Garfield Call to Arms Ignores the ONLY Workable Strategy: ATTACK

Garfield’s Ridiculous Call to Arms

Don Quixote Tilting
Garfield’s Quixotic Calling

Neil Garfield recently wrote about “Responses Coming in from My Call to Arms!” regarding his putative mission to help mortgage foreclosure victims by railing against securitization, misconstruing court opinions, calling the courts wrong, wrong, wrong, etc.

Christine Marais commented about Garfield’s delusion having no end, regarding the response he wants from others:

“Responses Coming in from My Call to Arms!”
“…it looks like we are making progress at building an effective team to help lawyers, accountants, homeowners and others with consumer debt.”

Pragmatic little me couldn’t let that go and didn’t.

Progress is quantifiable. So… quantify the success of those joining that “winning team”:
1) Lawyers with wins? (Case law, please)
2) Accountants whose work product has been deemed admissible by the court and helped win cases? (Case law please)
3) Winning homeowners (Case law, please, please, please)
4) Other consumer debt…? (??? Is there case law there LL was instrumental in winning?)

Garfield seems delusional because he can get no case law showing lawyer wins, accountant wins, and homeowner wins because THEY DON’T WIN!  THEY LOSE!  Why?  Because defense without attack always loses.

The ONLY Workable Strategy

I have made the point that the workable strategy “works” for the creditors and the borrowers alike:

  1. Find out how others injured you;
  2. Hire a competent attorney;
  3. ATTACK the injurious, first through negotiation, and if that doesn’t work, through lawsuit.

What do I mean by “works?”  I mean that strategy, tactics, and methodology that puts MONEY IN ONE’S POCKET and minimizes loss.

Defense might reduce or delay loss, but it enriches only the lawyer.

How the Borrower Injures the Creditor

In the case of home loan foreclosure, the borrower injures the creditor by not making timely payments, or by letting the collateral real estate go to ruin through lack of maintenance, or by not maintaining proper insurance against loss through fire, flood, vandalism, etc.  The creditor team (creditor or creditor’s servicer or lawyer) sends warning notice to the borrower, then if the borrower does not correct the problem, the creditor team attacks the borrower by foreclosing on the loan and ultimately forcing a sale of the property to discharge the borrowers’s debt.

How Creditors Led Borrowers to Injure Them

Creditors have created a monumental problem by lending to unqualified borrowers whom they knew would not repay the debt.  Creditors sold their loans to securitizers who created a pool of mortgage backed loans and sold security certificates to investors seeking to get a share of the interest.  During early years of the loan, between 85 and 92% of each house payment’s principle and interest constitutes interest, so the securitization trust has plenty of money to spread around to investors.  When loans stop performing because borrowers stop paying, the creditor forecloses, takes the house or the proceeds from the auction, and the whole affair destroys borrower credit rating for 10 years, exactly as it should.  Borrowers with underwater loans end up with a deficiency judgment that they can only discharge in bankruptcy, ruining their credit rating further.

In 2008, that cycle created a financial collapse that caused massive job loss, destruction of homeowner equity through falling home values, and foreclosures across the land.  Insurers like AIG lost so much money that the Congress bailed them out to prevent them from failing.  Many predatory lenders started failing, the Office of Thrift Supervision took them into receivership, and the FDIC sold their assets and liabilities to surviving banks, or to the quasi-government lenders like Freddie Mac (Federal Home Loan Mortgage Corporation) or Fannie Mae (Federal National Mortgage Association), who now own an enormous percentage of America’s home loans.

Now, in 2015, predatory (sub-prime) lending has begun to rise again, and it will cause another financial collapse.

How Lenders Injured Borrowers

None of such lending could become possible without the assistance of lender team members like the appraisers, loan brokers, realtors, title companies, attorneys, servicers, and others who earn money through the services they provide in the lending process, including loan modifications.  All have a vested interest in cheating the borrower by playing a role in elevating the amount of the loan.

Securitization provides a strong motive to cheat the borrower into excessive borrowing because the original lender will sell the loan to a securitizer the instant the ink dries on the loan papers.  The original lender won’t have to suffer the brunt of the borrower’s breach of the note, so that lender does not exercise the diligence necessary to ensure that it does not make bad loans to deadbeats.

The various participants cheat the borrower by such techniques as these

  1. Setting an exorbitant sale price on real estate and conning the buyer into buying it
  2. Overvaluing the property
  3. Falsifying the information on the borrower’s loan application to make the borrower seem more qualified than actual
  4. Bait-and-switching the borrower by promising better terms or lower interest, and then writing worse terms into the note that the borrower signs
  5. Giving bad legal advice to borrowers or failing to scrutinize loan documents
  6. Charging excessive interest or loan origination fees
  7. Miscalculating the closing costs to make the loan seem cheaper than actual
  8. Putting wrong property description on the loan documents
  9. Adding other properties as collateral to the security instrument
  10. Failing properly to disclose the borrower’s rights and risks to the borrower
  11. Failing to give the borrower sufficient advance notice of the cost and terms of the loan so that borrower cannot shop around for better terms and lower cost.
  12. Rushing the borrower through closing so the borrower does not have time to read all the documents before signing.
  13. Force-placing exorbitantly priced flood and hazard insurance
  14. Failing to notify the borrower of changes in servicer or creditor
  15. Offering loan modification orally (not in writing) and inducing the borrower to miss payments or underpay (breach the note) in order to qualify
  16. Sending home invaders (property preservation felons) into the property, pretending to winterize it during alleged abandonment, while they change the locks and steal chattel (electronic equipment, jewelry, and other valuables) belonging to the occupant.

That by no means comprises a comprehensive list of the legion of ways borrowers get injured in the lending and servicing process.  But every one of these and other injuries gives the borrower a valid causes of action (reason to sue) against the lender and / or other injurious parties.

The Problem with Garfield’s Foreclosure Pretense Defense

Neil Garfield and his ilk, the “foreclosure pretense defense” attorneys around the land who “get it” (embrace his philosophy of foreclosure defense with frivolous arguments about the lending and securitization background activities) DO NOT CARE about the foregoing list of crookedness.  They don’t care because it takes a lot of work, skill, experience, and expertise to examine the loan-related documents, and re-do the calculations in order to find the fraud, other tortious conduct, contract breaches, regulatory breaches, legal errors, flimflams, corkscrewing, backstabbing, and dirty dealing associated with the loan.

Furthermore, most of their prospective clients have breached the note because they cannot afford the payments, and do not have money even to hire a lawyer.  So such clients cannot pay the typical lawyer fee of $10,000 to $20,000 for a 40 to 50 hour mortgage examination.  And of course, neither Garfield nor his minions have the technical competence to do such an examination.  Therefore, they don’t tell the borrower about all the ways the lender team cheats the borrower.  Instead they focus on losing foreclosure related arguments like securitization, assignment robosigning, standing, and so on.

In fact, foreclosure pretense defense lawyers do anything they can to protract the foreclosure process.  They refuse to examine the mortgage for causes of action (injuries against the borrower at the inception of the loan).  They recycle pleadings they have used for other clients in similar or the same situation.  And they charge $300 to $1000 a month for skillfully using their lawyer skills to delay the foreclosure.  At the end, many don’t even show up for the summary judgement hearing in which the judge orders the auction of the house to pay off the debt.  Such lawyers can collect $20,000 to $30,000 per client for dragging out the foreclosure.  This is, of course, crooked, and borrower clients should file bar complaints against such attorneys, and complain to the state Attorney General.

The Proper Strategy for Foreclosure Victim Lawyers

What should such lawyers do?  Well, the client comes to them upset over the accusation that the client breached the contract.  All foreclosure disputes deal with breach of contract – the borrower violated the terms of the note.  Doesn’t it make sense that the lawyer should look at the note and underlying circumstances for evidence that someone injured the borrower?  After all, the creditor claims the borrower injured the creditor.  What happens if the creditor or someone else injured the borrower?  Couldn’t that constitute a contract breach that renders the loan invalid in some way?  Couldn’t that justify the borrower’s breach of contract, or justify a claim for damages?

The lawyers should find such injuries and launch an attack against the creditor and whoever else injured the borrower.

But they don’t.  This means that if the borrower loses the house to foreclosure and by properly, timely attacking the other injurious parties, the lawyer could have prevented that loss and won sizable damages for the borrower, but the lawyer didn’t, then that could constitute a crystal clear case of LEGAL MALPRACTICE for which the borrower should sue that lawyer.  Yes, even though the borrower breached the note by failing to make payments, the lender or agents breached it first, justifying a lawsuit against them that the borrower’s lawyer never bothered filing.  That looks like legal malpractice to me.

Bottom line, a lawyer should not take a foreclosure defense case without requiring the client to purchase a mortgage examination first.  Failure to do so demonstrates rank greed and incompetence.

If the lawyer gets the mortgage examined and finds causes of action, THEN the lawyer can sue the injurious parties for hurting his client, and he can win compensatory damages, punitive damages, legal fees and costs, and/or setoffs from the debt, or a nice monetary settlement or a loan modification to the advantage of the borrower.

Proof: Mortgage Attack Brings Borrowers Gargantuan Wins

Review these example cases of borrowers who did it the right way:

Summary and Conclusion

The lender uses this simple strategy against borrowers.  Borrowers should use it against them.  Why?  Because it WORKS:

  1. Find the injuries
  2. Hire a competent attorney
  3. Artfully ATTACK the injurious

Garfield doesn’t grok the above reality, or even acknowledge its possibility.  So his call to arms will fizzle because he ignores the ONLY workable strategy for mortgage victims.

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Neil Garfield Passes Stratosphere with Loony TILA Rescission Theory

space cadet photo
Garfield Passes Stratosphere

In Neil Garfield’s most recent blog article, Why TILA Rescission Makes Perfect Sense, Neil propounds utter nonsense showing why his idea of TILA rescission makes no sense at all.

I would say that as to rescission the principal strategy is to stick with the extreme —- as per the statute, even a “wrongful” rescission is effective by operation of law and may not be ignored by the trial court. It remains effective by operation of law unless a court of competent jurisdiction vacates it. (same as a wrongful foreclosure judgment). We know this to be true because Justice Scalia gratuitously added to the opinion that the TILA rescission statute makes no distinction between disputed and undisputed rescissions. Therefore the mailing of the rescission is the only thing required to cancel the loan contract and render the note and mortgage void by operation of law.

I decided to respond to Garfield’s silly notion that even a LIE about a TILA breach justifies rescission, AND that the lender must comply with it.

Neil:

For the vast majority of borrowers suffering a TILA breach, rescission makes no sense at all because they cannot tender.

To begin with, mortgagors who borrow money and sign for it must repay it or lose the house.  Concomitantly they must find out how others injured them at the inception of the loan and ATTACK .  ONLY in that way can borrowers win against the lender team (bank, appraiser, broker, etc).  Borrowers must ATTACK THE INJURIOUS PARTIES, whether or not they face foreclosure.

Likewise, borrowers who have legitimately rescinded must sue the lenders for not tendering and not removing the lien, and ask the courts to enforce the rescission, but they must also remember that they have the obligation to tender, and if they cannot do it, the court will not order the rescission.  For that reason, most borrowers suffering a TILA breach would become fools for rescinding.  Lenders need not sue because they have no cause of action against the borrower who tries to rescind.

Your consideration that the borrower may rescind on the basis of his own LIE simply defies logic and common sense.  Congress would never and did never intend such nonsense.  That explains why numerous courts have denied the borrower’s rescission efforts – either no TILA breach occurred, or the borrower signed an acknowledgment of receipt of the requisite disclosures, or the borrower did not send timely notice, or whatever the borrower sent did not constitute a notice of rescission.  In point of fact, no law penalizes the creditor for failing to respond to the notice of rescission, SPECIFICALLY BECAUSE that notice could contain a LIE, a claim that the lender breached TILA when in fact the lender’s records show that the lender did NOT breach TILA.

Furthermore, a GARGANTUAN GULF exists between a legitimate NOTICE of rescission and a COMPLETED rescission.  Rescission consists of a process whereby the parties tender back what the received from each other, and the creditor removes any liens. A borrower may initiate rescission.  Then the creditor may decide whether to tender and remove liens, or not.  If the lender tenders and removes liens, then the borrower must tender.  But most of the time the borrower cannot tender, so the lender does not remove the lien until after the borrower has tendered and PAID.  And if the borrower cannot tender, the lender will remove his tender offer and leave the lien in place.

When either party does not cooperate with the tender, one of them must sue.

1.  The lender has no reason to sue to force the rescission.  But he does have a reason to initiate foreclosure when the borrower stops making mortgage payments, which nearly all rescinding borrowers do.  And the court will deal with the rescission ONLY if the borrower brings it up as an affirmative defense, or in a declaratory judgment lawsuit in a non-judicial foreclosure state.  Even then, the court will deny the rescission if either party cannot tender.

2. A TILA breach injures the borrower statutorily, though typically not in fact.  Thus, the borrower MUST sue for damages under TILA, and must also sue to enforce the rescission against a recalcitrant creditor.  Then, the court might punish the creditor if the borrower could tender and a breach occurred, or otherwise might not.  The court certainly will not order a rescission unless both parties can tender.

THAT is how TILA rescission works in reality, in state and federal courts across the land.  Seldom does a creditor go along with the borrower’s TILA rescission effort because the lenders know that even if a breach occurred, the borrower typically cannot and will not tender.

The borrower must, within one year and 20 days after sending notice of rescission, sue for a TILA breach and failure to tender and remove liens, or forfeit the right to damages.

As to damages, the typical TILA rescinder stops making loan payments, and lives “RENT FREE” in the home for YEARS.  THAT constitutes a benefit, not an injury, to the borrower.  It injures the creditor, who eventually forecloses.

The TILA rescinder can suffer damages if he could have refinanced the house, but for damaged credit reputation, or if he could have sold it to raise the tender money, but for the collapse in house values after the notice of rescission.  Creditors have damage assessment teams to help them evaluate these issues in deciding how to respond.  Most of the time the creditors don’t voluntarily go along with the rescission because most rescinders mess up their cases so badly, or have such non-meritorious cases, that the court rules against them.

The foregoing shows why your theory on TILA rescission constitutes a house of cards that will crumble in court every single time someone foolish enough to believe you relies upon it.

Keiran v Home Capital – BLOWS GARFIELD OUT OF THE WATER

nuke going off
Sorry, Neil. Bad Idea.

This case deserves proper airing on the Living Lies blog as well as on this Living Lies The Truth blog,  Neil Garfield posted this commentary on 21 October 2015.

Lawyers for Banks: Ignore Rescission at Your Peril

Garfield seemed to approve some seminar notes indicating that bank lawyers should not ignore rescission.  The Keiran v Home Capital opinion proves the spurious, fallacious, WRONG nature of those notes, and of Garfield’s echo.

Keiran v Home Capital, a TILA Rescission case, went from trial to the 8th Circuit, to SCOTUS for a Jesinoski adjustment, and back to trial, where the USDC utterly destroyed Garfield’s and Keiran’s sophomoric contention that a notice of rescission voids the creditor’s security interest (lien). The opinion also proves the proper meaning of Jesinoski, and shows what borrowers must NOT do (rely upon their effete affidavit) to challenge their own written acknowledgement of receipt of TILA right-to-rescind disclosures. I provide the highlights below.

Keiran v Home Capital, Inc, Dist. Court, Minnesota 2015

The Keirans filed a complaint on October 29, 2010, seeking rescission of their mortgage loan, a declaratory judgment voiding defendants’ security interest in the loan, and money damages. The court granted summary judgment in favor of defendants on November 30, 2011. ECF No. 39. The court denied the claims for monetary damages because (1) the suit was commenced more than one year after defendants allegedly failed to provide a sufficient number of TILA disclosure statements to the Keirans, and (2) the alleged TILA violations were not present on the face of the loan documents. Id. at 5, 8. The court also held that the rescission claim was untimely because the Keirans did not file suit within three years of the December 2006 closing. Id. at 12.

The Keirans appealed, and the Eighth Circuit affirmed. See Keiran v. Home Capital, Inc., 720 F.3d 721 (8th Cir. 2013). The Keirans then petitioned the United States Supreme Court for a writ of certiorari. See Keiran v. Home Capital, Inc., No. 13-705, 2013 WL 6513778 (Dec. 9, 2013). The petition addressed only the timeliness of the rescission claim, and did not appeal the denial of the claims for monetary damages. Id. at *i. The Supreme Court reversed, finding that a consumer may exercise a right to rescind simply by providing written notice to the lender, rather than file suit, within three years of the loan transaction. See Jesinoski v. Countrywide Home Loans, Inc., 135 S. Ct. 790 (2015). The Eighth Circuit remanded to this court, and the parties now cross-move for summary judgment.

…The court finds that the Keirans have failed to rebut the presumption in favor of proper delivery under § 1635(c). This court has consistently held that statements merely contradicting a prior signature are insufficient to overcome the presumption. See Gomez v. Marketplace Home Mortg. LLC, No. 12-153, 2012 WL 1517260, at *3 (agreeing with “the majority of courts that mere testimony to the contrary is insufficient to rebut the statutory presumption of proper delivery”); Sobienak v. BAC Home Loans Servicing, LP, 835 F. Supp. 2d 705, 710 (D. Minn. 2011); Golden v. Town & Country Credit, No. 02-3627, 2004 WL 229078, at *2 (D. Minn. Feb. 3, 2004) (finding deposition testimony insufficient to overcome presumption). The documents procured from defendants’ title company also do nothing to contradict the Keirans’ signed acknowledgment, because they simply mirror the documents already on file with BAC. Under these circumstances, the court finds the presumption of proper delivery has not been overcome.

… the record here is devoid of any evidence — apart from self-serving affidavit testimony — that the defendants failed to provide the required number of disclosure statements or otherwise comply with TILA.

Lastly, the Keirans argue that defendants’ security interest is void because they failed to adequately and timely respond to their notice of rescission. When a borrower exercises a right to rescind, the lender must return to the borrower “any money or property given” to the lender within twenty days. 15 U.S.C. § 1635(c). The Keirans argue that, because the defendants did not adequately respond to their notice within twenty days, the rescission took effect twenty days from defendants’ receipt of the notice. As explained, however, the Keirans have not shown that the defendants violated the TILA. As a result, their right to rescind did not extend beyond the three-day period under § 1635(a). The defendants therefore did not have an obligation to rescind within twenty days, let alone respond to the notice, and summary judgment is warranted.

Read the whole opinion here:

https://scholar.google.com/scholar_case?case=4503342910608558978

Tough questions about the terrible diseases of greed and stupidity

On the Living Lies blog…

Michael Keane writes:

In this day and age, if a comparison were to be made, say, to a disease afflicting the human race, I would suggest it is presently, best defined as Greed.

For example, if law enforcement and the judiciary and the lawyers in our current, life threatening dilemma could be compared to a Jonas Salk, our families and children would be crippled, awaiting the day their final breath is forced from their bodies.

These are the types of people that think to themselves, while watching our country, and the middle class throughout the world degrade daily, “Hey look at that suffering family, before I go to try and help them, I wonder what type of extortion I can employ first… ? After all, what’s in it for me?”.

I look forward to the day We The People round them up and give them a good, old-fashioned @ss kicking.

Bob Hurt responds:

I consider stupidity an even worse, more epidemic and destructive disease, than greed.  A smart, greedy person will nearly always take unfair advantage of stupid people.  Smart people, however don’t make such easy targets for the greedy.

We have a problem with stupidity and with irresponsibility in the USA.  Most of the stupid are born stupid because they have stupid parents.  Thus stupidity is a genetic defect.  And by definition, stupid people do stupid things.  They don’t reason well, they cannot evaluate relative importances well, and they cannot solve problems well.  So, they gravitate to crime and welfare abuse to get by.  Stupid people are reliably irresponsible.

Other irresponsibles, aside from the stupid, include the lazy, those with bad rearing, those with deficient education and experience, the insane, the criminal, and people of poor judgment like those under 25 years of age whose brains have not fully developed.

25% of the US population falls in the category of stupid – that many people lack the cognitive ability (IQ of 85 or better) to graduate from a normal (non-dumbed-down) high school.  At least another 25% fall into the “irresponsible” category.  Got help us, many if not most have voting rights.  That at least partly explains irresponsibility in government.  And it suggests two controversial means of improving government:

  1.   Prevent irresponsibiles from procreating and rearing more of their kind; and
  2.   Prevent irresponsibles from voting.

Like I said:  controversial.  But nevertheless, logical.

I’d like to know answers to these questions:

  • How many irresponsibles have requested and received home loans they cannot or will not repay?
  • How many of irresponsibles have stumbled upon this Living Lies blog, and written comments to it?
  • How many irresponsibles have faced or presently face foreclosure because of breaching notes they never should have signed?
  • How many irresponsibles in a mortgage foreclosure fight have any chance of winning?
  • Who become the bigger crooks –
  1. the greedy irresponsibles who borrow money they cannot or will not repay, or
  2. the greedy appraiser who lies about the value of the property, or
  3. the greedy loan broker who lies on the loan application, or
  4. the greedy realtor who lists or sells a house for far more than its actual value, or
  5. the greedy title company who breaches regulations and shoves the borrower through the signing process too fast, or
  6. the greedy lawyer who drags out the inevitable foreclosure so as to bilk the irresponsible client out of thousands of dollars the client should pay the creditor, or
  7. the greedy (selfish) parents who procreated stupid children and reared them to behave irresponsibly so that greed would drive their behavior and they would buy a house on credit they don’t deserve?

Tough questions about the terrible diseases of greed and stupidity.

Lie travels Mark Twain

The American Mortgage Experience

Look at the American experience and learn from it. People running the finance and banking and investment industries have the ambition of converting all work-a-day people into their serfs, their economic slaves, through debt. So they have structured (and obtained government approval) all contracts (notes, mortgages) to their advantage, and to the disadvantage of borrowers, and made them unilateral adhesions to prevent the borrowers from negotiating terms. Thus the lender has an easy, built-in judicial or non-judicial mechanism for foreclosing a loan in default, but no built-in mechanism exists whereby the borrower might obtain liquidated damages for appraisal fraud, loan application fraud by brokers, or various legal errors, contract breaches, or regulatory violations intended to protect borrowers, but to which borrowers have scant access because of lack of discretionary funds (if they had money the would not have needed to borrow more).

In the USA virtually everybody who can qualify for a loan (based on credit rating) HAS a loan of some kind, and pays interest. The greed for that interest led to securitization. The loan originators tend to make predatory loans that they know the borrowers cannot repay. They do it because they immediately sell the loan to a securitizing bank, so they have no responsibility to chase deadbeat borroweres for repayment. Even those who do chase the borrowers know that eventually they will force a sale of, or simply take, the collateral property with the court’s or a trustee’s help.

I estimate that some form of fraud or other torts, contract breaches, legal errors, and/or regulatory breaches underlie 90% of the mortgage loans in the USA. And the legal industry has few attorneys able and willing to find all those problems and litigate them on behalf of borrowers. Instead, the attorneys focus on “foreclosure defense” where they recycle cookie-cutter pleadings to drag the foreclosure process out as long as possible, thereby not actually defeating the foreclosure, but leading the client into the jaws of foreclosure sale of the property. Why? Because such borrowers cannot afford the fight it takes to beat up the crooked lender team. However, since they have stopped making house payments, they can afford to pay an attorney $300 to $1000 a month for the foreclosure defense. Many borrowers stay in the houses for 4 to 7 years without making any payments. Thus the legal community intercepts borrower money that the borrower should pay to the creditor.

Take note that when the Federal Reserve Board (central bank of USA) lowers interest rates, borrowers RUSH out to refinance their home loans or to borrow more so as to buy a better house or use it (the collateral) effectively as a ATM (automated teller machine), a source of discretionary cash, thinking they will flip (resell) the house when its value goes up (which it does because of inflation and the lower interest rate). Many use the money to fund a profligate, spendthrift lifestyle. As a consequence of lower interest rates since 2002, house values rose dramatically till the crash in 2008, then the values plummeted and many people lost jobs and foreclosures increased so badly they clogged the courts and created a terrible backlog. Now the Fed has lowered interest rates again, and predatory lending has increased along with house prices, heading for another collapse in the next 3 years.

How can any legislature prevent this kind of craziness?

The Vapor Money Theory – Utter Bullshouts

Courts across the land have trashed the Vapor Money Theory – the idea that the borrower’s note funded the loan, or there’s no real money and so the lender never actually gave money in the form of a loan.  I provide some court opinions, and a host of related citations.

http://www.leagle.com/decision/In%20FDCO%2020100615B54/BARNES%20v.%20CITIGROUP%20INC.

MICHAEL J. BARNES, Plaintiff(s), v. CITIGROUP INC., et al., Defendant(s).

United States District Court, E.D. Missouri, Eastern Division.
June 15, 2010.


In the typical vapor money claim, “Plaintiff alleges that the promissory note he executed is the equivalent of `money’ that he gave to the bank. He contends that [the lender] took his `money,’ i.e., the promissory note, deposited it into its own account without his permission, listed it as an `asset’ on its ledger entries, and then essentially lent his own money back to him….He further argues that because [the lender] was never at risk, and provided no consideration, the promissory note is void ab initio, and Defendants’ attempts to foreclose on the mortgage are therefore unlawful.” Demmler v. Bank One NA, No. 2:05-CV-322, 2006 WL 640499 at *3 (S.D. Ohio Mar. 9, 2006). While the vapor money theory has not been addressed by any court within the 8th Circuit, it and “similar arguments have been rejected by federal courts across the country.”McLehan v. Mortgage Electronic Registration Sys., No. 08-12565, 2009 WL 1542929 at *2 (E.D. Mich. June 2, 2009) (citations omitted). See, e.g., Thomas v. Countrywide Home Loans, No. 2:09-CV-00082-RWS, 2010 WL 1328644 (N.D. Ga. Mar. 29, 2010); Andrews v. Select Portfolio Servicing, Inc., No. RDB-09-2437, 2010 WL 1176667 (D. Md. Mar. 24, 2010); Barber v. Countrywide Home Loans, Inc., No. 2:09-CV-40-GCM, 2010 WL 398915 (W.D.N.C. Jan. 25, 2010); Kuder v. Washington Mut. Bank, No. CIV S-08-3087 LKK DAD PS, 2009 WL 2868730 (E.D. Cal. Sept. 2, 2009); Rodriguez v. Summit Lending Solutions, Inc., No. 09cv773 BTM(NLS), 2009 WL 1936795 (S.D. Cal. July 7, 2009); Johnson v. Deutsche Bank Nat’l Trust Co., No. 09-21246-CIV, 2009 WL 2575703 (S.D. Fla. July 1, 2009); Gentsch v. Ownit Mortgage Solutions Inc. No. CV F 09-0649 LJO GSA, 2009 WL 1390843 (E.D. Cal. May 14, 2009). Thus, the vapor money theory is not a valid route to recovery, and Plaintiff’s claims based upon it must be dismissed.

http://www.gpo.gov/fdsys/pkg/USCOURTS-mdd-1_10-cv-01130/pdf/USCOURTS-mdd-1_10-cv-01130-0.pdf

YVONNE MOSELY-SUTTON v.  KENNETH MACFADYEN, USDC Maryland, 17 June 2011


Plaintiff appears to make a vapor money claim by alleging that, “Lawful money no longer is available for payment of debt in our economic system.” Compl. at 7. Plaintiff seems to assert that the loan at issue is unenforceable because “no such required cash was tendered,” presumably at the closing of the loan. Compl. at 5, ¶ 14. To the extent Plaintiff asserts a vapor money claim, this Court has previously noted that this “theory has been consistently rejected by federal courts as frivolous and insufficient to withstand a motion to dismiss.” Andrews v. Select Portfolio Servicing, Inc., 2010 WL 1176667, at *3 (D. Md. March 24, 2010). Accordingly, all claims based upon any variation of the vapor money theory must be dismissed.

Why Foreclosure Courts Want Proof that the Lender Injured the Borrower

DEUTSCHE BANK NATIONAL TRUST COMPANY v. Gardner, 2015 PA Super 219 – Pa: Superior Court 2015

https://scholar.google.com/scholar_case?case=5819170402171567967

In this TILA rescission appeal the court explained exactly why the borrower must tender in order to complete the rescission, and why the court has the power to rearrange the process, including the tender and lien removal sequence and mechanism. The court also explained the difference between old money and new money tender. And, most importantly the court explained that it can relieve the borrower of the obligation to tender ONLY in the case of creditor cheating or deceit.

“However, those cases relieving the borrower of his or her tender obligation, resulting in a forfeiture by the lender, are limited to “situations where creditors have tried to deceive or cheat the consumer.”/In re Williams,/291 B.R. 636, 655 (Bankr. E.D. Pa. 2003) (quoting/Michel v. Beneficial Consumer Discount Co.,/140 B.R. 92, 101 (Bankr. E.D. Pa. 1992)) (declining to hold that the borrower “should be relieved of her `tender obligation’” under TILA even though it adopted the minority view that termination of the lender’s security interest could not be conditioned upon tender).”

“We hold that, with this absence of any proof of an intent by Deutsche Bank or any of its predecessors to deceive or cheat Gardner, the trial court abused its discretion in ruling that rescission was appropriate, and in ordering the termination of Deutsche Bank’s security interest obtained in the 2005 refinance transaction, without also requiring Gardner to fulfill his tender obligation.”

I rightly point out that the borrower’s failure to find and lodge cheating/deceit causes of action against the lender team, such as appraisal or loan application fraud, constituted a COLOSSAL error that COST the borrower a LOT OF MONEY.

This of course vindicates my OFTEN REPEATED assertion that all home loan borrowers should purchase a COMPREHENSIVE MORTGAGE EXAMINATION from a COMPETENT PROFESSIONAL… BEFORE seeking a rescission or defending against a foreclosure attack.

People interested in much more info can call me at 727 669 5511, because I know Neil Garfield cannot or will not give it to them.

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Bob Hurt, Writer