No Loan Receivable Account Exists

Everyone seems to be having trouble with winning these cases outright. I think I have discovered the problem.

Most attorneys start in the middle of things because that is how it comes to them. Basic Contracts Law, first day of law school. For an agreement to be enforceable it must have all three of the these components: offer, acceptance and consideration. You can’t have just an offer, you can’t have just an acceptance, there must be some act that the law recognizes as consideration if the offer is accepted. Absent all three there is no way for a party to enforce an agreement for which there was either no acceptance nor any consideration.

If I loan you $100, you owe me $100 whether you sign a piece of paper or not. I offered to make the loan, you agreed to accept it and pay it back. That is true and presumed to be the reasonable interpretation of any exchange of money or property — that it isn’t a gift. And ALL of that is true whether there is documentation or not.

It is equally true that if I induce you to sign the note under the promise that I will loan you the $100, we have offer and acceptance and evidence of both the offer and the acceptance. But if I don’t give you the $100, there is no consideration and the agreement is not enforceable regardless of whether it is in writing or not. In the real world, I might survive a motion to dismiss or even a motion for summary judgment, but I could never win at trial because I don’t have any evidence that the money was delivered to you in cash, check or wire transfer.

But you are still going to lose and have a judgment entered against you for the $100 if you don’t deny that you ever got the money and you probably should add for good measure that you were fraudulently induced to sign a note when I knew I wasn’t going to give you the money.

The deal signed by most borrowers lacked consideration because the money did NOT come from the party representing itself to be the lender. The offer to the borrower was not the deal that the investor-lender or even the nonexistent trust pool was promised so if could not have been offered that way — with all the securitization parties involved and all their compensation contrary to the requirements of TILA for disclosure, whose purpose is to give the borrower an opportunity to exercise choice and seek a better competing deal in the marketplace. The borrower accepted an offer that was not backed by consideration nor the intent to provide it.

Hence there was no meeting of the minds in the first instance.

If you reverse the analysis and say that it was the borrower who made the offer it gets even worse. 99% of the real applications if they contained the true facts would never have been accepted by any investor or even a bank looking for subprime profits.

Hence the basics of contracts law have not been met – — you might have the argument to say there was an offer, but there are not grounds to say there was or even would have been acceptance if the true facts were known, and the documents signed do not reflect either the offer or the acceptance by the actual investor-lender or even the pool, whose documents were routinely ignored.

The real problem of Wall Street lies in the facts not in theory. They took the money in with complete disregard to the wishes and intent and agreement of the investor lenders and then funded loans from their own accounts that were based upon false premises made both to the investor-lenders and the borrowers. It is the fact that the money came from a Wall Street account rather than an investor account that causes the confusion.

That funding was the consideration — but that was separate from the documentary chain used by the securitizers. You can’t point to consideration “over there” and say that was the consideration you gave in exchange for the note and mortgage unless you can show that “over there” was connected to the documents that were presented to the borrower and signed under false pretenses, creating fraud in the inducement and even fraud in the execution of those documents.

They were “borrowing” the consideration from “over there” and borrowing the identity of the investor-lenders and borrowers to create a monumental shrine to Ponzi schemes in which the total nominal value of the scheme exceed world fiat money by 12 times the actual supply of money. The ONLY was to combat this is to dismantle the fraudulent scheme so that the threat posed by “shadow banking” no longer exists, seizure of the assets illegally obtained, and making whatever restitution is possible to investor-lenders and homeowners, past, present and future.

They did the illegal deals and then had their own people “approve”them and even accept them into non-existing pools without bank accounts. They claimed the loans as their own when it was convenient for them to do so — getting the money for plunging values of the mortgage bonds at 100 cents on the dollar.

Then they dumped what was left of the paperwork over the fence and told the investor NOW the loan is yours and you have a loss. But at all times these banks were merely depository institutions and they were accepting deposits from investor-lenders more or less in the same form as a CD. Their balance sheet did not show a loan receivable. It would have shown a liability for the deposit that was due back to the investor-lender but for them inserting fictitious entities that would take the liability and the loss borrower. In other words a shell game supporting the usual Ponzi scheme scenario.

In a word, they merely substituted the mortgage bond owed by a non-existent entity with no assets for a normal loan receivable account. Thus no loan receivable accounts exists.

%d bloggers like this: