Standing up to the banks: how to challenge your foreclosure

In response to an article I posted recently called “Standing Up to the Banks,” www.webofdebt.com/articles, a number of people have written to ask for help in defending their foreclosure actions.  I started to put together materials, when I discovered that it had already been done.  The Consumer Warning Network is an excellent website providing specific directions on how to raise the produce-the-note defense — 

http://www.consumerwarningnetwork.com/2008/06/19/produce-the-note-how-to/

It states: 

Using the “produce the note” strategy is something all homeowners facing foreclosure can do. If you believe you’ve been treated unfairly, fight back. We have created templates for a legal request, a letter to your lender and a motion to compel to help you through the process.

WHO OWNS THE NOTE?

Your goal is to make certain the institution suing you is, in fact, the owner of the note (see steps to follow below). There is only one original note for your mortgage that has your signature on it. This is the document that proves you owe the debt.

During the lending boom, most mortgages were flipped and sold to another lender or servicer or sliced up and sold to investors as securitized packages on Wall Street. In the rush to turn these over as fast as possible to make the most money, many of the new lenders did not get the proper paperwork to show they own the note and mortgage. This is the key to the produce the note strategy. Now, many lenders are moving to foreclose on homeowners, resulting in part from problems they created, and don’t have the proper paperwork to prove they have a right to foreclose.

THE HARM

If you don’t challenge your lender, the court will simply allow the foreclosure to proceed. It’s important to hold lenders accountable for their carelessness. This is the biggest asset in your life. It’s just a piece of paper to them, and one they likely either lost or destroyed.

When you get a copy of the foreclosure suit, many lenders now automatically include a count to re-establish the note. It often reads like this: “…the Mortgage note has either been lost or destroyed and the Plaintiff is unable to state the manner in which this occurred.” In other words, they are admitting they don’t have the note that proves they have a right to foreclose.

If the lender is allowed to proceed without that proof, there is a possibility another institution, which may have bought your note along the way, will also try to collect the same debt from you again.

A Tennessee borrower recently had precisely that happen to her. Her lender, Ameriquest, foreclosed on her in July of 2007. About three months later, another bank sent her a default notice for the mortgage on the house she just lost. She called to find out what was going on. After being transferred from place to place and left on hold for lengthy periods of time, no one could explain what happened. They said they would get back to her, but never did. Now, she faces the risk of having her credit continually damaged for a debt she no longer owes.

FIGHT FOR FAIRNESS

This process is not intended to help you get your house for free. The primary goal is to delay the foreclosure and put pressure on the lender to negotiate. Despite all the hype about lenders wanting to help homeowners avoid foreclosure, most borrowers know that’s not the reality.

Too many homeowners have experienced lender resistance to their efforts to work out a payment structure to keep them in their homes. Many lenders bear responsibility for these defaults, because they put borrowers into unfair loans using deceptive, hard-sell practices and then made the problem worse with predatory servicing.

Most homeowners just want these lenders to give them reasonable terms on their mortgages, many of which were predatory to begin with. With the help of judges who see through these predatory practices, lenders will feel the pressure to work with borrowers to keep them in their homes. Don’t forget lenders made incredible amounts of money by using irresponsible practices to issue and service these loans. That greed led to the foreclosure crisis we’re in today. Allowing lenders to continue foreclosing on home after home, destroying our neighborhoods and our economy hurts us all. So, make it hard for your lender to take your home. Make ‘em produce the note!

STEPS TO FOLLOW

A. If your lender has already filed suit to foreclose on your home:

  1. Use the first form. It’s a fill-in-the-blank legal request to your lender asking that the original note be produced, before it can proceed with the foreclosure. In some jurisdictions, the courts require the original request to be filed with the clerk of court and a copy of the request to be sent to the attorney representing the lender. To find out the rules where you live, call the Clerk of Court in your jurisdiction.
  2. If the lender’s attorney does not respond within 30 days, file a motion to compel with the court and request that the court set a hearing on your motion. That, in effect, asks the judge to order the lender to produce the documents.
  3. The judge will issue a ruling at your hearing. Many judges around the country are becoming more sympathetic to homeowners, because of the prevalence of predatory lending and servicing. In the past, many lenders have relied upon using lost note affidavits, but in many cases, that’s no longer enough to satisfy the judge. They are holding the lender to the letter of the law, requiring them to produce evidence that they are the true owners of the note. For example:
  • In October 2007, Ohio Federal Court Judge Christopher Boyko dismissed 14 foreclosure cases brought by investors, ruling they failed to prove they owned the properties they were trying to seize.

B. If you are in default, but your lender has not yet filed suit against you:

  1. Use the second form. It’s a fill-in-the-blank letter to your lender which also requests they produce the original note, before taking foreclosure action against you.
  2. If the lender does not respond and files suit against you to foreclose, follow the steps above.
UPDATE: CNN features The Consumer Warning Network and the “Produce The Note” strategy. Borrowers are putting this plan into action and getting results!

Consumer Warning Network Featured on CNN

THE LATEST: Borrower wins more time to fight foreclosure! At a court hearing Tuesday, a Pinellas County, Florida Judge denied Wachovia the right to proceed with its foreclosure against borrower Jacqueline O’Brien (profiled in the CNN story).  Instead, O’Brien was granted a continuance, as she pursues the produce the note strategy.  Wachovia expressed interest in renegotiating the terms of the loan, rather than continuing the court battle. 
_______________
Chris Hoyer adds in an email:
When people ask for individual lawyers we either refer them to their local bar referral system or, when they can’t afford a lawyer (most often), we give them this link : http://www.lsc.gov/map/lscprogramdirectory.asp
which allows them to find free legal advice in their area.  We have had lots of people show success recently from the feedback we have gotten.

58 Responses

  1. Michelle, Your question is far too broad and general to receive any kind of meaningful answer here. Please try being more specific and frame your question is way that a short answer of some sort is possible.

    If you are in bankruptcy or mortgage default and need directions to advice then it might be more helpful to just say so, and let us know what help you need. Where are you trying to go with this?

    Incidentally, I doubt Brock is here to help anyone. It seems he is only interested in clouding the issues and debunking money reform efforts.

  2. michelle, on March 13th, 2009 at 5:06 pm Said:

    how would that work if a class action was filed
    ————————————————————-
    ————————————————————–

    Foreclosure disputes are inappropriate for class action litigation, which is more appropriate for matters involving liability and torts.

    Ellen Brown was mistaken when she asserted that the Justice Court action in “Credit River” was “valid, just not precedent for cases in other judiciary systems.”

    Firstly, it was not valid, because it was subsequently overturned. Moreover, the litigant in the case, Daly, was a lawyer who was disbarred over the matter. See the materials and commentary at the Minnesota Law Library:
    http://www.lawlibrary.state.mn.us/askfaq.html#credit

    Secondly, the Justice Courts are not “courts of record.” Evidence and testimony in Justice Courts are not recorded and are therefore not published in law books. For that reason it is not available in any legally recognized form to be precedent in any court, including Justice Courts.

    Let me return to your posting on March 5. You couldn’t find my earlier posting because it had been deleted by the blog moderator.

    Now, let me answer your very important question from March 5:

    “As I understand it in order for a contract to be legal 3 elements must exist:
    1) Offer
    2) Acceptance
    3) Consideration

    “What was the ‘something of value’ or ‘Consideration’ the bank exchanged for Mr. Daly’s Promissory Note?”

    The consideration was the note or notes the bank exchanged for Mr. Daly’s note. Bank deposits are the functional equivalent of promissory notes issued by the banks. Daly exchanged his personal promissory note, that was not generally recognized or accepted in trade and commerce, for the generally recognized and accepted bank credit, in the form of deposits created through the loan. The vast majority of transactions are conducted through the transfer of bank deposits, which is why we call them “money.”

    Brock

  3. I think it is time to reintroduce some commons sense into this thread. In her article, Ellen wrote this: quote:

    “FIGHT FOR FAIRNESS

    This process is not intended to help you get your house for free. The primary goal is to delay the foreclosure and put pressure on the lender to negotiate. Despite all the hype about lenders wanting to help homeowners avoid foreclosure, most borrowers know that’s not the reality.

    Too many homeowners have experienced lender resistance to their efforts to work out a payment structure to keep them in their homes. Many lenders bear responsibility for these defaults, because they put borrowers into unfair loans using deceptive, hard-sell practices and then made the problem worse with predatory servicing.

    Most homeowners just want these lenders to give them reasonable terms on their mortgages, many of which were predatory to begin with. With the help of judges who see through these predatory practices, lenders will feel the pressure to work with borrowers to keep them in their homes. Don’t forget lenders made incredible amounts of money by using irresponsible practices to issue and service these loans. That greed led to the foreclosure crisis we’re in today. Allowing lenders to continue foreclosing on home after home, destroying our neighborhoods and our economy hurts us all. So, make it hard for your lender to take your home. Make ‘em produce the note!” Unquote

    The issue here is fairness. As I understand it, the “produce the note” tactic is something that might delay foreclosure long enough for the homeowner in trouble to either get back on his/her financial feet or to renegotiate more manageable or favorable terms through the courts.

    A promissory note is a legal financial obligation, and is therefore an asset, albeit one of questionable value, depending on the financial soundness of the borrower. Unfairness on the part of the lender, even predatory ones, does not relieve the signer of a contract of their responsibility to fulfill the contract. The fact that private banks can take a promise to pay and turn it into money may be immoral, but it is not illegal.

    I think the bottom line is that even if a corrupt system needs to be changed, that does not constitute a legal defense in a particular case. Not being able to “produce the note” may give the borrower some time and leverage to renegotiate a better deal, but it will probably not get one “off the hook” so to speak.

    However, the Obama administration and the Democratic congress are getting legislation passed that will offer some relief to some homeowners in some situations. Not all… some. Buying time just might pay off, if it can be done.

    I think that is the main message here, along with all that Ellen has already said on the issue.

    Jere

  4. […] friend forwarded me this intriguing post from Ellen Browns Web of Debt blog. I mentioned in February how some homeowners were successfully […]

  5. I apologize if I was not clear in my question. Foreclosure dispute was not the argument for a class action lawsuit- nor was I suggesting that it be a way for one to get their house for free. Even the idea of a “Fight for Fairness” seems futile.

    What I am asking is how is the following example not a valid or legitimate argument?

    Example:
    A Borrower goes to a Lender wanting to borrow “money” or set up a “llne of credit” to purchase a home -lets say $150,000.
    That loan contract would consist of 1-an offer 2- an acceptance and 3-consideration.
    Once the contract is drawn up with its terms and conditions agreed upon by each party the Lender then creates an account for the Borrower and -(heres where the magic happens)- the Lender types $150,000. into the Borrowers account- he does not move any precious metals, he does not mint any coins, or prints any money- He just punches in a few numbers.
    Now for this contract to be binding -the Borrower, in order to receive that $150,000 He / She has to exchange something of value, like a promise to pay, or Promissory Note, which is a negotiable instrument-and- any “Collateral” He / She may have signed over for the loan. This is what I am referring to in regards to the “Consideration” aspect of the contract.

    The Borrower agrees, by accepting the terms and conditions of the contract, to pay back PRINCIPAL plus INTEREST on money that has NEVER, does NOT, and WILL never exist.
    And, should the Borrower ever be in default or unable to pay back something that never existed, the Lender can then take the Real Property and Collateral, which is something that does exist and is of REAL VALUE.

    I am only hoping to open up a line of discussion, to offer food for thought and to get a better understanding of the whole current situation.

  6. Michelle, the flaw in your argument is that you’re assuming that the $150,000 typed into the borrowers account is not consideration. It is consideration and something of value inasmuch as it represents the liability of the bank to the deposit holder. It is effectively the promissory note or notes of the bank. Bank deposits and banknotes are functional equivalents. The bank is required to redeem deposits in central bank credit when and if demanded.

    “…the Lender types $150,000 into the Borrowers account- he does not move any precious metals, he does not mint any coins, or prints any money- He just punches in a few numbers.”

    But crediting deposit accounts is effectively the same as printing money. Remember the history of banknotes. Before the National Bank Acts, banks printed or contracted the printing of banknotes. With the National Bank Acts, that became a monopoly of the national banks. With the Federal Reserve Act, that became a monopoly of the Federal Reserve.

    “The Borrower agrees, by accepting the terms and conditions of the contract, to pay back PRINCIPAL plus
    INTEREST on money that has NEVER, does NOT, and WILL never exist.”

    It definitely DOES exist, in the form of bank deposits, which are liabilities of the banks. Most transactions are conducted through the transfer of bank deposits, which is why we call them money.

    Brock

  7. What you are saying is that the money and credit is created into bank notes from bank deposits which turns them into something of real value due to the liability.
    So through fractional reserve lending the lender is allowed to lend up to 10 times the amount it actually has on deposit. Which basically means that if a bank has a $1 deposit in an account it can lend 10 more that it actually does not have on deposit.

    So this leads me to my next questions:

    1- Are those deposits of money or credit backed by anything of REAL value? And if they are what is it?

    2- If they are not backed by anything of REAL value- how is that consideration?

    and here’s one that may seem a little too ignorant-

    If the bank is able to print the money when it so pleases- how is it ever a liability to the bank when it has the power to create more money?

    • You mean more worthless money? Doesn’t it cost the bank about 40 cents to print a one dollar bill and 40 cents to print a 100 dollar bill? And then the IRS collects taxes (interest) on the “money we use to pay for the use of these worthless notes (money)… Will it ever end?

  8. Sorry Brock- wanted to correct myself.
    Thank you again for the discourse.
    Michelle

    So through fractional reserve lending the lender is allowed to lend up to 10 times the amount it does NOT have on deposit. Which basically means that if a bank has a $1 deposit in an account it can lend 10 more than it actually does not have on deposit.

  9. “What you are saying is that the money and credit is created into bank notes from bank deposits which turns them into something of real value due to the liability.

    “So through fractional reserve lending the lender is allowed to lend up to 10 times the amount it actually has on deposit. Which basically means that if a bank has a $1 deposit in an account it can lend 10 more that it actually does not have on deposit.”
    —————————————————-
    —————————————————–

    This is not a quite correct statement of the fractional reserve process. Assuming a ten percent reserve requirement, it means that the bank must have an amount equal to ten percent of its deposit liabilities backed by reserves, which are defined as vault and till cash, plus its balance at the reserve bank. Both vault cash and its reserve balance are in the form of central bank credit. This requirement, and in the absence of the requirement, prudency, limit the bank’s ability to expand credit. The reason for this is that deposit holders can demand that their deposits be redeemed in Federal Reserve Notes. It also means, and this is far more important, that when deposits are transferred into other banks through trade and commerce, that the bank has a sufficient balance on deposit at the Federal Reserve Bank to cover those transfers. This is the very basis of the clearing system between the banks.

    “1- Are those deposits of money or credit backed by anything of REAL value? And if they are what is it?”
    —————————————————-
    —————————————————–

    They are backed by the faith and credit in the bank that it will redeem deposits in central bank credit, when, and if, demanded. That would be for what are called “demand deposits.”

    “If the bank is able to print the money when it so pleases- how is it ever a liability to the bank when it has the power to create more money?”
    —————————————————-
    —————————————————–

    It is the liability that it will redeem deposits, when and if demanded, in central bank credit. The bank does not create central bank credit. Central bank credit is in the form of Federal Reserve Notes, and the bank’s deposit balance at the Federal Reserve.

    Brock

  10. michelle, on March 18th, 2009 at 3:53 pm Said:

    Sorry Brock- wanted to correct myself.
    Thank you again for the discourse.
    Michelle

    So through fractional reserve lending the lender is allowed to lend up to 10 times the amount it does NOT have on deposit. Which basically means that if a bank has a $1 deposit in an account it can lend 10 more than it actually does not have on deposit.
    ———————————————————-
    ———————————————————–

    No, Michelle, this is not at all what fractional reserve banking is. Reserves are special category of assets in possession of the banks. In today’s system they are totally in the form of central bank credit. Deposits are liabilities that banks have to their depositors. So there is a “ratio” of reserves to deposits. A “ratio” of ten percent means the bank has one dollar in reserves for every ten dollars of deposits. It does not mean that the bank may lend ten dollars for every one dollar it has in reserves. If the regulators have imposed a ten percent requirement, it means that when they examine the bank, they expect to see that the bank has as least one dollar in reserves for every ten dollars in customer deposits. It is a regulatory requirement. In the absence of that requirement, a prudent banker will limit what he will create through loans, because he is mindful that every depositor may demand that he redeem the deposits in central bank credit, which occurs mostly through the clearing process with other banks. If he is too profligate in his lending practices, he will loose reserves to to the other banks, and eventually deplete his reserve account, putting him out of business. So it very much depends on what his customers, the public, and the other banks are doing. He is always attempting to attract one dollar from the the other banks for every dollar he is losing to the other banks. If he does this perfectly, he has no need for reserves whatsoever.

    Brock

  11. Brock-
    I have really enjoyed our discussion.

    you answered my question:
    -Are those deposits of money or credit backed by anything of REAL value? And if they are what is it?

    -with-

    They are backed by the faith and credit in the bank that it will redeem deposits in central bank credit, when, and if, demanded. That would be for what are called “demand deposits.”

    But you forgot to include HOPE-

    Because We better HOPE-
    -that people do not realize that their money is not back by any real value like gold & silver coin

    -that people do not realize that the federal reserve is no more federal than Fed Ex but a private bank cartel and does not have to answer to anyone

    and most importantly-

    We better hope-
    that there will never be a “bank run” and that the people will start demanding their “deposits” back during a time where the theory of fractional reserve banking is the cause for the dollar to not be worth the paper it was printed on.

  12. “It is the liability that it will redeem deposits, when and if demanded, in central bank credit. The bank does not create central bank credit. Central bank credit is in the form of Federal Reserve Notes, and the bank’s deposit balance at the Federal Reserve.

    Brock ”

    Brock and Michelle, I’ve read your posts with interest. I have to say Brock, you’ve tried to support the system well. However your above statement is where the sam unravels – that bank deposits exist in the form of central bank CREDITS. An boy don’t they just! And from whence do CENTRAL BANK CREDITS hail? From the same THIN AIR of faith and hope in people’s promises to pay out of the REAL economy! The Fed and US Treasury ARE part of the scam because they LEGITIMISE the commercial banks NOTHING MONEY through the credits they effectively GIVE them each time the commercial banks lend out money i.e. CREATE demand deposits! The FED cannot eternally print money endlessly and meaninglessly. At some point, people will stop borrowing and that’s when the ‘money supply’ freezes!

  13. 9th line above should read where “the SCAM unravels “

  14. Nice post. I like the part about produce-the-note. I live in Tampa and know one person he helped, and it actually worked. Well it did not work like some of the newspapers reporting, but they did get new terms that were very favorable and they were able to avoid foreclosure. It really varries by situation and probably the laws of your state on how far this goes. This site has all the videos they have done. Watch all the videos here:

    http://tinyurl.com/bozo2d

  15. A typical real estate purchase and sale goes down as described below after the buyer and the seller have signed the agreement of purchase and sale:

    The buyer goes to Magic Bank in response to the bank’s claim that it is in the business of lending money in accordance to its corporate charter. The buyer went to the bank believing that Magic Bank had the asset (money) to lend. Magic Bank never tells its customers the truth that it does not have any money to lend, nor are they permitted to use their depositors’ money to lend to its borrowers.

    Notwithstanding the fact that Magic Bank does not have any money to lend, Magic Bank makes the buyer/borrower to sign a mortgage loan application form which is essentially a promissory note that the buyer/borrower promises to pay Magic Bank for the money (what money?) he/she is supposed to receive from Magic Bank even before any value or consideration is received by the buyer/borrower from Magic Bank. This promissory note is a valuable consideration, a receivable and therefore an asset transferred from the buyer to the bank which Magic Bank enters into its own asset account as a cash deposit.

    After making sure that the buyer has the ability to pay the required monthly payments (the buyer has credit), Magic Bank agrees to lend the buyer the money (cash) to pay the seller. Magic Bank has no money to lend but it gave the buyer a promise to lend money by way of a commitment letter, loan approval letter, loan authorization or loan confirmation letter, etc., signed by a bank official or loans/mortgage officer employed by Magic Bank.

    Magic Bank’s acceptance of the buyer’s promissory note made the bank liable to the buyer/borrower for the full face value of the promissory note which is the agreed purchase price of the property, less any cash deposit or down payment money paid by the buyer directly to the seller.

    It is important to note at this point that all real estate transaction requires that the property being sold must be conveyed by the seller to the buyer free of all liens and encumbrances which means that all liens such as existing mortgages, judgments, etc. must be paid before the property can be mortgaged by the buyer as collateral to the mortgage loan which is yet to be received by the buyer pursuant the promise made by Magic Bank. How can the seller obtain clear title if he has not yet received any money from the buyer? And how can the buyer mortgage a property that does not yet belong to him or her?

    This dilemma is solved using Magic Bank’s magic tricks. Magic Bank in concert with other magicians, the bank’s lawyers or notaries, causes all the liens and encumbrances to magically disappear by using a cheque drawn in the name of Magic Bank backed by the buyer’s promissory note and the agreement of purchase and sale. This cheque is deposited into the lawyer’s trust account. In essence, Magic Bank and its magicians, the lawyers and notaries used the buyer’s promissory note as the cash to enable the purchase agreement. It was the buyer’s promissory note that made the conveyancing possible. Magic Bank caused the property to be conveyed to buyer from the seller clear title, free and clear of all liens and encumbrances. The property now belongs to the buyer which makes it possible for the buyer to mortgage the property to Magic Bank. The buyer paid for it using his/her own promissory note.

    At this point, the seller has not yet received any money or cash so Magic Bank and its magicians must perform another magic in order to satisfy the seller’s requirement that he/she must get paid or the whole deal is null and void. The seller does not even know that the property had been magically conveyed to the buyer’s name in order for the seller to receive any money.

    The ensuing magic trick is accomplished this way. The buyer is made to sign another promissory note. The mortgage contract is attached to the bottom of the promissory note which makes the buyer liable to pay Magic Bank for the money or the loan which the buyer has not yet or will never receive for up to twenty five years or more depending on the amortization term of the mortgage contract. This note is linked to the collateral through the mortgage contract and as such, it is valuable to Magic Bank.

    Magic Bank then goes to Bank of Canada or to another bank through its accomplice, the Canadian Payment Association to pledge the deal that they have just gotten from the buyer for credit. Bank of Canada then gives Magic Bank the “credit.” Remember, it is not Magic Bank’s credit, it was the buyer’s credit who promised to pay Magic Bank if and when the money is received by the buyer from Magic Bank, payable for up to 25 years or more (30 to 40 years in the USA).

    Note: What happened above is basically a “swap”, a transaction all banks do to ‘monetize’ security. In this case, the second promissory note that is linked to the mortgage contract and signed by the buyer is a mortgage-backed security.

    Magic Bank will then agree to pay Bank of Canada a certain percentage of interest over “prime”. Thus the buyer’s loan package goes to Bank of Canada which credits Magic Bank with the full amount of credit which is the total amount of the money Magic Bank is entitled to receive after 25 years which is the amount of the principal plus all the interest payments the buyer has promised to pay to Magic Bank for 25 years or more which is usually three times the amount of the money promised by Magic Bank to the buyer. By magic, Magic Bank just enriched itself and got paid in advance, without using or risking its own money.

    Magic Bank’s magician, the lawyer who holds the cheque that is backed by the buyer’s original promissory note then cuts a cheque to the seller as payment for the property. In effect, The buyer paid the seller with his/her own money by virtue of the fact that it was the buyer’s own money (the promissory note) that made the purchase and sale possible. Magic Bank just made a cool 300% profit without using or risking any capital of its own. Neither was there any depositor’s money deducted from Magic Bank’s asset account in this transaction.

    What really happened was pure deception that if we the people try to do this, we would end up in the calaboose and be found guilty of fraud and criminal conversion not to mention that the subject property would have been seized from us by the court.

    This is only a crime if we the people do it to each other such as it would be an indictable crime if we issue a cheque with no funds. There would not be any deal, no purchase and sale agreement because there is no valuable consideration. In order to de-criminalize the transaction, we need Magic Bank and their cohorts to make the deal happen. It is really a conspiracy of sorts but these “persons”, the banks, the lawyers, the land title offices or even the courts do not consider the transaction as fraudulent transactions because these transactions happen all the time.

    Such a contract is void ab-initio or void from the beginning which meant that the contract never took place in the first place. Moreover, the good faith and fair dealing requirement through full disclosure is non-existent which further voids the contract. Magic Bank failed to disclose to the buyer that it will not be giving the buyer any valuable consideration and taking interest back as additional benefit to unjustly enrich the corporation. Magic Bank also failed to disclose how much profit they are going to make on the deal.

    Magic Bank led the buyer to believe that the money going to the seller would be coming from its own asset account. They lied because they knew or ought to have known that their own book or ledger would show that Magic Bank does not have any money to lend and that their records will show that no such loan transaction ever took place. Their own book will show that there would be no debits from Magic Bank’s asset account at all and all that would show up are the two entries made when the buyer gave Magic Bank the first collateral or the promissory note which enabled Magic Bank to cut a cheque which made it possible to convey the property from seller to the buyer free and clear of all liens or encumbrances as required by the agreement of purchase and sale entered into in writing between the buyer and the seller. What really happened was not magic; in reality, the buyer’s promissory note was used by Magic Bank and its magicians – the lawyers and land title clerks to convey free title to the buyer from the seller. So why do we need the mortgage contract for?

    The other entry that would show up when we audit Magic Bank’s book is the other pledge of collateral including the buyer’s promissory note which was converted (unlawfully and without disclosure or permission from the buyer) into a mortgage-backed security which was “swapped” or deposited by Magic Bank to Bank of Canada and “cleared” through the Canadian Payment Association for which another deposit was entered into Magic Bank’s transaction account.

    From the above, we can list all the criminal acts perpetrated by Magic Bank:

    The mortgage contract was void ab-initio because Magic Bank lied and never intended to lend a single cent of their own asset or depositor’s money to the buyer. A valid contract must have lawful or valuable consideration. The contract failed for anticipated breach. Magic Bank never planned to give the buyer/borrower any valuable consideration.

    Magic Bank breached all its fiduciary duties to the buyer and are therefore guilty of criminal breach of trust by failing in its good faith requirement.

    Magic Bank concealed the fact from the buyer that it would be using the buyer’s promissory notes; first to clear all the liens and encumbrances in order to convey clear title to the buyer; then use the second promissory note to obtain more money from Bank of Canada or other institutions that buy and sell mortgage-backed security. Magic Bank received up to three times the amount of money required to purchase the property and kept the proceeds to itself without telling the buyer.

    Magic Bank violated its corporate charter by loaning “credit” or nothing at all to the buyer and then charging interests on such make-believe loan. Banks are only licensed to loan their own money, not other people’s money. Magic Bank used the buyer’s promissory note to clear the title which essentially purchased the property from the seller. The transaction is an ultra vires transaction because Magic Bank has engaged in a contract outside of its lawful mandate. An ultra vires contract is void or voidable because it is non-existent in law.

    Everyone involved in this undertaking with Magic Bank, starting with the loan or mortgage officer, the lawyers, the land title office and even the central bank are equally guilty by association by aiding and abetting Magic Bank in its commission of its crimes against the buyer and the people who would eventually have to absorb all of the loss through increased taxes, etc.

    In the final analysis, Magic Bank and the others who profited from the ultra vires transaction are all guilty of unjust enrichment and fraud for deceiving the buyer and the people for acting in concert in this joint endeavor to deceive the buyer.

  16. I do not know as I am just trying to learn about this stuff…

    I went through a hard time when I lost my home.  The hardest part was so many people listening to the news and thinking I got myself into debt beyond my means because I was irresponsible…  I have worked hard my entire life, between ten and sixteen hours a day, and weekends. I sometimes worked harder in the winter because there was more work due to the fair weather types staying home. Because of that hard work I was able to get a home and grasp at the American dream, and I felt I deserved it since I worked all the time. But it was not meant to be…

    Between the government and big business shipping our jobs overseas, and then not closing our borders making us compete, not only with immigrants, but illegal ones vying for our jobs, the only scraps left after the government shipped the good ones overseas…  and then the banks started foreclosing on mortgages they no-longer possessed.  That was the beginning.  Then I found out the banks are in fraud and have no “real party in interest” when it comes to legal standing.  Read on…
    The secret is that most judgments including foreclosure could be VOID! Most judgments can be vacated (made to go away) since rarely has any authenticated evidence, competent fact witness, or even a claim been put before a court and on the record.

    The case of Jerome Daly in (1968) retained his place after a fight with the banks in the infamous “Credit River Decision”.  Read about that here (http://www.lawlibrary.state.mn.us/CreditRiver/CreditRiver.html)

    As I understand it in order for a contract to be legal 3 elements must exist:
    1) Offer
    2) Acceptance
    3) Consideration
    What was the “something of value” or “Consideration” the bank exchanged for Mr. Daly’s Promissory Note?
    It seems to me that every time the bank(s) sell a Promissory Note (a negotiable instrument that has value) they are committing fraud because there is no real consideration.
     
    “The landowner’s [meaning Daly’s] defense had been that the bank had not lent him any actual money, but had simply created credit on its books, and therefore, since nothing of value had been advanced by the bank, it was not entitled to the property that had been given as security for the loan.”

    Some people say “This is simply a crank argument that has no basis in reality.”, but Daly won the case on those and other merits, though I would recommend sticking to the “Produce the Note” method because it is a lot less complex.

    Lets look a loan creation…

    Example;
    A Borrower goes to a Lender wanting to borrow “money” or set up a “line of credit” to purchase a home -lets say $150,000.
    That loan contract would consist of
    1-an offer
    2- an acceptance
    and
    3-consideration.
    Once the contract is drawn up with its terms and conditions agreed upon by each party the Lender then creates an account for the Borrower and -(here’s where the magic happens)- the Lender types $150,000. into the Borrowers account- he does not move any precious metals, he does not mint any coins, or prints any money- He just punches in a few numbers. (To better understand this you need to know what is a dollar [http://www.fame.org/HTM/Vieira_Edwin_What_is_a_Dollar_EV-002.HTM ] and read it carefully)
    Now for this contract to be binding -the Borrower, in order to receive that $150,000 He / She has to exchange something of value, like a promise to pay, or Promissory Note, which is a negotiable instrument-and- any “Collateral” He / She may have signed over for the loan. This is what I am referring to in regards to the “Consideration” aspect of the contract. 
    The Borrower agrees, by accepting the terms and conditions of the contract, to pay back PRINCIPAL plus INTEREST on money that has NEVER, does NOT, and WILL never exist.   And, should the Borrower ever be in default or unable to pay back something that never existed, the Lender can then take the Real Property and Collateral, which is something that does exist and is of REAL VALUE.
    An Indiana Senator prapose a Gold Money Bill in Congress here (http://www.indianahonestmoney.com/index.php?option=com_content&view=article&id=68:indiana-state-senator-files-gold-money-bill&catid=37:ihma&Itemid=53) and it needs the support of the people…. But any way back to the issue.  We are still talking about foreclosure and how it can be stopped, and on that point I must say many claim it can not be stopped forever BUT my contention is that the “debt” is based on a promissory note that no longer exists because the banks, out of self preservation, will see to it that the note is “lost” or “destroyed” [a defense on their part that has been disallowed as of late]. 

    I know much of this seems off topic but it is related.  Anything on finance is going to be on topic.  You should read/download the “Foreclosure Glossary” found here (http://www.scribd.com/doc/15519335/Foreclosure-Glossory).
    A typical real estate purchase and sale goes down as described below after the buyer and the seller have signed the agreement of purchase and sale:
    The buyer goes to Magic Bank in response to the bank’s claim that it is in the business of lending money in accordance to its corporate charter. The buyer went to the bank believing that Magic Bank had the asset (money) to lend. Magic Bank never tells its customers the truth that it does not have any money to lend, nor are they permitted to use their depositors’ money to lend to its borrowers.
    Notwithstanding the fact that Magic Bank does not have any money to lend, Magic Bank makes the buyer/borrower to sign a mortgage loan application form which is essentially a promissory note that the buyer/borrower promises to pay Magic Bank for the money (what money?) he/she is supposed to receive from Magic Bank even before any value or consideration is received by the buyer/borrower from Magic Bank. This promissory note is a valuable consideration, a receivable and therefore an asset transferred from the buyer to the bank which Magic Bank enters into its own asset account as a cash deposit.
    After making sure that the buyer has the ability to pay the required monthly payments (the buyer has credit), Magic Bank agrees to lend the buyer the money (cash) to pay the seller. Magic Bank has no money to lend but it gave the buyer a promise to lend money by way of a commitment letter, loan approval letter, loan authorization or loan confirmation letter, etc., signed by a bank official or loans/mortgage officer employed by Magic Bank.
    Magic Bank’s acceptance of the buyer’s promissory note made the bank liable to the buyer/borrower for the full face value of the promissory note which is the agreed purchase price of the property, less any cash deposit or down payment money paid by the buyer directly to the seller.
    It is important to note at this point that all real estate transaction requires that the property being sold must be conveyed by the seller to the buyer free of all liens and encumbrances which means that all liens such as existing mortgages, judgments, etc. must be paid before the property can be mortgaged by the buyer as collateral to the mortgage loan which is yet to be received by the buyer pursuant the promise made by Magic Bank. How can the seller obtain clear title if he has not yet received any money from the buyer? And how can the buyer mortgage a property that does not yet belong to him or her?
    This dilemma is solved using Magic Bank’s magic tricks. Magic Bank in concert with other magicians, the bank’s lawyers or notaries, causes all the liens and encumbrances to magically disappear by using a check drawn in the name of Magic Bank backed by the buyer’s promissory note and the agreement of purchase and sale. This check/cheque is deposited into the lawyer’s trust account. In essence, Magic Bank and its magicians, the lawyers and notaries used the buyer’s promissory note as the cash to enable the purchase agreement. It was the buyer’s promissory note that made the conveyancing possible. Magic Bank caused the property to be conveyed to buyer from the seller clear title, free and clear of all liens and encumbrances. The property now belongs to the buyer which makes it possible for the buyer to mortgage the property to Magic Bank. The buyer paid for it using his/her own promissory note.
    At this point, the seller has not yet received any money or cash so Magic Bank and its magicians must perform another magic in order to satisfy the seller’s requirement that he/she must get paid or the whole deal is null and void. The seller does not even know that the property had been magically conveyed to the buyer’s name in order for the seller to receive any money.
    The ensuing magic trick is accomplished this way. The buyer is made to sign another promissory note. The mortgage contract is attached to the bottom of the promissory note which makes the buyer liable to pay Magic Bank for the money or the loan which the buyer has not yet or will never receive for up to twenty five years or more depending on the amortization term of the mortgage contract. This note is linked to the collateral through the mortgage contract and as such, it is valuable to Magic Bank.
    Magic Bank then goes to Bank of Canada or to another bank through its accomplice, the Canadian Payment Association to pledge the deal that they have just gotten from the buyer for credit. Bank of Canada then gives Magic Bank the “credit.” Remember, it is not Magic Bank’s credit, it was the buyer’s credit who promised to pay Magic Bank if and when the money is received by the buyer from Magic Bank, payable for up to 25 years or more (30 to 40 years in the USA).
    Note: What happened above is basically a “swap”, a transaction all banks do to ‘monetize’ security. In this case, the second promissory note that is linked to the mortgage contract and signed by the buyer is a mortgage-backed security.
    Magic Bank will then agree to pay Bank of Canada a certain percentage of interest over “prime”. Thus the buyer’s loan package goes to Bank of Canada which credits Magic Bank with the full amount of credit which is the total amount of the money Magic Bank is entitled to receive after 25 years which is the amount of the principal plus all the interest payments the buyer has promised to pay to Magic Bank for 25 years or more which is usually three times the amount of the money promised by Magic Bank to the buyer. By magic, Magic Bank just enriched itself and got paid in advance, without using or risking its own money.
    Magic Bank’s magician, the lawyer who holds the cheque that is backed by the buyer’s original promissory note then cuts a cheque to the seller as payment for the property. In effect, The buyer paid the seller with his/her own money by virtue of the fact that it was the buyer’s own money (the promissory note) that made the purchase and sale possible. Magic Bank just made a cool 300% profit without using or risking any capital of its own. Neither was there any depositor’s money deducted from Magic Bank’s asset account in this transaction.
    What really happened was pure deception that if we the people try to do this, we would end up in the calaboose and be found guilty of fraud and criminal conversion not to mention that the subject property would have been seized from us by the court.
    This is only a crime if we the people do it to each other such as it would be an indictable crime if we issue a cheque with no funds. There would not be any deal, no purchase and sale agreement because there is no valuable consideration. In order to de-criminalize the transaction, we need Magic Bank and their cohorts to make the deal happen. It is really a conspiracy of sorts but these “persons”, the banks, the lawyers, the land title offices or even the courts do not consider the transaction as fraudulent transactions because these transactions happen all the time.
    Such a contract is void ab-initio or void from the beginning which meant that the contract never took place in the first place. Moreover, the good faith and fair dealing requirement through full disclosure is non-existent which further voids the contract. Magic Bank failed to disclose to the buyer that it will not be giving the buyer any valuable consideration and taking interest back as additional benefit to unjustly enrich the corporation. Magic Bank also failed to disclose how much profit they are going to make on the deal.
    Magic Bank led the buyer to believe that the money going to the seller would be coming from its own asset account. They lied because they knew or ought to have known that their own book or ledger would show that Magic Bank does not have any money to lend and that their records will show that no such loan transaction ever took place. Their own book will show that there would be no debits from Magic Bank’s asset account at all and all that would show up are the two entries made when the buyer gave Magic Bank the first collateral or the promissory note which enabled Magic Bank to cut a cheque which made it possible to convey the property from seller to the buyer free and clear of all liens or encumbrances as required by the agreement of purchase and sale entered into in writing between the buyer and the seller. What really happened was not magic; in reality, the buyer’s promissory note was used by Magic Bank and its magicians – the lawyers and land title clerks to convey free title to the buyer from the seller. So why do we need the mortgage contract for?
    The other entry that would show up when we audit Magic Bank’s book is the other pledge of collateral including the buyer’s promissory note which was converted (unlawfully and without disclosure or permission from the buyer) into a mortgage-backed security which was “swapped” or deposited by Magic Bank to Bank of Canada and “cleared” through the Canadian Payment Association for which another deposit was entered into Magic Bank’s transaction account.
    From the above, we can list all the criminal acts perpetrated by Magic Bank:
    The mortgage contract was void ab-initio because Magic Bank lied and never intended to lend a single cent of their own asset or depositor’s money to the buyer. A valid contract must have lawful or valuable consideration. The contract failed for anticipated breach. Magic Bank never planned to give the buyer/borrower any valuable consideration.
    Magic Bank breached all its fiduciary duties to the buyer and are therefore guilty of criminal breach of trust by failing in its good faith requirement.
    Magic Bank concealed the fact from the buyer that it would be using the buyer’s promissory notes; first to clear all the liens and encumbrances in order to convey clear title to the buyer; then use the second promissory note to obtain more money from Bank of Canada or other institutions that buy and sell mortgage-backed security. Magic Bank received up to three times the amount of money required to purchase the property and kept the proceeds to itself without telling the buyer.
    Magic Bank violated its corporate charter by loaning “credit” or nothing at all to the buyer and then charging interests on such make-believe loan. Banks are only licensed to loan their own money, not other people’s money. Magic Bank used the buyer’s promissory note to clear the title which essentially purchased the property from the seller. The transaction is an ultra vires transaction because Magic Bank has engaged in a contract outside of its lawful mandate. An ultra vires contract is void or voidable because it is non-existent in law.
    Everyone involved in this undertaking with Magic Bank, starting with the loan or mortgage officer, the lawyers, the land title office and even the central bank are equally guilty by association by aiding and abetting Magic Bank in its commission of its crimes against the buyer and the people who would eventually have to absorb all of the loss through increased taxes, etc.
    In the final analysis, Magic Bank and the others who profited from the ultra vires transaction are all guilty of unjust enrichment and fraud for deceiving the buyer and the people for acting in concert in this joint endeavor to deceive the buyer.
     
    That will do for now, won’t it?

    –Phil

    • Phil and All,

      Ellen sent me a preview of an article she is doing on this subject. Stay tuned for something big.

  17. […] If the lender is allowed to proceed without that proof, there is a possibility another institution, which may have bought your note along the way, will also try to collect the same debt from you again. (08/04/08)more… […]

  18. What if your lender can provide the original note, but only from the originating bank, which assigned the loan in 2006 to Countrywide….which was acquired by B of A.

    So the bank foreclosing is not in possession of the note.

    • I think you’ve got them. Check out Neil Garfield, here —

      http://livinglies.wordpress.com/2010/11/03/a-brief-summary-of-rmbs-securitization-as-we-now-know-it/

  19. Does anyone know how many people have been screwed going into court and arguing things heard from Neil Garfield? Way too many!

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