Judge Cancels Mortgage: Is it Fair to the Rest of Us?

New York judge Jeffrey Spinner cancelled mortgage obligations of over $500,000 for Diana Yano-Horoski and her husband, Greg Horoski. What happened, and why millions of Americans may be saying "What about me?"

The Horoskis originally purchased their residence more than a decade ago for under $200,000. In 2004, they refinanced their loan amount to $292,500 with an adjustable rate that swelled to more than 12%. By July of 2005, the Horoskis were behind on payments and being sued by IndyMac, the failed California bank. The foreclosure of their 3,400 square foot Long Island house was finally approved in January of 2009, but the couple bought time by requesting a court settlement conference. Judge Jeffrey Skinner made headlines with his groundbreaking ruling to overturn the mortgage plus all accrued penalties and interest. While it makes the Thanksgiving holiday memorable for one family, Skinner's ruling inspires strong reactions among others.

Millions of Americans face challenges in today's economy, sharing the plight of the Horoskis. These families may experience health problems, job loss, and the erosion of their home's value. Any of these factors separate or combined leads these families to impossible choices: food or shelter; utilities or transportation; family or employment. Judge Skinner's ruling provides false hope to such families and undermines the efforts of the Making Home Affordable program. The decision sets a dangerous legal precedent that contracts need not be honored if things fail to work out perfectly for both parties.

Through bubbles and economic upheaval, millions more Americans chose to continue making sound and conservative financial decisions. The court ruling that erases the Horoskis mortgage debt insults the ongoing efforts of these hardworking individuals. It sends a resounding message that hard work is no longer the path to success in the United States. America hears instead that enough hard workers will always pick up the slack of her underachievers. America offers equality of opportunity to her citizens, but she does not guarantee equality of outcome.

While representatives of OneWest, the banking branch of the private equity group that assumed IndyMac, behaved egregiously during the foreclosure and hearing process, experts believe that Judge Jeffrey Skinner's ruling will not stand. Mory Brenner, a specialist in Massachusetts foreclosure law, was quoted in Dalia Fahmy's article "Judge Rescues Struggling Couple from Foreclosure." "As much as I would like to see homeowners helped, this would set a horrendous precedent because it means the government gets to undercut the mortgage contract." OneWest will pursue an appeal to overturn the decision.

Fahmy, Dalia. Judge Helps Couple Avoid Foreclosure. ABC News.
Crowley, Kieran, Rich Wilner, Dan Mangan. Judge Blasts Bad Bank, Erases 525G Debt. NY Post.