Outraged Judge in Long Island, New York, wiped out $525,000 in mortgage payments demanded by One West, subsidiary of Indy Mac Mortgage division. This bombshell decision leaves the owners- Diane Yano-Horoski and Greg Horoski- owing simply no money on their ranch house, in East Patchogue,

Suffolk Judge Jeffrey Spinner blasted lender’s “harsh, repugnant, shocking and repulsive” acts. Regardless that the bank has taken $814.2 million federal bailout, they have a record of cold bloodedly foreclosing on any homeowner owing hardly any money. The judge’s decision erases up to $291,000 in principal and $235,000 in interest and penalties.

The owners were paying only interest on their mortgage and had no equity in their home.

The obligation, refinanced in 2004, carried an initial adjustable interest of 10.375 per cent, which soared to 12.375 percent. The owners were begging lenders to restructure their loan. Reported by the owners, dealing with the lending company was like combating organized crime.

The Judge blasted the financial institution for repeatedly refusing to work out an offer, for misleading him regarding the dollar amounts at stake in the case and for its treatment of the couple over months of hearings. He canceled the debt since the bank ought to be appropriately sanctioned so as to deter it from imposing further mortifying abuse against the owners.

The significance of the ruling is that borrowers may have been empowered by knowing that judicial system may come to their rescue if their attempts to modify their loans are not entertained by the lenders. The ruling do not automatically require the lenders to take any action to pursue loan modifications with borrowers. However, lenders have been put on alert by judicial system to work out reasonable agreement with borrowers seeking relief.

By far the most common mistake that individuals make is to understate their income, assets, and ability to repay a loan modification. If the lender determines that you will be unable to pay even a modified loan, they will not want to reach modified agreement and will just foreclose on you now as opposed to later. The best strategy is to come up with loan modification that you will be able to pay and is reasonable.

There are no “specialist” or “expert” in the loan modification process. Thus, if anyone pretends to be specialist, you are urged to stay away. The reason is that banks have no specific methods and usually the decision is made by representative assigned to the specific property or designated area where property is located. So the decision process is based on the representative and your negotiation capability. There is no reason to pay anyone if they are not going guarantee a successful outcome.

The most crucial points about the mortgage loan modification process are:

Pursue loan modification process with lender immediately

Establish a point of contact with your lender

Propose reasonable terms that you can honor in the future

Do not hire “third party” to negotiate if they take any money up front.

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