Judge wipes out 525K worth of idiots' debt

[halik]

Awesome precedent being set here - apparently borrowing 300K at at a credit card APR is now an economically viable* plan and the little needs to be protected from "ruthless bankers."


http://www.nypost.com/p/news/local/judge_kos_mortgage_to_slap_bank_28ZS1oW8Y58z6gu1AQbWMI

http://www.cnbc.com/id/34147646

* The rational basis for interest-only arm at that rate is you expect the house to appreciate at 10.4 annually. Any less and you owe more than what the house is worth.

 

[brandonbull]

Someone needs to line up the moron homeowners and the judge and kick them in the face.

 

[jonks]

Reading just your links, it appears the bank lied to the judge during the course of the case and this ruling was part of the sanction. The judge sounds really really pissed ("harsh, repugnant, shocking and repulsive"), but without knowing more about the facts I'll hold off about whether he went overboard.

What I will say is anyone reading the OP and picking sides from the subect header is probably jumping the gun.

Ed: Ok, here's the opinion:
http://blogs.reuters.com/felix-salmon/files/2009/11/23084930-indymacopinion.pdf

If anyone wants to read it, I'll discuss, but I'll not engage with those who simply make up their minds before knowing any of the facts.

I do wonder if this will hold on appeal, but as it appears to be an equitable decision its precedential value is limited.

 

[Patranus]

Um. Guess who gets to pay for this (hint, its not the bank)

 

[Thump553]

A little legal background for the OP: Foreclosure is (and has been since before the dawn of this country) an action in equity and not an action at law. These means the court is entitled-in fact obligated-to consider such concepts as fairness and clean hands-in order to do justice. It is NOT (and never has been) simply a matter of proving facts A, B & C and the lender is automatically entitled to a foreclosure judgment. If that was the case, we could have replaced judges in foreclosures with DMV clerks with checklists a long time ago.

I read both articles-twice-and they are abysmal cases of legal reporting, so bad the reader must resort to guesswork to determine what happened. The OP applied his political bias and concluded a soft judge gave these spendthrift borrowers an early Christmas present because he felt sorry for them. I highly doubt that happened, and if it did, the bank should prevail on appeal.

I doubt the judge actually wiped out the debt. Odds are what he did was decide that the lender's actions were so bad that the lender was not entitled to foreclose it's mortgage. The debt (as evidenced by the mortgage note) could be sued upon in a collection action (action at law) unless the bank has an election of remedies problem here.

One of the articles points out that the bank apparently deliberately lied to the court-under oath-about the amounts owed. This is a huge no-no, especially in an equitable action. Judges are absolute death on people shown to have lied to them-the law expressly permits them to be able to disregard ALL testimony from that person. I've won cases I thought were sure losers by establishing the other side's lies to the court.

Nothing in these two (admittedly poor) articles leads me to a conclusion that justice has miscarried here-and I spent a decade rerpesenting lenders in foreclosures. It quite possibly is a solid, justifiable legal decision. But with crap reporting like that we in the general public will never know.

 

[whylaff]

A little legal background for the OP: Foreclosure is (and has been since before the dawn of this country) an action in equity and not an action at law. These means the court is entitled-in fact obligated-to consider such concepts as fairness and clean hands-in order to do justice. It is NOT (and never has been) simply a matter of proving facts A, B & C and the lender is automatically entitled to a foreclosure judgment. If that was the case, we could have replaced judges in foreclosures with DMV clerks with checklists a long time ago.

I read both articles-twice-and they are abysmal cases of legal reporting, so bad the reader must resort to guesswork to determine what happened. The OP applied his political bias and concluded a soft judge gave these spendthrift borrowers an early Christmas present because he felt sorry for them. I highly doubt that happened, and if it did, the bank should prevail on appeal.

I doubt the judge actually wiped out the debt. Odds are what he did was decide that the lender's actions were so bad that the lender was not entitled to foreclose it's mortgage. The debt (as evidenced by the mortgage note) could be sued upon in a collection action (action at law) unless the bank has an election of remedies problem here.

One of the articles points out that the bank apparently deliberately lied to the court-under oath-about the amounts owed. This is a huge no-no, especially in an equitable action. Judges are absolute death on people shown to have lied to them-the law expressly permits them to be able to disregard ALL testimony from that person. I've won cases I thought were sure losers by establishing the other side's lies to the court.

Nothing in these two (admittedly poor) articles leads me to a conclusion that justice has miscarried here-and I spent a decade rerpesenting lenders in foreclosures. It quite possibly is a solid, justifiable legal decision. But with crap reporting like that we in the general public will never know.

According to the opinion, the note and mortgage are both cancelled. The Judge was not happy about being repeatedly lied to.

 

[Double Trouble]

A little legal background for the OP: Foreclosure is (and has been since before the dawn of this country) an action in equity and not an action at law. These means the court is entitled-in fact obligated-to consider such concepts as fairness and clean hands-in order to do justice. It is NOT (and never has been) simply a matter of proving facts A, B & C and the lender is automatically entitled to a foreclosure judgment. If that was the case, we could have replaced judges in foreclosures with DMV clerks with checklists a long time ago.

I read both articles-twice-and they are abysmal cases of legal reporting, so bad the reader must resort to guesswork to determine what happened. The OP applied his political bias and concluded a soft judge gave these spendthrift borrowers an early Christmas present because he felt sorry for them. I highly doubt that happened, and if it did, the bank should prevail on appeal.

I doubt the judge actually wiped out the debt. Odds are what he did was decide that the lender's actions were so bad that the lender was not entitled to foreclose it's mortgage. The debt (as evidenced by the mortgage note) could be sued upon in a collection action (action at law) unless the bank has an election of remedies problem here.

One of the articles points out that the bank apparently deliberately lied to the court-under oath-about the amounts owed. This is a huge no-no, especially in an equitable action. Judges are absolute death on people shown to have lied to them-the law expressly permits them to be able to disregard ALL testimony from that person. I've won cases I thought were sure losers by establishing the other side's lies to the court.

Nothing in these two (admittedly poor) articles leads me to a conclusion that justice has miscarried here-and I spent a decade rerpesenting lenders in foreclosures. It quite possibly is a solid, justifiable legal decision. But with crap reporting like that we in the general public will never know.

Excellent post, thanks for the insight as someone who knows both from a legal and business perspective how that business works. We need more stuff like this posted.

 

[tk149]

Reading just your links, it appears the bank lied to the judge during the course of the case and this ruling was part of the sanction. The judge sounds really really pissed ("harsh, repugnant, shocking and repulsive"), but without knowing more about the facts I'll hold off about whether he went overboard.

What I will say is anyone reading the OP and picking sides from the subect header is probably jumping the gun.

Ed: Ok, here's the opinion:
http://blogs.reuters.com/felix-salmon/files/2009/11/23084930-indymacopinion.pdf

If anyone wants to read it, I'll discuss, but I'll not engage with those who simply make up their minds before knowing any of the facts.

I do wonder if this will hold on appeal, but as it appears to be an equitable decision its precedential value is limited.

There are errors of fact in that opinion, which is pretty much inexcusable for a judge. There are also several grammatical errors, which is pretty much inexcusable for anybody who uses the words "celeritously" and "opprobrious." Sounds like the judge is full of himself, and wanted to get in the news. Maybe an election is coming up?

The opinion even states facts which he admits are not relevant to the case, but do indicate the judge's state of mind:
1. sympathy towards the debtor because she is disabled.
2. Mention of the housing crisis in the county.

While, according to the judge, the bank/servicer lied in court, I really question whether they actually lied, or just were confused and had their numbers mixed up. Having worked in banking, I can say that it's very possible. It's certainly possible that they lied, but it's also possible that the judge just seized upon their confusion/mistakes as an excuse to impose his own views.

I have to question the judge's view of the facts. I can think of no reason why the bank/servicer would deliberately choose a foreclosure over trying to work out some kind of deal with the debtor. Foreclosures are expensive, and usually result in a loss for the note holder, especially in this market.
I don't have a lot of sympathy for the bank, because it does sound like they screwed up, but I doubt it was deliberately malicious, which is what the judge makes it sound like.

Activist judge FTL.

 

[FaaR]

"Activist judge" = "judge's ruling disagreed with my personal religio-political views"...

 

[jonks]

There are errors of fact in that opinion, which is pretty much inexcusable for a judge.

where, and how do you know exactly?

You "doubt" the bank lied, but the judge pointed out several instances of intentional deceipt and reluctant admittance.

The judge himself pointed out in the opinion certain mitigating factors which while irrelevant to the law of the case weigh on the good faith nature of the parties to reaching settlement, yet you point out his inclusion of these facts as if you discovered some sort of "gotcha!" And the housing crisis is relevant, as the judge points out, as a matter of public policy. I don't think you understand the equity v. law argument so re-read thump's post above.

Basically with no knowledge of the case and a supremely inferior knowledge of the facts compared to the trier who heard the case for almost a year, you have determined bias. You know, if anyone's state of mind is being questioned here I think we can add you to that list.

 

[halik]

Excellent post, thanks for the insight as someone who knows both from a legal and business perspective how that business works. We need more stuff like this posted.

Seconded,
I'm gonna have to get a JD at some point; it would definitely complement skill set.

Also in my defense, it wasn't my political bias, but rather my professional bias. I work on a team that manages a 11figure portfolio of fixed income assets and all I see in the story is a default and recovery rate. We lend you money, you either service your debt or we take the collateral. Different perspectives from different sides of the table

 

[StageLeft]

The bank is involved in a similar case in California, where it's trying to foreclose on an 89-year-old woman, despite two court orders telling it to stop.

Worse than lawyers.

I read both articles-twice-and they are abysmal cases of legal reporting, so bad the reader must resort to guesswork to determine what happened.

Yeah it was terrible, nothing about in what way it [lender] was badly behaved. Fvck's sake journalism is in the toilet these days, a damned monkey could write better articles than this.

 

[Moonbeam]

It is the hand of God. Islam permits only 2% interest. The lender should have been gutted.

 

[tvarad]

Seconded,
I'm gonna have to get a JD at some point; it would definitely complement skill set.

Also in my defense, it wasn't my political bias, but rather my professional bias. I work on a team that manages a 11figure portfolio of fixed income assets and all I see in the story is a default and recovery rate. We lend you money, you either service your debt or we take the collateral. Different perspectives from different sides of the table

It's not just the dry figures and the law but how it relates to human beings (and extremely stupid ones obviously, in this case). All of us have seen how mortgage re-fis are advertised as if it is free money being given away through saturation bombing of ads in the media. Instead of the barely legible legalese at the end of these ads scrolling at supersonic speed and being read by one of Alvin's chipmunks, I wish there was a mandatory bold statement up front that goes something like "You dumbfvck, think this through - you may be signing your life away. We may not use a baseball bat on your knees but we sure know how to get our money back, as well as yours".

 

[dmcowen674]

Bottom line is bank wanting $600,000 payment for a property worth $300,000

You cannot defend this kind of shit and all those in here doing just that hate America. Please leave ASAP if you don't like it.

Thank you

 

[alphatarget1]

Bottom line is bank wanting $600,000 payment for a property worth $300,000

You cannot defend this kind of shit and all those in here doing just that hate America. Please leave ASAP if you don't like it.

Thank you

STFU. If English phDs can't handle simple personal finance and have NO equity after living in the house for 10 years, that's their problem. They have no business in owning a home. The bank should win the appeal and toss these f***s onto the street.

It's not some helpless people without education. We're talking about highly educated folks (at least the wife).

 

[halik]

Bottom line is bank wanting $600,000 payment for a property worth $300,000

You cannot defend this kind of shit and all those in here doing just that hate America. Please leave ASAP if you don't like it.

Thank you

Of course I should in no way be responsible for my actions. Same thing goes for people that racked up 6 figure CC debt, they just got taken advantage of by greedy bankers /eyeroll

I would love to hear how lending people 1/3 million dollars is somehow morally reprehensible and completely unamerican. Something tells me there will not be a cogent argument on your part.

 

[ch33kym0use]

Judge blasts bad bank, erases 525G debt

Excellent

 

[WhipperSnapper]

From what little I have heard about this case which is only a TV news report, it sounds like the bank's lawyers really rubbed the judge the wrong way. I get the sense that they really pissed him off.

 

[Vic]

Bottom line is bank wanting $600,000 payment for a property worth $300,000

You cannot defend this kind of shit and all those in here doing just that hate America. Please leave ASAP if you don't like it.

Thank you

It is hating America to believe in fulfilling one's legal obligations?

It is people like you who are trying to kill homeownership in this country. You have such strong opinions but without any knowledge of the subject. You fancy you know everything while being too lazy to learn even the most basic concepts of any subject you have an opinion on.

The difference between owning a mortgaged property and just plain being nothing but a renter is that the fact that, on a mortgaged property, the note (debt) and the mortgage (security instrument) are SEPARATE. Do you understand? The homeowner actually owns the home, the bank simply lent them the money by which to buy the home. When a bank forecloses on a property, that means it is using its rights under the mortgage to recover all or a part of what is owed to it under note.

Meh, I waste bandwidth replying to you. Mark my words, if your attitude here prevails in this country, then banks will have no choice but to revert back to trust deed practices where the mortgagor is not granted title to the property until after they have satisfied the note in full. And what that means is that while you'll get your precious little wish that banks won't be able to pursue homeowners for deficiency amounts, homeowners also won't be able to collect on any equity potentially gained in the property so long as there is an unsatisfied debt against it.

IOW, you'd turn us all into renters, into serfs for the banks and the monied interests. And sadly, not because you want to, but because you're stupid, short-sighted, and irresponsible.

 

[Vic]

From what little I have heard about this case which is only a TV news report, it sounds like the bank's lawyers really rubbed the judge the wrong way. I get the sense that they really pissed him off.

Like all mortgage lenders, banks, and servicers, IndyMac doesn't vote in local elections. But foreclosed homeowners do. And look at the publicity the judge just got off this controversial decision.

In addition, I would like to point out that borrower in question did not owe "$600,000... for a property worth $300,000." RTFA.
They borrowed $295,000 on a cash-out refinance of the property and then haven't made a payment for so long that they also owe $235,000 in interest and penalties on top of that.

Now let's stop for a minute and put this in the bank's perspective. Suppose, just for moment, that you're a loss mitigation officer for some lender. The country is in the middle of a housing crisis, and every day you're working with an endless stream of defaulted homeowners trying to help them save their homes. And in the midst of all this, you discover that there are 2 kinds of these homeowners. The majority are good people undergoing legitimate hardships (like unemployment, illness, divorce, etc) who will work hard with you and do what is necessary to save their homes.
And then there's the guy who hasn't paid since back in 2006 or 2007 (sometimes they defaulted on the very first payment), who is $100k or more in arrears, and not just from the back interest and penalties from not making payments, but because he hasn't paid his property taxes and insurance either and the bank has been paying those for him. And the bank has offered numerous payment plans and he's failed on every one of them through non-payment. Then you review the income documents that he's sent in for his modification/forbearance request, and see that there has been steady income all along, sufficient to make some kind of reasonable payment, so you call him up to try to work something out. And the guy tells you he can't afford anything. You're like, "Hey, you have a $2000+ a month payment which your paystubs and tax returns show that you can afford, where'd all that money go when you haven't paid us for 2 to 3 or more years? And you've been living in the house rent-free?" And the answer is they don't know. So confronted with an unwilling customer, you've no choice but to proceed to sale. And the guy takes it to some judge who gets publicity and headlines about the "bad bank."

But yeah, I wouldn't know anything about all this.

 

[Double Trouble]

Like all mortgage lenders, banks, and servicers, IndyMac doesn't vote in local elections. But foreclosed homeowners do. And look at the publicity the judge just got off this controversial decision.

In addition, I would like to point out that borrower in question did not owe "$600,000... for a property worth $300,000." RTFA.
They borrowed $295,000 on a cash-out refinance of the property and then haven't made a payment for so long that they also owe $235,000 in interest and penalties on top of that.

Now let's stop for a minute and put this in the bank's perspective. Suppose, just for moment, that you're a loss mitigation officer for some lender. The country is in the middle of a housing crisis, and every day you're working with an endless stream of defaulted homeowners trying to help them save their homes. And in the midst of all this, you discover that there are 2 kinds of these homeowners. The majority are good people undergoing legitimate hardships (like unemployment, illness, divorce, etc) who will work hard with you and do what is necessary to save their homes.
And then there's the guy who hasn't paid since back in 2006 or 2007 (sometimes they defaulted on the very first payment), who is $100k or more in arrears, and not just from the back interest and penalties from not making payments, but because he hasn't paid his property taxes and insurance either and the bank has been paying those for him. And the bank has offered numerous payment plans and he's failed on every one of them through non-payment. Then you review the income documents that he's sent in for his modification/forbearance request, and see that there has been steady income all along, sufficient to make some kind of reasonable payment, so you call him up to try to work something out. And the guy tells you he can't afford anything. You're like, "Hey, you have a $2000+ a month payment which your paystubs and tax returns show that you can afford, where'd all that money go when you haven't paid us for 2 to 3 or more years? And you've been living in the house rent-free?" And the answer is they don't know. So confronted with an unwilling customer, you've no choice but to proceed to sale. And the guy takes it to some judge who gets publicity and headlines about the "bad bank."

But yeah, I wouldn't know anything about all this.

That's all fine and dandy, I don't see any problem with what you've stated, and the borrower should definitely be held to account for his actions, but ultimately, if you piss off the judge and repeatedly lie to the court, you're going to lose the case.

 

[MotF Bane]

This message is hidden because dmcowen674 is on your ignore list.

 

[Vic]

That's all fine and dandy, I don't see any problem with what you've stated, and the borrower should definitely be held to account for his actions, but ultimately, if you piss off the judge and repeatedly lie to the court, you're going to lose the case.

Yeah well, I won't speak for IndyMac, I don't work for them. But I do have experience with southern NY and I can say for certain that their judicial system is heavily biased towards homeowners regardless of how intentional their default is or how hard the lender has tried to work with the homeowner to resolve the situation.

The guy is $235,000 in arrears, nearly double the original mortgage balance. That didn't happen overnight or because the lender pissed off some judge. That's an extraordinarily large arrearage and I've just about seen it all.

 

[Ozoned]

Um. Guess who gets to pay for this (hint, its not the bank)

Obama's stash?