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compromised due to the longstanding nature of the case; (4)
petitioners were defrauded by Hoyt; and (5) the offer-in-
compromise should be accepted based on equity and public policy
grounds.
On February 22, 2005, a telephone section 6330 hearing was
held between Mr. Owens and Ms. Gellner. During the hearing, Mr.
Owens requested more information regarding changes in income and
expenses reported on the Form 433-A, a second mortgage on
petitioners’ house obtained in May 2001, and refinancings of
petitioners’ house in June 2002 and February 2004. Because she
did not have the requested information, Mr. Owens allowed Ms.
Gellner additional time to confer with petitioners.
On February 28, 2005, and March 3, 2005, petitioners sent
additional letters to Mr. Owens explaining the changes in income
and expenses, the second mortgage, and the refinancings. With
regard to the second mortgage and the refinancings, petitioners
stated:
The Lindleys obtained a second mortgage for $110,500.00
in May 2001 at 12.02% interest. * * *
The June 2002 refinance absorbed all of the remaining
$110,500.00 second mortgage except for $35,000.00,
which could not be included because that amount
exceeded 80% of the appraised value. Thus, $35,000.00
was still at the high interest rate of 12.02% when the
June 2002 refinance was complete.
The February 2004 mortgage for $45,000.00 was used to
pay the high interest $35,000.00, a $7,500.00 note with
Telco Credit Union, and $2,500.00 toward credit cards.
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