Judge Erases $525G Mortgage for N.Y. Couple, Citing 'Repulsive' Acts by Bank

[music12]

When the financial-industrial complex (and the media) have consumers convinced that (1) borrowers should pay whatever amount the bank wants, nevermind the contract, and (2) banks don't need to play by any legal rules, much less show respect for the justice system itself -

then I think they've won more than this case could ever lose for them.

well put.

[momisery]

The banks took bail out money could be one reason, but I think the judge saw what I have been seeing for years now. Mortagage brokers did not explain the mortgages to people. Most times people were trying to buy a home so they could have a piece of the American dream. They hoped that by working hard and saving they would have a home to call their very own and be proud of instead of renting for a lifetime. Tax accounts will tell you, society will tell you, in fact banks use to tell you that home ownership is one of the best "investments" you can make. Homes/land always grows in value over time. No one that I spoke with in the mortgage business wanted a free house, or to buy a home and lose it. They all THOUGHT they had latched on to a answer to them being a part of our socieyt, you know to be Americans. These people really believed that things would only go up, their incomes would go up and they would be just fine like everyone around them. Many of these SCUMBAGS that ended up with the ARM did not understand them because the really brillant SCUMBAG selling it to them did not explain it to them, because his/her SCUMBAG boss would fire their hindends if they did not sell enough or if they chased away a client because that SCUMBAG boss would get fire by his SCUMBAG boss who was afraid of his SCUmBAG investor. Lets face it all the SCUMBAGS around us profited off of the incomes, stores, gas stations in fact I bet we are all SCUMBAGS to someone. lol We need to build a country on good paying jobs, not on working two jobs and no one home watching the kids and borrowing against our homes for a car. GEESH.. There is a law against selling SNAKE oil.... but it is done anyhow. People need incomes to pay their bills, no matter who you are if you lose your job though no fault of your own and can not find another one you will spend all your savings and end up as a SCUMBAG per this poster. Hence we are all SCUMBAG, my family especially so because hubby not only lost his job and no one will hire him because the SCUMBAG is too old, and the SCUMBAG is sick from all the stress. Do we all need free homes?? WEll, of course not. But I like the judge in this case, we finally have someone that sees the real story here. They built a nation without jobs on a house of cards, got everyone to buy into it, and they made all the money and ship our jobs out. Then, when it starts falling, they are planning for the next turn around and trampling all of us SCUMBAGS in the rush to steal our homes back from us. Most have tried to work out a deal. I tried on a home in GA with Wells FArgo... they lost the paper work until the buyer walked.. then we tried a DIL and they lost that paperwork... the short sale would have put them down by about 10,000 from the costs and what we owed on the darn place. Now over 2 years later they are looking at a home that the renters moved out of and it has been empty for 9 months and we live in another state so who knows what is going on. But, we have kept up the insurance for the bank so that helps I guess? And the house is worth about 40,000.00 less now... so have fun WF. Banks did not work with people upfront is why we are in this mess. The ARM's were tools to let those people in to larger homes that could not AFFORD it now but could later?? Really??? Did these college educated CEO"S and upper management really believe they could ever afford these homes? No, they didn't but what did they care they were on a roll right now and in the end they will own everything so how can they lose? In our case we bought a home at 19% of our income level... gosh how foolish we were right? SCUMBAGS..

[Flamingo]

The banks took bail out money could be one reason, but I think the judge saw what I have been seeing for years now...

Big posting snip....

Great posting! One thing I want to add is that people are responsible for their own actions and also planning. When offered these mortgages, they knew they could not afford them, were under sales pressure, and could have just said no. This society was (or may still be) a "gotta have it now" society that lacks financial education and knowing how to budget to plan for possible future income loss or decrease/increase. Many were offerred those kinds of mortgages and turned them down also realizing it was a major risk. So now everyone suffers, including savvy financial mortgagees who were not hurt by all this except for a big drop in their house values, but they have to pick up the cost also for those that did sign and did not either research, plan or think it all out. As to the brokers/banks offering these mortgages, business is about profit and they want to make money to keep in business, pay their employees and please shareholders. It's all about moving the product, sales bonuses for brokers (also competition with bonuses for top sellers/producers) and people purchasing a house, vehicle, etc. need to educate themselves as to all that and what they are getting into if they lose their job in a few years, become ill, etc....do they have savings in place to cover the payments? As things have been going down over the past few decades, no thought as to any of that was given and things were just purchased cause they were wanted (and probably not needed) and everyone can now see what happened with the huge influx of bankruptcy filers.

It's all about learning about money, how to handle it and how to budget and plan. All grade schools and high schools should start teaching more as to credit and borrowing, budgeting, etc. due to what just occurred as to the mortgage mess and the huge debt load being dumped on everyone stemming from all that.

[Hillbilly]

Today, it is not only those who got suckered into ARMs or were buying McMansions, but average working folks, who shopped for the best interest rates, and bought modest homes, who are now losing their homes and all that they had worked so hard for.
'Little people', who faithfully made their mortgage payments on time for many years, some having worked for the same employer for 10 or 20 years, found their stable jobs shipped off to other countries or eliminated. What SCUMBAGS!
Communities have thousands of good paying jobs disappear overnight, and there is no gainful employment available, and no prospect of ever replacing those jobs, people who have saved for decades, watch as their life savings dwindle down to nothing, trying to hold on, and 'do the right thing'.
The Bankers get their last dime, and they become SCUMBAGS because they no longer have jobs, and no means to pay any more_or even pay at all.

Of what good is a Banks offer to refinance their mortgage, to these SCUMBAGS who now, through no fault of their own, now have no jobs and no savings left?
Oh yeah, that's right, its these scumbags fault because they didn't 'learn how to budget and plan'?
Right now, the mortgage payment on the home that I lost to foreclosure 3 years ago would be unaffordable to me even at 0% interest.

Although I am a working 'scumbag', I now work for $7.50 an hour, and no benefits, rather than the $23.00 per hour + benefits that I was earning all during the '80s and '90s.
Here in the new economy of 2009, I am working a full time job that pays less than what my starting wage was back in 1968.
Over forty years a dedicated and productive worker, one who over the years paid out hundreds of thousands of dollars in interest payments to the Banking industry, earned with sweat in a US factory that is now bull-dozed, one who drew every last dime from my life savings to honor my obligations, so that I could reach this lofty status of being accounted a scumbag. Money that they invested in foreign countries, and in the buying and the manipulating of politicians so they could further profit by their lucrative undermining of US industries.
Being a 'scumbag', my credit is now shot, and I can no longer afford (nor desire) their 'services' (thankfully)

[BobMango]

Today, it is not only those who got suckered into ARMs or were buying McMansions, but average working folks, who shopped for the best interest rates, and bought modest homes, who are now losing their homes and all that they had worked so hard for....

Preach on brother!

The original program to "help" homeowners was developed by the big brains in Washington thinking that the problem was subprime loans and adjustable rate mortgages. Lo and behold, it turns out that losing your job, increasing taxes and imploding housing and stock markets have more of an impact.

Like you I drained various accounts in an effort to keep up with my obligations, thinking a turn around was just around the corner. When that didn't happen I did file before I spent my bottom dollar.

Did I make some imprudent financial decisions? You bet. But I consider my financial sins to be of less significance that those of the banks and brokerages that almost led to the catastrophic implosion of our banking system. My intention was to get a little piece of the American dream for me and mine, not just screw everybody I could to build up a bank account or please my stock holders.

[onwards]

If the bankers actually lied then those that lied should be brought up on perjury charges. That I would love to see.

Won't work; the lawyer can always claim that this is what he was told, and the bankers can always claim clerical error.

The judge did the right thing; he sanctioned them in the one way he could. I applaud the decision on legal merits, without any concern about the slightly bizarre side-effect of the couple getting their house handed to them.

[JustFileSuit]

The Court's legal reasoning

I think some of you folks are missing the legal reasoning behind the Court's decision. The Court was confronted with misconduct before the Court. In order to maintain both truthfulness and candid disclosure in matters before the Court, the Court has to have available tools of discipline. There are two avenues available to the Court, dependent on whether or not the misconduct took place before or in anticipation of the Filing, or if it happened during the proceedings.

In the first case, that came before the US Supreme Court in Keystone Driller Co,. v. General Excavator Co., 290 U.S. 240. The Plaintiff had carefully arranged for evidence matters to be hidden from the Court. The Court responded by declaring that "all must be fair and candid with the Court," and for those that are not, then "the Court House doors shall be barred against him in limine." So then the plaintiff (here, creditor) gets kicked out of Court and gets nothing (and cannot came back to Court later).

In the second instance, the Court is confronted with misconduct while the matter is under his review. The trial Court has to have available a mechanism or mechanisms to enforce standards of conduct, and this discipline could include fining the attorneys, and tossing the claim. Here, the Judge took the view that an appropriate sanction would be to simply vacate the mortgage securing the Note. So in effect the Mortgage is voided and struck from the Land title records.

This does not mean that the debtor is home free; there is no record to suggest that the underlying Note Obligation is also struck (it may be, but that is not clear). If the Note survives, then it is now unsecured, like a telephone bill or a credit card. Judges have wide latitude to invoke discipline as long as they are not engaging in an abuse of discretion. Voiding the mortgage security in response to misconduct by a creditor before the Court is not going to meet the level of abuse of judicial discretion, and I rather suspect the Appellate Review body is going to be loath to disturb this Ruling. The creditor is going to have a tough row to hoe here. The more logical outcome is that the creditor simply sells the (now unsecured) Note to some new party, untainted by the scandal, at a discount and lets them try to collect.

A similar situation occurred in the USBC. Sou. Distr. NY in the case of In Re Parades, before Judge Drain. There, the Judge struck the entire Note and Mortgage. The homeowner ends up with a $454,000 Note struck from his BK claim (adversary proceeding filed by debtor challenging proof of claim). The trial transcript make great reading! This decision has sent shock waves through the banking crowd, for obvious reasons.

Moral: you can challenge creditor claims, including proofs of claim, in adversary proceedings, using Parades as a case cite. The Courts are starting to look less favorably on the schemes hatched by mortgage lenders and servicers. Expect more fireworks in the near future.