JUDGING INDYMAC – New York Supreme Court Judge Finds IndyMac’s behavior “repugnant, shocking, repulsive and completely devoid of good faith”.

A judge in New York, The Honorable Jeffrey Arlen Spinner, was shown what its like to request a loan modification from IndyMac/One West Bank… and he was not at all impressed.  In fact, he was so offended by IndyMac’s attitude and treatment of homeowner Diana Yano-Horoski that he decided the only responsible decision he could reach, in addition to publicly chastising the bank, was to wipe out the homeowner’s entire indebtedness to IndyMac.  Will the decision be appealed?  Probably, but I think that’s besides the point.  This appears to be the first decision by a court based on the behavior of a bank or servicer towards a homeowner… and as far as I’m concerned, it’s about time.

In Judge Spinner’s decision, he wrote that the homeowner had been eminently reasonable in her requests for a loan modification, while IndyMac Bank (recently renamed “One West Bank”), throughout the process, was completely unwilling to entertain any outcome short of foreclosure.  The judge referred to IndyMac’s conduct as being “inequitable, unconscionable, vexatious and opprobrious,” so obviously this is a guy who can complete the Sunday crossword in the New York Times using a pen.  But he didn’t stop there.  He went on to say:

“Plaintiff’s conduct is wholly unsupportable at law or in equity, greatly egregious and so completely devoid of good faith that equity cannot be permitted to intervene on its behalf. Indeed, Plaintiff’s actions toward Defendant in this matter have been harsh, repugnant, shocking and repulsive to the extent that it must be appropriately sanctioned so as to deter it from imposing further mortifying abuse against Defendant.”

IndyMac/One West Bank… Mortifying abuse… completely devoid of good faith… harsh, repugnant, shocking and repulsive.  Bravo, Judge Spinner… Bravo!  When I read it for the first time, it literally brought tears to my eyes.

It all started when IndyMac wanted to foreclose on a home located in Suffolk County, New York. The mortgage involved secured an adjustable rate note with an initial interest rate of 10.375%, with an original principal amount of $292,500.  Because the loan was considered “sub-prime” or “high cost,” and I suppose based on a New York State law, the homeowner requested that the court schedule a settlement conference.  And that’s when things started to go wrong.

The court tried five times to get IndyMac to cooperate and attend the settlement conference, and finally the court had to direct what some would refer to as the world’s most intolerable bank, to produce an officer of the bank and show up in court.

On September 22, 2009, Karen Dickinson, IndyMac’s Regional Manager of Loss Mitigation showed up to represent the bank.  Ms. Dickinson claimed that IndyMac was the servicer of the loan, and that Deutsche Bank was the owner, although the record holder was IndyMac Bank FSB, an entity no longer in existence, so who the heck knows what the real deal is on that point.

Judge Spinner wrote that at that conference, it was made clear to the court that IndyMac had no intention of resolving the matter in any way but to foreclose on the property.  At first, Ms. Dickinson insisted that the homeowner had recently been offered a “Forbearance Agreement,” which she claimed had been defaulted on immediately, but after “substantial prodding” by the court, she finally admitted “with great reluctance” that the agreement had not been sent to the homeowner until after the stated first payment was due!  So, just so we’re clear… Ms. Dickinson lied to the court.

According to IndyMac, the total amount due on the mortgage is now $525,000, and the bank freely conceded that the property today is worth no more than $275,000.  The homeowner’s daughter had offered to purchase the property for its fair market value, but good old IndyMac, who is nothing if not consistent in its unreasonableness, flatly rejected the offer.

IndyMac also refused to consider a loan modification that would rely on any more than 25% of the income earned by the homeowner’s husband and daughter, both of whom live in the house.  IndyMac’s excuse was that “We can’t control what non-obligors do with their money,” which caused the judge to consider the logical follow-up question: How does the bank control what the obligor does with her money?

Judge Spinner found IndyMac’s position to be “deeply troubling,” which only shows that he’s an adult with a brain and a conscience.  Further, Judge Spinner stated that there have been “a plethora of sub-prime loans in this County’s Foreclosure Conference Part have been successfully modified with the lender’s reliance upon the income of non-obligors who reside in the premises under foreclosure.”

IndyMac rejected whatever the homeowner offered in terms of an alternative solution.  And Judge Spinner stated that “It should be noted here that Defendant did not even request any waiver or “forgiveness” of the indebtedness aside from some tinkering with the interest rate, just a modification of terms so as to enable her to repay the same.”

The judge described Ms. Dickinson as having an “opprobrious demeanor and condescending attitude”.  And even though, as I read the judge’s decision, I had no idea what that meant, I cheered along anyway.  After looking it up, I discovered that the first definition of “opprobrious” is written as “expressing scorn, contempt or severe criticism,” and the second definition says, “bringing shame or disrepute”.  So, obviously Ms. Dickinson completed Banking & Servicing 101, where I’ve decided they teach you to be an obnoxious prick or bitch, depending on your gender.  (I’d like to take a moment to say a small prayer: Dear God… please let me have the opportunity to kick at least one banker’s ass before I die.  Amen.)

There was some back and forth… Dickinson claimed that the bank had offered the homeowner not one but two modification offers, but that both were refused by the homeowner.  The homeowner basically replied that Ms. Dickinson was clearly smoking crack and out of her mind.  Then Dickinson said that the homeowner’s financial status made her ineligible for a modification under Federal HAMP Guidelines, to which the homeowner basically replied that Ms. Dickinson was smoking crack and out of her mind.  (Okay, that’s not verbatim or anything, but you get the idea, right?)

The judge couldn’t figure out why IndyMac thought they were owed over $500,000 either.  He tried a lot of math equations, but none seemed to make any sense.  Finally, Judge Spinner decided that “the pendulum of credibility swings heavily in favor of Defendant”.  He also said that, taking into consideration the conduct of IndyMac in its entirety, compelled him to invoke an “ancient and venerable principle” known as “Falsus in uno, falsus in omni,” which is Latin for “false in one, false in all”.  (I don’t know about you, but if Judge Spinner ever goes on Jeopardy, I’m betting on him to win by a landslide.)

In the elegant words of Judge Spinner: “Regrettably, the Court has been unable to find even so much as a scintilla of good faith on the part of Plaintiff. Plaintiff comes before this Court with unclean hands yet has the insufferable temerity to demand equitable relief against Defendant.”

Judge Spinner also commented that even though the homeowner and her husband have health problems, they, along with their daughter, managed to appear at each and every scheduled conference before the court.  The judge also said that the homeowner, at each appearance, tried their best to resolve the matter “in an amicable fashion, only to be callously and arbitrarily turned away” by IndyMac.

Then Judge Spinner pointed out several things that I have not heard of a court recognizing up until this decision.  He said:

“Were IndyMac amenable, the homeowner would presumably continue to maintain the property’s physical plant, pay taxes thereon and the property would retain or perhaps increase its market value. IndyMac would receive a regular income stream, albeit with a reduced rate of interest and without sustaining a loss of several hundred thousand dollars.  In addition, no neighborhood blight would occur from the boarding of the property after foreclosure, which would, in turn, avert problems of litter, dumping, vagrancy and vandalism as well as a corresponding decline in the property values in the immediate area.  In short, a loan modification would result in a proverbial “win-win” for all parties involved.  To do otherwise would result in virtually certain undomiciled status for two physically unhealthy persons and their daughter, leading to an additional level of problems, both for them and for society.”

Wicked smart… this judge is wicked smart.  If he’s willing to run, I’m willing to support him for President of the United States in 2012, or any other office he might be interested in for that matter.

Judge Spinner also wrote: “The maxim of “clean hands” fundamentally was conceived in equity jurisprudence to refuse to lend its aid in any manner to one seeking its active interposition who has been guilty of unlawful, unconscionable or inequitable conduct in the matter with relation to which he seeks relief.”  And that statement was followed by a whole string of numbers and squiggles that lawyers seem to understand and claim as useful, although I have my doubts.

The judge said that the court, when attempting to reach a decision as to whether to permit the foreclosure, is required to look at the entire situation, and to give careful consideration to “whether the remedy sought by Plaintiff (IndyMac) would be repugnant to the public interest when seen from the point of view of public morality”.  And let’s face it… as far as the public morality thing goes, IndyMac is way repugnant.

Judge Spinner wrote:

“Equitable relief will not lie in favor of one who acts in a manner which is shocking to the conscience, 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.  The compass by which the questioned conduct must be measured is a moral one and the acts complained of 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.  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.”

And then in closing, my new favorite judge of all time wrote:

“The Court cannot be assured that Plaintiff will not repeat this course of conduct if this action is merely dismissed and hence, dismissal standing alone is not a reasonable option. Likewise, the imposition of monetary sanctions is not likely to have a salubrious or remedial effect on these proceedings and certainly would not inure to Defendant’s benefit.  This Court is of the opinion that cancellation of the indebtedness and discharge of the mortgage, when taken together, constitute the appropriate equitable disposition under the unique facts and circumstances presented herein.”

My Conclusion…

Okay… first of all I’d just like to again say “Bravo!” to Judge Spinner for doing the right thing, and for sending a message to IndyMac, and hopefully to all the other banks and servicers, that their egregious behavior as seen consistently throughout today’s crisis will not be tolerated forever by the people of the United States of America.  This decision, as several attorneys have told me, will likely be overturned on appeal… but I have to tell all of the homeowners reading this: I don’t care about that at all.

IndyMac may have changed their name to One West bank, but they will not be able to hide from thousands of homeowners, should they follow suit and file suit.  If it were me, I’d get started immediately.  As anyone close to the foreclosure crisis knows… this isn’t a fluke, this is how IndyMac behaves towards all homeowners at all times.  They are in the home stealing business, and they are not to be trusted… ever.

I have personally received hundreds of stories from homeowners that describe unconscionable behavior on the part of IndyMac/One West Bank.  In point of fact, just yesterday, a homeowner in Buena Park, California called to tell me that IndyMac told her last Friday at 3:30 PM, that she had until Monday at 9:00 AM to come up with some $72,000 or her home would be sold on Monday at noon.  When the homeowner responded that she would be able to pay the $72,000, but would need 4-5 days to get it from her retirement plan account, IndyMac simply and callously said no.  Monday at 9:00 AM was it.

I’m not a lawyer.  Let’s be very clear about that.  And I’m told that this case in New York provides no precedent as it is not an appellate court decision.  In fact, I’ve been told a lot of things by attorneys attempting to diminish the value of Judge Spinner’s decision.  But, again… I don’t care.  People… if you feel that you’ve been or are being tormented by the bastards at IndyMac/One West bank… call an attorney… or file the damn case yourself, if you think you can handle that path.  This homeowner did it, and I think you can to.

Will you win… who knows, but I have to believe that we’ve all been quiet long enough, and with this next year being an election year… there’s no better time to make a statement.  And you have to think that a few thousand lawsuits filed by homeowners across the country would have to be noticed by someone, don’t you?  Look, I don’t know what I’m talking about here, but I wouldn’t let it go just because a couple of lawyers don’t think it will provide legal precedent.

(Sorry, lawyers reading this… but there are times when a citizen should disregard the letter of the law and make a statement, and I don’t want to discourage anyone from doing so based on this decision.)

I would also like to say to Mrs. Diana Yano-Horoski, the homeowner in this case who appeared before the court as a Defendant Pro Se, meaning that she did not have a lawyer: “YOU GO GIRL!”  You are quite sincerely my idol and I will never forget your courage and dedication to pursuing justice in the face of oppression.  You are clearly a patriot who has great faith in this country… and I salute you.

To Judge Spinner… I hope you understand just how much joy you have brought to me, regardless of where things go from here, I’ll always remember reading your decision and feeling renewed hope and faith in our nation as a place where tyranny will not endure.

To Michael Dell and George Soros… This is only the beginning.  Your bank has gone too far and cannot survive the onslaught of homeowners who will never have anything but hatred for what you have allowed to take place.  Mr. Soros, I suppose you are insulated, as no one knows what you do for a living.  Being Jewish myself, the fact that you’re a Jew offends me.  But… Mr. Dude-You’re-Getting-a-Dell… we know where your bread is buttered, and I for one would rather return to using an IBM Selectric II typewriter, white out and all, then ever touch the keyboard of a computer with your name on it.

And last, but by no means least… to Ms. Karen Dickinson. F#@K YOU.  How dare you?  Have you no shame?  You are a person so utterly lacking in character that, for the first time in my life, I find myself fantasizing about the possibility that one day forced sterilization programs will prevent people like you from reproducing and polluting our society as a result.  Everything about you offends me.  All I can do now, is everything possible to put you out of my mind forever.

Pssst… Karen… over here…