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  1. Some of these cases are wild. These are my summaries and comments. I am not an attorney or a CPA. There is usually a lot more involved in these cases then what I state in the following …

    Borrower declares fraud occurred. Foreclosure attorney says no fraud because no actual loss sustained
    o This (among many other reasons) is why the borrowers have to allege everything possible that Neil and others have been talking about. Usury, inflated appraisal, predatory lending, etc., etc., – if they are not actual losses sustained I don’t know what is.

    Borrower declares breach of oral contract. Foreclosure attorney says no consideration given for the verbal contract – so the contract is not enforceable. I have never done a loan modification so the same argument might be alleged. If the borrower gives a payment that is already required under the existing loan terms, where is the consideration? Since I haven’t done a loan mod, I don’t know – maybe consideration is required outside of normal loan payments on the original loan (anyone?)
    o Tell the foreclosure attorney that the borrower gave no consideration for the loan! The borrower gave the lender a security instrument worth the amount of money the lender gave to the borrower. Thus it was an exchange, not a loan. No consideration, no loan! In addition, they tricked, swindled or stole the security instrument from the borrower – they hid the fact that the note had actual value (fraud in the inducement, fraud in the factum, etc). Plus no loss sustained by the “lender” since they did not give any of their own money for the original loan (they funded the loan with money from the borrower OR money from an investment bank OR they received funds from BOTH the borrower and the investment bank). Plus the original “lender” may have committed a class “C” felony. Check the account that issued the check for the loan. Was it funded by the promissory note (since the promissory note was endorsed and turned into cash)? Did they write the check BEFORE depositing the security into the account (which is probably always done)? Can you say “check kiting”? It is possible that this only applies when a “real” bank lends money – I am not sure (I don’t understand the difference – they both create securitize a piece of paper – meaning they turn it into money). We would have to have an expert (CPA?) check the “lenders” bank account records to see if they followed GAAP (generally accepted accounting principles). If the lender deposited the “security instrument” into that account (the account used to issue the check to the borrower), then the borrower funded his own loan and the lender never gave the borrower the lenders money – thus the lender failed to fulfill the terms of the contract (to lend their own money). (Again, this may only apply to a real bank). Speaking of their own money – since another bank gave the “originator” money to lend, doesn’t that mean the “originator” never gave their own money?

    Borrower declares that the company foreclosing has no rights as they are not the holder of the note and not authorized by the note. Foreclosure attorney says that even if this were true, the clients would still be in the same position (non-payment / breach of contract)
    o To me this means I could step in and start foreclosing on anyone’s house when they are behind on their payments. “Hey, they are late and in breach, therefore give me the house because if they didn’t give it to me they would have to give it to the actual note holder anyway”.
    o That is crazy! It must get even crazier because I haven’t read that many cases.

    Dan Edstrom
    dmedstrom@hotmail.com

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