In a ruling heard throughout the home-lending world, a State Supreme Court justice tossed out the mortgage on an East Patchogue home. The judge sided with the owners, who were seeking an alternative, against the bankers, who seemed bent on foreclosure. Lenders, take heed.
Calling the lenders' conduct "harsh, repugnant, shocking and repulsive," Justice Jeffrey Spinner declared the $292,500 debt null and void. He ruled that representatives of IndyMac Mortgage Services had callously rebuffed the family's offers to refinance, while inflating and misstating what they owed.
But this could still end badly for the family. OneWest Bank, IndyMac's parent firm, plans to appeal. Meanwhile, the case will be back in Spinner's court this week, because IndyMac says it is still owed nearly $475,000. This story is shocking, but so are the tales of other homeowners fighting foreclosure.
Recently, Treasury Department officials reported disappointing results in the Obama administration's $75-billion program to reward banks that rework loans for hundreds of thousands facing foreclosure. Relatively few were offered permanent mortgages, which was the program's aim. Now Treasury is threatening to shame laggard lenders by naming them.
With another wave of foreclosures expected, due to high unemployment and "underwater" mortgages, it's incredible that lenders have to be shamed into offering lower-cost mortgages to families willing and able to pay them. hN