Score One for the Consumer: Judge Voids LI Couple's Mortgage!

On November 19^th, a New York judge did the unimaginable. In a power seldom used in court cases, Suffolk County Court Judge Jeffrey Spinner voided a mortgage held by Indy Mac Mortgage Services of Pasadena, California on a house owned by a Long Island couple. In one fell swoop of the pen, Spinner erased a nearly $300,000 debt owed to the mortgage giant by Gregory and Diana Horoski of East Patchogue. Score one for the consumer!

In 2005, Diana Horoski fell ill and was disabled from working. Income suddenly disappeared and the Horoskis were unable to pay their mortgage bills for a year. Eventually payments were made, but the family was unable to catch up and began negotiations with the bank in order to save their home. Settlement consultations were held beginning February 2009, and according to Spinner's findings, Indy Mac representatives were uncooperative at best.

In his decision, Spinner wrote that Indy Mac had "exhibited conduct that was harsh, repugnant, shocking and repulsive" in its dealings with Mrs. Horoski. The lending company "soundly rebuffed even the most reasonable of settlement offers, inflated the amount of debt...and seemed determined to kick them out of their home."

During the trial, an Indy Mac representative told Spinner that Mrs. Horoski was offered a payment agreement, but she "quickly defaulted." After further probing, the representative reluctantly admitted that the bank had not sent Horoski the paperwork for the agreement until after the first due date. Spinner sarcastically wrote that Mrs. Horoski was in the "unique and uncomfortable position of being placed in default of the agreement even before she had received it."

During negotiations, the Horoskis daughter Kimberly offered to commit the salaries of her parents for the purposes of loan modification, which the lender rejected. The mortgage company stated it could not control what the "obligor" did with her money in its reasoning. They also rejected Kimberly's offer to buy the house with third party financing. Clearly and sadly, the judge's words seem to ring true: Indy Mac seemed determined to kick the Horoskis out of their home.

During the trial, the bank was unable to state the exact amount owed on the principal of the loan, but claimed it was owed a total of $527,437.73. Spinner calculated the total at $447,028.50. That's a large difference, especially considering that the Court received a letter since the decision from Indy Mac claiming it was still owed $474,936.78.

Neither of the references for this article state whether the principal amount was included in any of these figures, but considering the decision in the case and the ensuing letter, I believe that this nearly half a million dollar debt is considered by Indy Mac to consist of nothing but fees and interest, which is repugnant! Spinner has called a conference on December 18^th to discuss the letter.

This story warms my heart just a bit. For once, it seems like someone, somewhere with power used his authority with a conscience. Jeffrey Spinner saw the obvious in this case, that Indy Mac was highly unscrupulous in its dealings with the Long Island family and awarded the Horoskis with an unimaginable payback. I only hope that Indy Mac is an extreme in this case of unjust business practice. Though I believe financial institutions have an unfair advantage in their dealings with consumers and often heap unreasonable and excessive burdens upon American families, I don't believe that all of them are this mean spirited in their hubris.

This one is far from over. The letter sent to Judge Spinner is a clear indication that the bank is refusing to accept the decision and will continue to pursue actions to either ascertain money from the Horoskis or get them out of their home. I hope it turns out still in favor of the Horoskis. Surely this case sets a precedent and only time will tell if its effects are felt in numerous similar cases. We'll just have to wait and see...

Sources:

Castillo, Alfonso. "Ruling a message to lenders." LI Newsday. 29 November 2009: A16-17. Print.

Kelleher, Jennifer. "Parties ordered back to court in mortgage case." LI Newsday. 11 December, 2009: A20. Print.