Treasury spokeswoman Meg Reilly announced Saturday that the Obama administration plans to step up their efforts to pressure mortgage companies receiving government bailout funds to modify loans and keep homeowners from defaulting.
Along with slowing payments to uncooperative mortgage lenders, one of their main weapons, according to Treasury Assistant Secretary for Financial Institutions Michael S. Barr, will be embarrassment, which presumably will be more effective than the shame they deployed in August.
As a rough gauge of how effective that’s likely to be, it might be instructive to discuss why a Suffolk County Judge wiped out the full, inflated, $525,000 amount of a local family’s mortgage with OneWest, which as Indymac scored almost $9 billion in FDIC funds to cover their nut when they failed in 2008.
According to Suffolk County Court Judge Jeffrey Spinner, he decided against IndyMac/OneWest because their behavior towards Greg Horoski and Diane Yano-Horoski was “inequitable, unconscionable, vexatious and opprobrious… wholly unsupportable at law or in equity, greatly egregious… completely devoid of good faith… harsh, repugnant, shocking and repulsive to the extent that it must be appropriately sanctioned…”
Spinner found that IndyMac Regional Manager of Loss Mitigation Karen Dickinson had “no good faith intention whatsoever of resolving this matter in any manner other than a complete and forcible devolution of title from Defendant.”
Dickinson refused settlement offers, one for the full value of of the house; arbitrarily disqualified the homeowners from eligibility for mortgage adjustment; sent necessary paperwork after the date due and used the missed date as evidence of bad faith on the part of Yano-Horoski; arbitrarily jacked the amount owed up $80,409.23 past an amount she could justify; and was unable to confirm the principal balance owed.
IndyMac, which plans to appeal, foreclosed on 970 Long Island mortgages between January 2008 and June 2009.
That’s what $9 billion worth of shame looks like. I’m not sure we can afford embarrassment.