$500,000 mortgage given free

Okay, so you have this doll business and you decide to refinance your home because, on paper, your home is worth more than you owe on it. Then you run into some financial problems. So you try to refinance but the bank does want to go along with what you want to do. You go to court. At court, the judge calls the bank "repulsive" and gives you the house free. That sounds fair, huh? I mean, nobody has to actually PAY for that loan, right? It's not like others will have to absorb the cost of that mortgage, right? Oh, did I mention the loan is for $500,000?

Mrs Horoski, an English professor, bought the 3,400 sq ft (315 sq m) bungalow 15 years ago for less than $200,000. In 2004, after the value of the home soared, she refinanced with a mortgage for $292,500 from Deutsche Bank at an initial interest rate of 10.375 per cent that rose as high as 12.5 per cent.

The couple, both of whom have medical problems and who live with their adult daughter, used the extra money for healthcare and to help to finance Mr Horoski’s online business selling collectable dolls. But the value of their home plummeted in the property crash and is now appraised at no more than $275,000 — less than the mortgage.