Judge Blasts Bank's Foreclosure Conduct and Cancels Mortgage

[pauldun170]

Judge Blasts Bank's Foreclosure Conduct and Cancels Mortgage
Vesselin Mitev

11-24-2009

A lender's "unconscionable, vexatious and opprobrious" conduct in attempting to foreclose on a Long Island home has prompted a state judge to cancel the mortgage on the property.

IndyMac Bank v. Yano-Horoski, 2005-17926, came before Suffolk County Supreme Court Justice Jeffrey A. Spinner as the result of a state law mandating pre-foreclosure settlement conferences between lenders and borrowers of subprime, or high-cost, home loans.

The case was decided with the county facing what the judge characterized as "the yawning abyss of a deep mortgage and housing crisis with foreclosure filings at a record high rate and a corresponding paucity of emergency housing."

Spinner acknowledged that foreclosure is sometimes inevitable and proper, but he noted that a "plethora" of subprime mortgages had been successfully modified in the county's foreclosure part. And he said that he found it "deeply troubling" that the bank had spurned what would have been a "win-win" solution for all parties.

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

Yano-Horoski, appearing pro se, requested a conference in February to seek a deal with IndyMac Bank on the $292,500 mortgage she took out in August 2004 on her East Patchogue home.

Following a series of hearings attempting "to obtain meaningful cooperation" from the bank, Spinner ordered that a bank representative attend a conference in September.

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.

The bank also rejected an offer Yano-Horoski's daughter to buy the house at fair market value.

"It was evident from Ms. Dickinson's opprobrious demeanor and condescending attitude that no proffer by Defendant (short of consent to foreclosure and ejectment of Defendant and her family) would be acceptable to Plaintiff," the judge wrote, adding that even a "desperate" offer of a deed in lieu of foreclosure was "met with bland equivocation."

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.

The large disparity, coupled with Dickinson's conduct, swung "the pendulum of credibility" heavily to the homeowner, the court held.

SETTLEMENT REJECTED

The judge also remarked that despite her severe health problems, Yano-Horoski and her husband had attended every conference and tried to resolve the dispute in good faith, "only to be callously and arbitrarily turned away by Plaintiff."

The judge observed that a modification of the mortgage would have assured the IndyMac "a regular income stream, albeit with a reduced rate of interest and without sustaining a loss of several hundred thousand dollars."

"In addition, no neighborhood blight would occur from the boarding of the property after foreclosure which would, in turn, avert problems of litter, dumping, vagrancy and vandalism as well a corresponding decline of property values in the immediate area."

Moreover, rejecting the "win-win" of a negotiated settlement would result in virtually certain "undomiciled status for two physically unhealthy persons and their daughter, leading to an additional level of problems, both for them and for society."

The judge concluded that the banks' conduct was "wholly unsupportable at law or in equity, greatly egregious and so completely devoid of good faith that equity cannot be permitted to intervene on its behalf."

But he went further than rejecting the foreclosure.

If the case was simply dismissed, he wrote, the court "cannot be assured that Plaintiff will not repeat this course of conduct."

Also Spinner said that monetary sanctions were "not likely to have a salubrious or remedial effect" and, in any case, would not benefit the homeowner.

Imposing sanctions would bring little benefit to the homeowner, the judge wrote, leaving the "appropriate equitable disposition" of canceling the debt and discharging the mortgage.

Thus, he concluded that the original principal amount of $292,500 "should be cancelled, voided and set aside," the mortgage be discharged and the bank barred from any attempt to collect on the note.

According to state court data, Suffolk County is first among the state's 62 counties in foreclosures, recording more than 9,000 filings this year. According to RealtyTrac, one foreclosure filing was recorded last month for each 578 homes in the county. Lenders took possession of 20 homes.

Spinner leads a newly-established foreclosure unit to accommodate settlement conferences that have reached 2,400 in the county; approximately 15,000 conferences have been held statewide.

The law firm of Steven J. Baum represented the bank.

IndyMac, which was placed in conservatorship in July 2008, is now a subsidiary of California-based OneWest Bank. The firm said on Friday it could not prepare a response by press time.

[Homeslice]

vexatious?
opprobrious?
salubrious?



whatever..

[pauldun170]

Originally Posted by Homeslice

vexatious?
opprobrious?
salubrious?



whatever..

Damn people speaking english using a decent vocabulary

[Homeslice]

More like using big words to try and justify being called "Your Honor" and having people stand up when they enter the room

[Smittie61984]

So they are in court because she didn't pay her loan and the bank is in trouble for wanting the money they loaned out?

[Papa_Complex]

Sounds like a judge who has a brain. Mediation isn't mediation, if one side never intends to budge. I frequently side with banks, because so many people have no idea how they operate, but the story makes this woman sound like she spent the meetings twirling the end of her long handlebar moustache.

Originally Posted by pauldun170

Damn people speaking english using a decent vocabulary

If *I* have to look up a word, then the author has gone a step too far with the thesaurus

[goof2]

It doesn't matter anyway. This will be overturned on appeal, but that will not generate any news stories.

After a cursory look I think New York state elects their judges. I would wager that this is an attempt by the judge to pander to his constituency because he is in danger of loosing his next election.

[Apoc]

Originally Posted by Smittie61984

So they are in court because she didn't pay her loan and the bank is in trouble for wanting the money they loaned out?

Read past the first 5 lines. They tried to settle, the bank wouldnt even let her daughter buy the house from them at fair market value.

Im glad the bank is losing out. Fuck em. they've got no interest in actually helping anyone with financial problems.

[sherri_chickie]

Good for the judge. Banks get bailed out all the time and do nothing to help the people who really need help, who are going to lose everything. Maybe this will send a message that they should go into mediation with an open mind and truly mean to come to a conclusion that helps everyone.

I don't understand why banks even want to foreclose if they can help it, it's not like they are going to have an easy time reselling the property right now.

[Avatard]

Originally Posted by Smittie61984

So they are in court because she didn't pay her loan and the bank is in trouble for wanting the money they loaned out?

As usual, reading comprehension fail.