Is it Possible All Mortgage Contracts Are Void and Foreclosures are Invalid?

The following article should probably be considered for educational or entertainment purposes only. It is rare to find such a knowledgeable judge working for government that puts the interest of the individual over the financial interests of the banks and their system of credit and money creation. Homeowners facing foreclosure should absolutely be aware of this case and the arguments, but taking any of this as actual legal advice should be warned against.

I first stumbled across the very curious case of Jerome Daly through an article by Ellen Brown, author of the book Web of Debt. It concerns a foreclosure case in Minnesota in 1968 that has yet to be overturned, and the issues go straight to the heart of the sleight of hand that the banking system is built upon. The case also presents an optimistic view of how individuals can take back the power to create money from the private banks.

Jerome Daly was a homeowner living in Minnesota who stopped paying his mortgage. The lender, First National Bank of Montgomery, of course, sued the man for foreclosure. Daly presented his argument before a jury as to why he did not owe the bank anything.

Essentially, he argued that the bank had not provided any consideration for Daly’s promise to pay back the loan. Consideration is one of the requirements for a valid contract, and without it, a contract is void. Daly was arguing that the mortgage contract was void and did not need to be repaid because the bank had not actually given him any money. The lender had created the money out of thin air in response to the promise to repay the loan.

This credit, argued Daly, was not real money that counted as consideration and therefore did not need to be paid back. Without valid consideration, the mortgage contract was null and void and nothing was owed to the bank. Astoundingly enough, the jury agreed with him and declared that the mortgage was not a valid contract.

The judge and a representative testifying on behalf of the bank also agreed with Daly’s argument, in effect. The bank’s president, Mr. Morgan, admitted that the money did not exist until Daly was given the mortgage, and the money was created out of thin air.

The judge wrote a supporting decision in the case agreeing with Daly, writing “The money and credit first came into existence when they created it. Mr. Morgan [the bank’s president] admitted that no United States Law or Statute existed which gave him the right to do this.” Thus, the lending of the money to Daly in the form of a mortgage did not constitute valid consideration. The bank did not even have the authority to create money out of thin air according to any known law or statute.

This case has been suppressed far more than argued against, and it has not been overturned. What this means to homeowners facing foreclosure is that they may not even owe their bank any money, and the lender is trying to take the home to pay an illegal contract. This case is, quite possibly, a get out of debt-jail free card.

But that does not mean that the local judges will allow these kinds of rational arguments in their courtrooms. Just because mortgage contracts can be proven invalid and the lending system a scam does not mean that corrupt judicial systems will allow the truth to be told about the equally-corrupt banking system. Political power and money work hand-in-hand.

Thus, it should not be surprising that people who have used the Daly arguments to protect against foreclosure have not always been successful in finding a court to listen to them. Rubber stamping foreclosure lawsuits generates good money for lawyers in the form of legal fees and for local county courts in the form of filing fees. (Of course, neither of these parties seem to be aware that the money they are helping to steal was created out of thin air itself, and they are selling out fellow human beings to an illusion.)

Homeowners, as I mentioned above, should be aware of this argument, because it shows the banking system to be the scam that it is. Now that so many more homeowners were given bad loans and are losing their houses because of them, will more of them rely on the argument of a void mortgage contract and the unconstitutionality of the monetary system itself? That remains to be seen, but it is a convincing, rational, and very interesting argument that Daly put forth. Even more interesting is that the judge and jury agreed with him.

But, on the less interesting side will always be the corrupt judges, lawyers, and others who benefit from the banking scam. As one of them stated in regards to this issue, “If I let you do that — you and everyone else — it would bring the whole system down… I cannot let you go behind the bar of the bank… We are not going behind that curtain!” The “whole system” supports the banks and the government — why should we expect them to help people defend against unlawful acts and contracts?

What to Offer for HUD Foreclosures?

You have found your dream home and it is a HUD foreclosures. You have done a walk-through of the HUD house and it seems to be in good shape, just a few minor repairs.

Unfortunately, you have already made a major mistake. Your real estate agent, who is your uncle, has never sold a HUD home foreclosure. He does not have any idea how much you should offer for a HUD foreclosure. Your uncle is not a lone; most real estate agents are not experienced in HUD foreclosure listings.

First, a little about what you can and can’t do when buying HUD home foreclosures:

1. You cannot buy HUD foreclosures without a real estate agent. A real estate agent does not have to take special training to sell HUD home foreclosures. I personally think they should have mandatory training. An inexperienced real estate agent can cost you thousands of dollars in mistakes. Again, you have to use a real estate agent to buy HUD foreclosure listings.

2. You do not have to offer the list price. HUD home foreclosures are listed at FHA appraised “market value”. It is my experience HUD foreclosures are listed somewhere within 20% of market value either too high or too low.

3. If the HUD foreclosure listing is new on the market, you will not get it for 50% off the list price. You are wasting your time on a low ball offer. But, if the HUD house has been on the market 3 or 4 months then a low ball offer might work.

4. HUD will pay up to 5% of the purchase price for buyer’s closing costs. The amount of buyer’s closing costs you want HUD to pay must be on the initial bid form.

5. HUD will pay up to 5% of the purchase price for real estate agent commissions and it also must be on the initial bid form.

Ok, so what do you offer? The bidding process for HUD foreclosures is just a numbers game for HUD. They don’t care about what you offer; they look at what they net from the sale of HUD foreclosure listings.

If the HUD home foreclosure is new on the market, HUD will usually accept 85% to 88% of the list price net to HUD.

For example, the HUD house that you want to make a bid is listed at $100,000. Your uncle, the inexperienced agent, will be paid 5% of the purchase price for commissions and you want HUD to pay $3,000 of your closing costs.

What do you offer so that HUD will net 88% of list price? You need to take what you know and back up to the figure you don’t know, the offer price.

You know what you want HUD to net and what costs HUD will pay. First, you want HUD to net $88,000 ($100,000 X 88%). You want HUD to pay $3,000 of your closing cost and pay your uncle, the inexperienced agent, 5% commission.

You take $88,000, add $3,000 closing costs, and you get $91,000. You still have to figure in your uncle’s, the inexperienced agent, 5% commission. $91,000 is the figure without the agent’s 5% commissions, or it is 95% of an unknown amount. You divide $91,000 by .95 and you get $95,790. That is the amount you can bid and HUD will net $88,000 with HUD paying $3,000 closing costs and 5% Buyer’s agent commissions.

How did I determine HUD will accept 85% to 88% net of list price? HUD publishes Bid Results and Bid Statistics on all of their HUD foreclosure listings. Bid Results are the accepted bids and Bid Statistics are all bids including the ones that weren’t accepted. I am a CPA so I enjoy working with numbers. I also have brought HUD foreclosures for myself to fix up and resell. I want to buy HUD foreclosure listings for as cheap as possible.

This example is for HUD home foreclosures that are new on the market. It is a different ball game if HUD houses have been on the market for 2-4 months.

You also need to remember whoever bids the highest net to HUD gets the HUD home foreclosure.

What to offer for HUD foreclosures is not hard to determine if you or your real estate agent have the experience or knowledge of buying HUD home foreclosures. It is just a numbers game to HUD and it is easy to figure the numbers that HUD will accept for HUD foreclosure listings.

Current Trends in Texas Foreclosures and Real Estate

There were 57,000 foreclosures that were completed in Texas between February 2012 and February 2013, which ranks Texas fourth nationally in completed foreclosures for the period. Out of 5,411 Texas foreclosure filings in the month of February 2013, 3,252 filings were foreclosure starts. This suggests that despite a 43.36% decrease in foreclosure notices filed in February 2013 over February 2012, the market for distressed property in Texas will continue to remain active.

Sensing localized recoveries in the Texas housing market, mortgage lenders are moving in and expanding operations in the state, particularly in North Texas. This could prove to be a boon to first time homebuyers as well as foreclosure investors looking to realize value on the purchase of distressed property, especially as interest rates remain low and inventory stays strong.

Positive Economic Indicators Support Strengthening North Texas Real Estate Market

North Texas by many measures remains the strongest local market. In North Texas, the average sale price in February 2013 was 94.0% of the original list price, a 1.9% increase as a percentage of list price over February 2012. Overall, pre-owned home sales were up 14% year over year, with prices 8% higher in February 2013 than in February 2012. The higher average sale prices are partly due to a more restricted supply, with the housing inventory falling to 3.6 months in February 2013 as compared to an inventory of 5.6 months in February 2012.

Austin is another area where the real estate market is gaining strength. Sales were up 26% year over year in February, while the median price for listed homes was up 7% during the same period, to $208,500. The competitive market resulted in a drastic reduction in inventory, which stood at just 2.6 months at the end of February. Townhouses and condominium units shared in the gains, with 31% more units sold in February 2013 than February 2012. Strong gains in employment rates as greater numbers of people relocate to Austin are likely supporting the increases in real estate activity, as Austin boasted just 5.4% unemployment in February 2013. Still, there are contracts waiting for distressed real estate buyers who know where to look.

Advantageous Markets to Pursue Texas Foreclosures and Distressed Real Estate Transactions

An assessment of the outlook for distressed real estate performed by Cole Schotz predicts Dallas will be within the top markets for distressed real estate throughout 2013. Median list prices in Dallas are at $205,000, a 5.39% increase year over year. However, in light of a 20.34% drop year over year in active listings, this increase is quite modest. The delinquency rate for Dallas mortgages also remains high, reported at 4.28% in January 2013, suggesting that more distressed properties are entering foreclosures in Texas pipeline in this market.

El Paso may be one of the most promising places to look for distressed property in Texas, with 8.79% of all sales in 2012 taking place on foreclosed homes. The average discount realized on these sold properties was 17.80% despite a 93.42% increase in foreclosure activity in the area. Foreclosure discounts in McAllen, Texas were also high in 2012, at 21.49%; however, the foreclosure activity in McAllen decreased substantially in 2012 from 2011, falling 65.90%.

The overall economic outlook in Texas is strongly positive. In February 2013, the state saw its largest monthly job gains ever recorded, with 80,600 new jobs added, adjusted for seasonal variations. The regenerating job market and the strengthening real estate market, on the whole, point to opportunities for investment gains on distressed real estate for those who buy during this recovery.

Why Have Major Lenders Suspended Foreclosures – A New Chance to Get a Loan Modification Approved

Why have 3 major lenders suspended foreclosures, and what does that mean for you?

Here’s the short story of why. It seems that banks were in such a hurry to foreclosure, they forgot to follow the rules. With all the work involved in taking all those homes, who would notice if they cut a few corners along the way? Well they got found out, and it turns out that many of the foreclosures they have already done or were about to do, may have no legal basis because they didn’t follow the rules.

Here’s what this means for homeowners.

If you have had a home taken by any one of these banks that include Bank of America, Chase and GMAC, contact an attorney immediately, because you may have a law suit on your hands with damages as big or bigger than the amount of your mortgage — with the possibility of rescission! What’s rescission? They may have to forgive your mortgage balance entirely, and give you your home back. Make sure the attorney you contact knows mortgage notes better than the lenders who wrote them.

If you have a foreclosure pending, or if you have received a notice of sale, and have a foreclosure auction date, the first thing to do is to call the sheriff or attorney that sent you that letter. Don’t assume anything.

Ask them if your sale is canceled. Just because you have a Bank of America loan, doesn’t mean YOUR sale is canceled unless the attorney or sheriff has actually received word that YOUR sale is canceled. In other words, they could be pulling a fast one on you. We just called about a Bank of America sale for next week and as of today it is not canceled.

In other words, you may want to still have a “Plan B” in place. That could be having the preliminary documents so that you can file a chapter 13 bankruptcy and stop your sale on the spot. Have everything ready to go to the court house in case they are still going through with your sale. You can actually prepare these documents yourself without an attorney. That’s pretty cheap insurance (a couple of hours and the cost of some instructions).

If the foreclosure attorney hasn’t received notice of cancellation of your foreclosure sale, then call your lender. Don’t rely on them just “telling” you. They probably won’t confirm anything. The only way to get confirmation is to establish an open channel with the foreclosure attorney who sent you the letter. Let them know you spoke with your lender who said the sale was canceled, and would they please confirm that. Then get something in writing from them. Remember that the foreclosure attorney has no authority to act on their own. They can only do what the lender has instructed them to do.

There is nothing stopping your lender from going back one mortgage at a time, and doing what is necessary to fix their compliance mistakes and shortcomings. In that case, they may be able to resume foreclose with confidence that they are in compliance.

So you may have less time than you thought.

And finally, take full advantage of the time you you have just been given. Now you may find yourself with time to get started or reapply for that loan modification. In one sentence, a loan modification changes your loan with lower payments, so you can afford your own home. This takes months, even when things go right. So DO NOT PUT THIS OFF! The more you know the less the chances are that you will do this wrong, and waste months of valuable time. Get educated, and get started!

Foreclosures And Short Sales – Important Tips

There is no need to say that you can’t live without one thing: the roof over your head. The majority of people want their own home, especially if they have a family to take care of. Of course, you will need to do a lot of planning before buying a house as this decision can have a great impact on you and your family. Let’s know more about it.

When Buying a House

If you want to buy your own house, you need to consider a lot of things. You may have to face some serious problems. For example, if you lose your job, you will find it harder to keep your word. And in the worse scenario, you may have to deal with a short sale or foreclosure. This may have a bad impact on your routine life. Therefore, you may want to understand how it works.

Short Sale And Foreclosure

If you are not familiar with the two terms mentioned above, you should know the difference between the short sale and the foreclosure process first. According to most people, foreclosure is a situation where you are forced to give your home back to the lending authority, which is a bank most of time. Once the house is given bank to the bank, you no longer have to pay back the debt.

A Misconception

Aside from this, some people have a misconception that short sale is not a real transaction, which is not true. No matter what happens you should keep your word and you should be ready to meet the deadline.


In case of a foreclosure, the lender has to auction your house in order to sell it to the person who places the highest bid. The lender will advertise the property to sell it in a certain period of time. However, the law requires the home owner to show up in the court. The home owner is the same person who borrowed from the bank. In the court, the homeowner will have to present his point of view about the mortgage. If you, the homeowner, have strong evidence, you should present it. If you don’t have strong evidence, the judge may issue a verdict giving your house back to the lender.

On the other hand, in case of a short sale, you can sell your property. You will find a buyer yourself and you won’t be required to show up in the court. And it will be an agreement between you and the lender. However, in some special cases, you will need the professional advice of a good real estate broker. But before the closing of the deal, you will need to make sure that the lender expresses his agreement to the proceedings.

The two processes are different in some ways. It’s important that you complete the short sale as soon as possible or the lender may lose interest in the property and may not acquire it. But in case of a foreclosure, you can’t do much as you will have to comply with the court decision.

Long story short, foreclosure is not easy. Therefore, it’s important that you get help from a professional so that the process is completed as smoothly as possible.