortgage with part of a $292,500 sub-prime loan from Deutsche Bank. They used what was left for health care and for his business.

The loan carried an initial adjustable interest rate of 10.375 percent, which soared to 12.375 percent.

It eventually ended up being either owned or serviced by IndyMac, and the bank sued the couple in July 2005 when they began having trouble making payments because of Horoski's health problems.

After a foreclosure was approved last January, Yano-Haroski successfully asked for a court settlement conference.

Spinner excoriated OneWest for repeatedly refusing to work out a deal, for misleading him about the dollar amounts at stake in the case, and for its treatment of the couple over months of hearings.

OneWest's conduct was "inequitable, unconscionable, vexatious and opprobrious," Spinner wrote.

He canceled the debt because the bank "must be appropriately sanctioned so as to deter it from imposing further mortifying abuse against [the couple]."

The bank is involved in a similar case in California, where it's trying to foreclose on an 89-year-old woman, despite two court orders telling it to stop.

Read more: http://www.nypost.com/p/news/local/judge_kos_mortgage_to_slap_ba...

So u guys... rather than look to save a few $$$. might as well try to get a free mortgage...

they get to live there at least until the appeal runs its course --- not a bad result for them

I wonder if they could get a 60% LTV equity loan from Penfed and cash out

...

I love that the bank is "ruthless" and "coldblooded" for wanting to get paid back the money that it loaned the couple at the rates they contractually agreed to, or alternatively foreclose, the remedy that they were contractually allowed to do in the event of nonpayment. I suppose my employer is also ruthless and coldblooded for wanting me to show up to work sober.

Pay your bills, deadbeat!

Suffolk Judge Jeffrey Spinner wiped out $525,000 in mortgage payments demanded by a California bank, blasting its "harsh, repugnant, shocking and repulsive" acts.

The bank got off light. Consider EMC and the starks who got like 6M from an arbitratior...

http://www.appellate.net/briefs/EMC_amicus.pdf

 

Yes, banks foreclose on deadbeats who don't make their payments. That's the way life works.
Yeah and they should be able to walk all over them too.

ppatin said: Yes, banks foreclose on deadbeats who don't make their payments. That's the way life works.

But businesses who run out of money shouldn't have to go bankrupt? That's the way life works (now).

I don't agree with either, but these are the crazy things that happen when you start bailing out any particular group.

codename47 said: Suffolk Judge Jeffrey Spinner wiped out $525,000 in mortgage payments demanded by a California bank, blasting its "harsh, repugnant, shocking and repulsive" acts.

The bank got off light. Consider EMC and the starks who got like 6M from an arbitratior...

http://www.appellate.net/briefs/EMC_amicus.pdf

 

Yes, banks foreclose on deadbeats who don't make their payments. That's the way life works.
Yeah and they should be able to walk all over them too.

While that brief was interesting, it was also very OLD. What was the final outcome of that case?

I really wish we would have done the 'financial armageddon' and let everything fail that was insolvent. Trying to conduct business nowadays is so fraught with hypocrisy (on both sides) that it's getting pretty annoying. Social acrimony here we come

Lets see.

The case appears in court "...as the result of a state law mandating pre-foreclosure settlement conferences between lenders and borrowers of subprime, or high-cost, home loans."

"Instead of negotiating, he said that the bank had engaged in "harsh, repugnant, shocking and repulsive" treatment of the homeowner, Dana Yano-Horoski."

Karen Dickinson, regional loss mitigation manager for IndyMac, appeared and "made it abundantly clear that no form of mediation, resolution or settlement would be acceptable" to the bank, Justice Spinner wrote.

Notably, the judge wrote, the bank asserted that the borrower had previously defaulted on a forbearance agreement when in fact the agreement had not even been sent out until after it was due.

"Defendant, through Plaintiff's duplicity, found herself to be in unique and uncomfortable position of being placed in default of the 'agreement' even before she had received it," Spinner wrote."

"Spinner ordered another hearing last week at which discrepancies surfaced about how much was actually owed.

The bank claimed a balance of $527,437 was due, but Yano-Horoski gave a much lower figure --according to two bank letters, she owed around $285,000 as of August 2009.

Spinner pointed out that a prior affidavit by a bank representative, "presumably one with knowledge of the account," tabbed the principal balance at $290,687."

So, the bank showed up in court mandated meeting, abided by the strict rule of state law while flaunting it's purpose, caused the homeowner to default on a forebearance by not sending it out till she was in default (not giving her the ability to abide by its terms), and couldn't even agree on how much she owed. If she had paid the amount on the bank letter demand, they still would have sued for foreclosure, because they filed an in-court demand that was double that.

Yeah, I don't see this as an outlandish result. Banks have to deal with people fairly or else they will be punished in the legal system. It's the same reason you can sue a debt collector for harassment, or get out of an unconscionable contract. In this case, the homeowner never had a chance.

I don't disagree with the Brooklyn case either- If the bank can't prove they own the mortgage, they have no right to foreclose, no matter how much they argue about tranches or assignment. They may consider their electronic collateralization and assignment systems the pinnacle of efficiency, but it still needs to abide by state and federal law regarding mortgage ownership. If it doesn't, it's the banks' collective fault, not the fault of the legal system for requiring them to follow the law.

I mean, hell, if the banks can't prove who owns the mortgage, who is the homeowner supposed to pay? One of these days we'll see a smartass file a concursus asking who the hell owns his mortgage check, and when the banks can't prove it, he'll probably get his mortgage cancelled too.

They bought the house over 15 years ago for under 200K. I'll bet its current value isn't much below the outstanding principal amount plus back interest. That's probably why the bank insists on foreclosing.

walletfart said: ppatin said: Yes, banks foreclose on deadbeats who don't make their payments. That's the way life works.

But businesses who run out of money shouldn't have to go bankrupt? That's the way life works (now).

I don't agree with either, but these are the crazy things that happen when you start bailing out any particular group.

With the bailout, the government isnt giving away money. they are lending money. The crazy bailout to GM was a loan, bailout to all the banks were loans or stock. Everything was a trade of cash for debt or equity.

so for a deadbeat homeowner, what are they going to trade?

glxpass said: Whatever the final results are, would this case really set a precedent? If not, I think the thread title excerpt, "tries to kill mortgage system" is a tad overblown.The person who issued the decision is a state trial court judge, whose decision absolutely does not set a precedent. An an aside, I don't think that there is much doubt that the decision will be overturned.

glxpass said: Whatever the final results are, would this case really set a precedent? If not, I think the thread title excerpt, "tries to kill mortgage system" is a tad overblown.Not just overblown but also inequitable, unconscionable, vexatious and opprobrious too.

just like the home makeover show hall of famers....wonder how long it is until we find out these folks have defaulted on a home-equity loan they took out on their home.

Will the same judge cancel their IRS bill next april?

geo123 said: An an aside, I don't think that there is much doubt that the decision will be overturned.

I think you should read the actual opinion before you say this. There was as much disregard for the court as there was for the defendant. The Court had to schedule five different hearings before the bank could even be bothered to send someone, and the someone they sent was acting in bad faith. As the judge noted in the opinion, there's precedent for the remedy he ordered.

From the bank's point of view, why appeal this? The amount of bad publicity from yet another round of media coverage of the mean bank picking on the poor cripples has to be worth more than the 300k they're actually losing, even if they were assured of getting it overturned, which is not at all the case.

wx1trw said: geo123 said: An an aside, I don't think that there is much doubt that the decision will be overturned.

I think you should read the actual opinion before you say this. There was as much disregard for the court as there was for the defendant. The Court had to schedule five different hearings before the bank could even be bothered to send someone, and the someone they sent was acting in bad faith. As the judge noted in the opinion, there's precedent for the remedy he ordered.

From the bank's point of view, why appeal this? The amount of bad publicity from yet another round of media coverage of the mean bank picking on the poor cripples has to be worth more than the 300k they're actually losing, even if they were assured of getting it overturned, which is not at all the case.Thank you for bringing some balance to this discussion. It takes a lot of courage to say something that can be construed as being in favor of "deadbeats" on this board.

We should also realize this: courts decisions are overturned mostly based on procedure and law and not based on merit of the decision.

wx1trw said: There was as much disregard for the court as there was for the defendant.If there was "disregard" for the court, the bank could be held in contempt. A finding of contempt, even if there was one, would not support a subsequent finding that the bank could not collect on its contractually agreed upon indebtedness. As for the obligors, what does it mean that there was "disregard" for the obligors? In other words, what specific duties did the bank owe to the obligors who have defaulted on a mortgage, such that the disregard of those duties could have given rise to a decision that the bank could not collect on its claim?

The Court had to schedule five different hearings before the bank could even be bothered to send someone, and the someone they sent was acting in bad faith.How was the bad faith manifested?

As the judge noted in the opinion, there's precedent for the remedy he ordered.I'd actually love to read the opinion. Would you happen to have a link or a citation?

From the bank's point of view, why appeal this? The amount of bad publicity from yet another round of media coverage of the mean bank picking on the poor cripples has to be worth more than the 300k they're actually losing, even if they were assured of getting it overturned, which is not at all the case.I don't see any bad publicity that the bank has to be concerned about so far. Based on the limited facts that have been posted in this thread, we have irresponsible deadbeats who have failed to pay and the bank is exercising its contractually agreed upon foreclosure remedy.

Check out the judge's re-election web site:

Re-election web page

Be sure and read his endorsements page. Its BLANK, what does that tell you?

burgerwars said: jkimcpa said: Will the same judge cancel their IRS bill next april?

That's what I was thinking if the IRS looks at this forgiveness of debt as now income.

In this specific case, I don't think they'll be taxed. See this IRS article.

Bump for an interesting thread.