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Judge Voids Mortgage Due to Bank’s “Bad Faith”

Posted By Barry Ritholtz On November 25, 2009 @ 2:28 pm In Credit,Legal,Real Estate | Comments Disabled

“[The adjustable rate bank note issued Aug. 4, 2004 is' hereby canceled, voided, nullified, set aside and is of no further force and effect . . . the lender and its successors are barred, prohibited and foreclosed from attempting, in any manner, directly or indirectly, to enforce any provision of" the mortgage loan."

-Suffolk County Supreme Court Justice Jeffrey A. Spinner

"We never asked for this. I was shocked, honestly. It's not like we said, 'Judge, please throw the loan away.' We just wanted them [the bank] to be reasonable.”

-Greg Horoski, East Patchogue Home owner.

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Here’s a fascinating development: A Long Island judge voided the mortgage of a home-owner after the legal team for the creditor behaved in an egregious manner.

The lender lied in various dunning notices and court papers, claiming a balance due of $527,437.73, including an escrow overdraft of $46,627.88 for advanced taxes — even though the outstanding loan balance was $283,992.48 as of Aug. 10 and the taxes were already paid.

Excerpt:

A Suffolk judge awarded a Long Island family their East Patchogue house, wiping the slate clean on their mortgage debt and ruling that the bank holding their home loan had acted in a manner “so completely devoid of good faith that equity cannot be permitted to intervene on its behalf.”

In a terse, no-holds-barred decision rendered Nov. 19, Suffolk County Supreme Court Justice Jeffrey A. Spinner blasted the actions of IndyMac Mortgage Services, a division of OneWest Bank F.S.B., and its representatives – and awarded the home to Diana J. Yano-Horoski and husband Greg Horoski.

The decision came after a series of state-mandated, pre-foreclosure settlement conferences between the lenders and borrowers of subprime loans.

Spinner wrote in his decision: “It was celeritously made clear to the Court that Plaintiff had no good faith intention whatsoever of resolving this matter in any manner other than a complete and forcible devolution of title from Defendant.”

The lending institution, represented at a hearing on Sept. 22 by Karen Dickinson, regional manager of loss mitigation for IndyMac, asserted Yano-Horoski owed a debt in excess of $525,000 – and “freely concedes” that the property was worth “no more than” $275,000, Spinner wrote.”

Glad to see the screws being turned on weasels like this . . .

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Hat tip Singer!

Source:
Judge cancels LI family’s mortgage, berates lender [1]
JOHN VALENTI AND JENNIFER SINCO KELLEHER
Newsday.com, November 25, 2009

http://www.newsday.com/long-island/suffolk/judge-cancels-li-family-s-mortgage-berates-lender-1.1621785


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URL to article: http://www.ritholtz.com/blog/2009/11/judge-voids-mortgage-due-to-banks-bad-faith/

URLs in this post:

[1] Judge cancels LI family’s mortgage, berates lender: http://www.newsday.com/long-island/suffolk/judge-cancels-li-family-s-mortgage-berates-lender-1.1621785

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