A Long Island, NY, judge cancelled $525,000 in mortgage payments being demanded by California bank OneWest and its IndyMac mortgage division, criticizing its "harsh, repugnant, shocking and repulsive" behavior, the New York Post reported Wednesday.
The ruling, which was delivered last Thursday, eliminated $291,000 in principal and $235,000 in interest and penalties on Diane Yano-Horoski and husband Greg Horoski's ranch home.
According to court records, the couple refinanced their home in 2004, paying off the original mortgage with the help of a $292,500 subprime loan, the Post said. It had an adjustable interest rate of 10.375 percent, which rose above 12 percent.
Video: Debating whether a judge's decision to erase a couple's mortgage debt is fair, with Matt Englett, KEL Attorneys, and Mark Calabria, CATO Institute.
When the couple struggled to pay off the debt due to Horoski's health problems, OneWest — which is owned by a private equity group that bought IndyMac — sued the couple in 2005. The foreclosure was eventually approved last January.
Judge Jeffrey Spinner criticized OneWest for repeatedly refusing to work out a deal with the couple and for misleading him about the amount of money involved in the case.
"I think the judge felt it was almost a personal vendetta," Horoski told the Post.
OneWest said it "respectfully disagrees" with the ruling and believes it will be overturned on appeal.
The bank, which accepted an $814.2 million bailout from the government, is also involved in a case in California where, despite two court orders instructing it to stop, it is attempting to foreclose on an 89-year-old.
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