Homeowners With Foreclosure Victories Often Win The Battle But Lose The War

Remember Diana Yano-Horoski and Gregory Horoski who won one of the few foreclosure victories in the early days of the financial crisis? After winning what everyone thought was one of the few foreclosure victories, they soon became the national face of beating back IndyMac’s “repugnant” and “repulsive” foreclosure after Suffolk County Judge Jeffrey Spinner ripped up the mortgage on a property that was once appraised at $525,000 and ripped IndyMac a new asshole.

The only problem was that even though it was one of the most high profile foreclosure victories since the crisis, the war for Horoski’s foreclosure was far from over. In October of 2012, IndyMac appealed the ruling and won. After losing the appeal the Horoski not only lost at the appeal hearing and their home but they were also slapped with a $264,500 deficiency bill from IndyMac. According to court documents, this included $160,000 in legal fees IndyMac/One West claimed they incurred attempting to foreclose on the Horoskis and the nearly $65,000 in unpaid taxes that IndyMac/One West claimed the Horoskis had not paid since 2005. Within 24 months of winning one of the highest profile foreclosure victories since the crisis began, the victory was now nullified. 

Suffolk Judge Jeffrey Spinner, the judge who gave the Horoskis one of their only foreclosure victories by tearing up their $292,500 mortgage with an interest rate of 12.375 percent, told Catherine Curan from The NY Post that in more than 17 years on the bench and thousands of cases, he has had only three requests for deficiency judgments and those were on commercial mortgages with deep-pocketed borrowers.

Spinner again told Catherine Curan from the New York Post, “I think it was grossly unfair what ended up happening to the Horoskis. It’s bad enough that these folks had health problems, and even worse that a high-rate refinancing deal … was the result of uncovered medical bills they tried to pay because they are honest people. Then they lost their home. Now they have a deficiency judgment to follow them around. That’s frightening.”

The Horoski’s problems started in June 2005 when bills from uninsured medical problems led them to default on their mortgage. After a judgment of foreclosure, the Horoskis hoped that mediation and conferences with their lender, IndyMac Bank (now OneWest Bank), in 2009 would lead to a mortgage modification.

According to the New York Post and public record, it was IndyMac’s tactics at these meetings with the Horoskis with Diana, hobbling into court with a walker that drove Spinner to toss the foreclosure and give the Horoski’s one of the few foreclosure victories of the financial crisis.

With a ruling that gave the Horoski’s one of the few foreclosure victories in the early days of the crisis, Spinner also branded IndyMac’s tactics as “harsh, repugnant, shocking and repulsive. Spinner’s ruling thrust the Horoskis into the headlines by ordering the mortgage to be vacated.

In the years since Spinner’s ruling that made them  a symbol of hope for more foreclosure victories, the Horoskis continued to come out losers in court and they eventually lost their house. The deficiency judgment from October, 2012, which carried an interest rate of 9 percent, was like One West stealing the wallet of a guy who is dying of a heart attack on the street.

One West’s blood thirsty pursuit for a deficiency is based purely on greed because there was no deficiency inflicted by the Horoskis even if One West spent $264,500 on attorney fees and property taxes. As part of their deal to buy IndyMac, One West was reimbursed with incentives by the FDIC when they acquired the loan from the FDIC.

In order to get One West to take IndyMac off their hands, the FDIC allowed One West to buy the loans held by IndyMac at 70% of their face value plus the FDIC would cover 80-95% of One West losses on the property.  Mark and Brian explain below:

As a result of the Horoski case, New York has since strengthened protections for homeowners that, had they been in place during the Horoski’s foreclosure, may have saved the Horoskis the nightmare they endured and who are now finally getting their life back together.

But as Catherine Curan at the New York Post points out, the new safeguards came too late for the Horoskis.

Gregory Horoski told The Post last week, “They sold my house and got paid … and I’m the one living in a rental somewhere…We’re just coming out of the trauma of it. This is not the way America is supposed to be.”