LI Judge Strikes Again; Hammers Lender For $100K In Damages, Scraps $119K In Dubious Loan Charges For "Overreaching, Shocking, Unconscionable" Conduct

In Suffolk County, New York, Newsday reports:

• A state judge accused Emigrant Mortgage Co. of premeditated attempts to destroy an East Northport couple's chances of keeping their home, ordering the lender to pay the borrowers $100,000 in damages and scrapping as much as $119,330 in questionable late charges.

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• [E]migrant waited 14 months before starting a foreclosure case, apparently to rack up penalty fees, [State Supreme Court Justice Jeffrey Arlen Spinner](1) concluded. Then, two months ago, on Feb. 23, the lender offered a loan modification plan and 10 days to accept or reject a proposal whose "deplorable particulars" insulated Emigrant from any liability by violating [homeowners'] state and federal rights, Spinner wrote.

• "This court is driven to the inescapable conclusion that plaintiff has, by way of calculation and premeditation . . . created a scenario whereby it is a virtual certainty that defendants will ultimately be irreparably damaged," he wrote. "In short, the conduct of plaintiff in this matter has been overreaching, shocking, willful and unconscionable."

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• [W]hat the judge ripped into were the parts that called for the [homeowners] to "unconditionally" agree not to raise any challenges to Emigrant's foreclosure actions, including filing for bankruptcy, if the couple defaults again. The agreement also seems to release Emigrant from federal truth in lending laws, the judge said.

• "This court has never been presented with such a waiver, especially when accompanied by absurd representations [drafted by the lender] that amount to what could best be described as an express warranty that defendants presently are and will forever be insolvent," the ruling read.(2)

For the story, see Lender ordered to pay E. Northport couple $100G (A state judge accused a mortgage company of premeditated attempts to destroy an East Northport couple's chances of keeping their home).

For the ruling, see Emigrant Mtge. Co. Inc. v Corcione, 2010 NY Slip Op 20133 (Sup. Ct. Suffolk County, April 16, 2010).

(1) The story notes that Justice Spinner is the same judge who, back in November, 2009 voided Long Island residents Greg and Diana Yano-Horoski's $292,500 mortgage for similar conduct by the lender (see Indymac Bank F.S.B. v Yano-Horoski, 2009 NY Slip Op 52333(U), November 19, 2009). He had accused IndyMac Mortgage Services of failing to negotiate a loan modification in good faith. The lender's appeal is pending.

Spinner is also the same judge who recently belted Wells Fargo for giving a homeowner facing foreclosure a premature boot (see Long Island Judge Hammers Wells w/ $155K Tab For Oppressive, Heavy Handed, Egregious Conduct For Pre-Sale Lockout Of Homeowner In Foreclosure).

In his ruling, Justice Spinner makes this acknowledgement to a fellow New York trial judge:

• Indeed, my learned and distinguished colleague, Justice Timothy J. Walker, in the matter of Wells Fargo Bank, N.A. v Hughes 2010 NY Slip Op (Supreme Court, Erie County; 1/13/2010) declined to approve a settlement proposal where the Plaintiff failed to act in good faith as required by CPLR § 3408. Regrettably, it is patently clear to this Court that Plaintiff has failed to act in good faith in this matter.

(2) In a recent New Jersey case (see Gonzalez v. Wilshire Credit Corp., DOCKET NO. A-2634-08T2, 988 A.2d 567; 2010 N.J. Super. LEXIS 16 (App. Div. 2010)), the state appeals court found that unfair, deceptive, or unconscionable practices engaged in by a mortgage lender in connection with "negotiating" a one-sided loan modification agreement with a financially strapped homeowner was subject to the provisions of the New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -106. See Unfair, Deceptive Practices In Connection With Post-Foreclosure Judgment Loan Workout Negotiations Subject To NJ Consumer Fraud Act.