Homeowners in clear after judge throws out mortgage

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Last Thanksgiving, Greg Horoski and his wife faced foreclosure. Thursday, they celebrate the holiday in the East Patchogue home they now own outright, thanks to a State Supreme Court justice's ruling to cancel their mortgage because of a bank's failure to act in good faith in working out a foreclosure alternative.

Justice Jeffrey A. Spinner in Riverhead ordered the $292,500 mortgage "canceled, voided, avoided, nullified, set aside" and blasted the actions of IndyMac Mortgage Services, a division of OneWest Bank F.S.B., and its representatives, as "harsh, repugnant, shocking and repulsive," according to his Nov. 19 decision.

"We never asked for this," Greg Horoski, 56, said Wednesday from the modest single-story home on Oakland Street. "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."

Horoski and his wife, Diana Yano-Horoski, 55, purchased the four-bedroom, three-bath home in 1994 for $178,000 and refinanced in 2004 for $292,500.

They fell behind on their mortgage payments because of failing health. Horoski wouldn't detail his wife's ailments but said he underwent triple bypass heart surgery in 2006.

"Every two or three months I would call them to try to make a deal," he said of efforts to avoid foreclosure. "I'd say, 'I can pay so-and-so amount of dollars. Please take this as a good-faith payment and reinstate the loan.' "

Spinner's decision notes that the couple appeared at every court conference despite their health problems. Conferences were rescheduled five times because of the bank's failure to cooperate, the decision says.

Wednesday, instead of celebrating a victory won without a lawyer, Horoski and his wife simply stayed home. They were overwhelmed by media attention, Horoski said, and distraught over the death of their shih tzu, Timmy, who was struck Tuesday by a neighbor's car.

"Maybe God is telling us not to be too happy about the decision," he said, adding that he fears the bank will appeal and prevail.

A statement from OneWest Bank Wednesday said the bank will appeal: "In this particular case, we spent nearly four years working with the borrower to resolve the situation and the law does not authorize a judge to cancel a borrower's loan obligation because he did not like the way loan modification discussions were handled. We believe the Yano-Horoski ruling, if allowed to stand, has sweeping and dangerous implications for the entire mortgage lending industry."

Several attorneys said that Spinner's decision was the first of its kind, at least on Long Island.

Horoski, who is disabled and runs an online business, DollsAmerica.com, said he worries that the decision will lead to his family being seen as "deadbeats."

"There are times in people's lives when circumstances are beyond their control," he said. "The judge wanted to send a signal to the banks that you can't do this to normal people."

His daughter, Kimberly Horoski, 28, offered to purchase the home at fair-market value in a short-sale, but the bank refused a loan modification using more than 25 percent of income.

Wednesday, she called Spinner "saintly" for showing that "poor business practices won't be condoned."

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