Posted in Foreclosure, Foreclosure Defense

Homeowners’ fight against foreclosure ends with $264K bill | New York Post

Who remembers the Yano-Horoski v. IndyMac case? Everyone in foreclosure defense world were thrilled that the trial court cancelled their mortgage and note after finding that the lender engaged in “offensive” and “repugnant” actions. Here in Judge Spinner’s words, he describes why he decided to cancel the Horoski note and mortgage:

In attempting to arrive at a determination as to whether or not equity should properly intervene in this matter so as to permit foreclosure of the mortgage, the Court is required to look at the situattion in toto, giving due and careful consideration as to whether the remedy sought by Plaintiff would be repugnant to the public interest when seen from the point of view of public morality, see, for example, 55 NY Jur. Equity § 113, Molinas v. Podloff 133 NYS2d 743 (Sup. Ct., New York County, 1954). Equitable relief will not lie in favor of one who acts in a manner which is shocking to the conscience, Duggan v. Platz 238 AD 197, 264 NYS 403 (3rd Dept. 1933), mod. on other grounds 263 NY 505, 189 NE 566 (1934), neither will equity be available to one who acts in a manner that is oppressive or unjust or whose conduct is sufficiently egregious so as to prohibit the party from asserting its legal rights against a defaulting adversary, In Re Foreclosure Of Tax Liens 117 NYS2d 725 (Sup. Ct. Kings County, 1952), aff’d on other grounds 286 AD 1027, 145 NYS2d 97 (2nd Dept. 1955), mod. on other grounds on reargument 1 AD2d 95, 148 NYS2d 173 (2nd Dept. 1955), appeal granted 7 AD2d 784, 149 NYS2d 227 (2nd Dept. 1956). The compass by which the questioned conduct must be measured is a moral one and the acts complained of (those that are sufficient so as to prevent equity’s intervention) need not be criminal nor actionable at law but must merely be willful and unconscionable or be of such a nature that honest and fair minded folk would roundly denounce such actions as being morally and ethically wrong, Pecorella v. Greater Buffalo Press Inc. 107 AD2d 1064, 468 NYS2d 562 (4th Dept. 1985). Thus, where a party acts in a manner that is offensive to good conscience and justice, he will be completely without recourse in a court of equity, regardless of what his legal rights may be, Eastman Kodak Co. v. Schwartz 133 NYS2d 908 (Sup. Ct., New York County, 1954), York v. Searles 97 AD 331, 90 NYS 37 (2nd Dept. 1904), aff’d 189 NY 573, 82 NE 1134 (1907).

As expected, the bank appealed. Judge Spinner’s decision was reversed. And, in a rare move, the bank decided to heartlessly go after the Horoskis and seek a deficiency judgment. In foreclosure world, banks have been allowed to not only get away with fraud with impunity but also to mercilessly exact punishment on their victims.

via Homeowners’ fight against foreclosure ends with $264K bill | New York Post.

The New York family that in 2009 became the national face of beating back “repugnant” and “repulsive” bank foreclosure practices after a judge ripped up the mortgage on their $525,000 ranch home, not only lost an appeal of the judge’s order — and eventually their home — but were also slapped with a $264,500 bill from the bank.

The bill was to cover the difference between what was owed on the mortgage and what the bank got when it sold their 3,400 square-foot home, court records show.

“That’s adding insult to injury,” Suffolk Judge Jeffrey Spinner said of the quarter-million-dollar-plus deficiency judgment.

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3 thoughts on “Homeowners’ fight against foreclosure ends with $264K bill | New York Post

  1. They have lost their home, and that is tragic. But they should be able to file a BK and wipe out the unsecured deficiency judgment. That is, at best, cold comfort after the fact.

    When the opinion of Spinner issued in 2009 I noted that his citations to case law revolving around “equity maxims” were all several decades old. I took that as an indication NY courts (and probably others) really … just don’t give a sh*t about equity, good faith, adherence to rules, etc. Abandonment of the rules, and prejudicial predeterminations in which courts bend over backwards to presecute banks cases for them, seem to be the norm these days.

    Among my favorite cases on equity, particularly in regard to clean hands, is Keystone Driller Co. v. General Excavator Co., 290 U.S. 240 (1933). The best reading begins in the 2nd to last ¶ of page 244, continuing through page 245 (but the entire opinion is relatively short, seeming to have been authored at a time when SCOTUS operated with at least some linguistic economy [which I apparently do not]).

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    1. My law professors always advised students to find the oldest case that is still good law to cite. We were told that it’s the best way to impress a judge. Judge Spinner must be from that school of thought.

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  2. Here is the November 16, 2010, reversal from NY 2nd Appellate Division:

    “In an action to foreclose a mortgage, the plaintiff appeals from a judgment of the
    Supreme Court, Suffolk County (Spinner, J.), dated December 1, 2009, which, inter alia, vacated a
    judgment of foreclosure and sale of the same court (McNulty, J.), dated January 12, 2009, cancelled
    the note and mortgage, and directed the Suffolk County Clerk to cancel the notice of pendency. By
    decision and order on motion of this Court dated January 14, 2010, enforcement of the judgment
    dated December 1, 2009, was stayed pending the hearing and determination of the appeal.

    ORDERED that the judgment dated December 1, 2009, is reversed, on the law,
    without costs or disbursements, the judgment of foreclosure and sale is reinstated, the note and
    mortgage are reinstated, and the SuffolkCountyClerk is directed to reinstate the notice of pendency.

    In July 2005, after the defendant Diana J. Yano-Horoski defaulted on her mortgage,
    the plaintiff, IndyMac Bank, F.S.B., commenced the instant foreclosure action. On January 12,
    2009, the Supreme Court (McNulty, J.) issued a judgment of foreclosure and sale. Notwithstanding
    the entry of a judgment of foreclosure and sale, the Supreme Court scheduled various postjudgment
    settlement conferences between March and August of 2009, which the plaintiff agreed to attend and
    participate in. Based upon the plaintiff’s conduct during these conferences, the Supreme Court
    (Spinner, J.), sua sponte, directed a hearing to determine whether sanctions should be imposed
    against the plaintiff. Following the hearing, based on a determination that the plaintiff had
    conducted the settlement negotiations in bad faith, the SupremeCourt issued a judgmentwhich, inter
    alia, vacated the judgment of foreclosure and sale, cancelled the note and mortgage in its entirety,
    and directed the Suffolk County Clerk to cancel the notice of pendency.

    Here, the severe sanction imposed by the Supreme Court of cancelling the mortgage
    and note was not authorized by any statute or rule (see Tewari v Tsoutsouras, 75 NY2d 1, 5-7), nor
    was the plaintiff given fair warning that such a sanction was even under consideration (see Matter
    of Harner v County of Tioga, 5 NY3d 136, 140; Barasch v Barasch, 166 AD2d 399, 400). The
    reasoning of the Supreme Court that its equitable powers included the authority to cancel the
    mortgage and notewas erroroneous, since therewas no acceptable basis for relieving thehomeowner
    of her contractual obligations to the bank (see First Natl. Stores v Yellowstone Shopping Ctr., 21
    NY2d 630, 637; Levine v Infidelity, Inc., 285 AD2d 629, 630), particularly after a judgment had
    already been rendered in the plaintiff’s favor.

    In light of our determination, we need not address the plaintiff’s remaining
    contentions.

    DILLON, J.P., FLORIO, BALKIN and ROMAN, JJ., concur.”

    I figure the court may as well have just said “Equity? We don’t need no stinking equity” and let it go at that. 😦

    Liked by 1 person

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