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10A053
Loan Law
by Jim Davies, 10/25/2010
In Scrambled Notes here on 10/16 I noted that thanks to NY Supreme Court Judge Arthur Schack, it might actually be feasible for almost anyone with a mortgage to walk away from it, and get a free house. I wrote that that would destroy the lending industry and effectively move cash from one's future to one's present, though I added that wasn't necessarily a bad thing since in the future, fiat money will be worthless. Since then Gonzalo Lira has added another article (with even worse foul language) to amplify how to begin that process if one wants to (the clients whose case he described did not) and there the matter sits. The media seem to me to be holding its breath. This could be the biggest domestic news of the last century, yet everyone is avoiding it - no doubt for fear of being accused of pulling out the card that causes the nation's financial house to fall in a heap. I'm still undecided about the ethics of not paying (as were Lira's clients) - that is, if one is under no particular stress, is it right to stop paying off a loan merely because the creditor cannot enforce it? - and some have observed that the absence of a proper Note doesn't eliminate the obligation, it just turns it into an unsecured loan, which might be dischargeable in bankruptcy. I don't know about such fine points, but am just interested in whether promises ought to be kept, when possible. Two factors may bear upon the question. 1. When a mortgage is written, the lender is committing huge fraud. Yes, the fraud is legalized (government declares that down is up) and yes, it brings about the desired result of transferring the house key from seller to buyer; but it's fraud anyway. First, the money being loaned is not money at all. It is described as "two hundred thousand dollars" but in fact is no such thing; for a "dollar" by definition is 24.057 grams of pure silver, and there were not 4.811 tons of silver on the table at the closing. Second, the lender didn't have those funds anyway, but by rules approved by government, called fractional reserve, he was lending as much as ten times what had been deposited with him for safe keeping; so he loaned something that wasn't money, and mostly wasn't his. Such fraud invalidates the loan. 2. Law (including whatever law may settle the question of whether missing Notes invalidate mortgage loans) is what government judges say it is, plain and simple. It is not what is written by representatives of The People; all of that is complete whitewash and was always intended to be. Arthur Schack has said it one way, but pretty darn soon if this matter threatens the money tower government has built, its other and superior judges will rule the contrary. In fact, I'd not be amazed if the word has already been issued, from a certain egg-shaped office, that such is the way it's going to be; for just 10 days after the Bank of America suspended foreclosures while Judge Schack was saying his piece, it reversed itself. So if I'm right and it's government policy, in future judges will obediently declare that 55 million clearly worded contracts do not mean what they plainly say. In the coming zero government society, contracts will be enforced on the basis of what they are and say; for any different judgment would expose the court as partial and therefore not worthy of trust as a competing player in the justice market. Today courts are viciously partial, but they have no competitors. They are merely the hatchet-men for government. |
 
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