Judge Cancels Couple's Mortgage Debt, Rounds on Bank

A couple from Long Island, New York have seen the $525,000 mortgage on their ranch house canceled by a judge who has described the actions of their California-based bank as "harsh, repugnant, shocking and repulsive".

In 2004 Diane Yano-Horoski, a college professor of English and cognitive reason, and her husband Greg Horoski, who sells collectible dolls via the Internet, refinanced the home they bought 15 years ago in East Patchogue, Suffolk County, Long Island. Obtaining a sub-prime loan from Deutsche Bank, the couple had a surplus after paying off their original mortgage, which they spent on health care and Mr Horoski's business. The New York Post reports that IndyMac, once one of the largest mortgage providers in the U.S. and one of the largest bank failures in U.S. history when it was seized by the FDIC in 2008, eventually became the owner of or the organization responsible for the servicing of the Long Island couple's loan. Come July 2005 and IndyMac, which New York Law Journal confirms is now a subsidiary of OneWest Bank, sued Mrs Yano-Horoski and Mr Horoski when they began falling behind with their payments due to the ill-health of Mr Horoski. January 2009 arrived and the foreclosure of the home owned by Diane, or Dana according to New York Law Journal, Yano-Horoski and Greg Horoski was approved, although New York Law Journal appears to indicate that Mrs Yano-Horoski is the home's sole owner. A court settlement conference was requested by Mrs Yano-Horoski and in September, after previous hearings apparently failed to secure any cooperation in the matter from OneWest Bank, Justice Jeffrey A. Spinner of Suffolk County Supreme Court ordered a representative of the bank to attend a conference. As the representative reiterated the bank's unwillingness to reach any form of compromise, even an offer to buy the house made by Mrs Yano-Horoski's daughter was rejected, Justice Spinner discovered one major anomaly. OneWest Bank had claimed that their clients were in breach of a forbearance agreement that it transpired was never sent out to Mrs Yano-Horoski and her husband until after its due date. When Justice Spinner, by now exasperated by the behavior of OneWest Bank, which was the recipient of a $814.2 million bailout from the U.S. government, called another hearing for last week a dispute over the amount owed to OneWest Bank occurred. Regardless of the amount involved, the consensus appears to be that it is $525,000, $291,000 in principal and the balance in interest and penalties says both the New York Post and the Daily Mail, Justice Spinner decided that OneWest Bank should not receive another cent from Diane/Dana Yano-Horoski and Greg Horoski. And in addition to his description of OneWest Bank's behavior as "harsh, repugnant, shocking and repulsive" Justice Spinner spoke of its conduct as "inequitable, unconscionable, vexatious and opprobrious". Justifying his decision to cancel the debt rather than just dismiss the foreclosure he said that the bank "must be appropriately sanctioned so as to deter it from imposing further mortifying abuse against the couple". Mr Horoski said of the matter and the ruling of Justice Spinner:

The bank was so intransigent that he decided to punish them. I think the judge felt it was almost a personal vendetta. It was like dealing with organized crime

Declaring that it is confident "the lower court's unprecedented ruling" will be overturned on appeal, OneWest Bank, owned by a private equity group and currently attempting to foreclose on an 89-year-old California woman, in spite of the fact two court orders have been issued ordering it to stop trying to do so, has defended itself by asserting that 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". UPDATE November 26: Mr Horoski has contacted Digital Journal to advise that when he and his wife refinanced there were no surplus funds and all the loan money went to the direct payment of debt. Their home was valued at more than $450,000 at that time and Mr Horoski emphasizes that they only borrowed what they could repay.