It is little known and long practiced that banks create money out of thin air based only on your promise to pay it back. (Click here for a quick lesson on where money comes from.)
Here’s a surprising story about a mortgage nullified based on this concept:
“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.” (Read more from ezinearticles.com)
SEE ALSO:
Are you an idiot to keep paying your mortgage?
Should you keep paying your mortgage? If you have significant equity in your home, absolutely.
If you don’t, it’s getting harder to answer that question, especially when our government keeps giving people who owe more than their homes are worth so many reasons not to pay.
Last week, the government announced a program that will substantially lower payments for many homeowners who have little or no equity, but only if they are at least 90 days delinquent.
Critics say the plan, which applies to loans owned or guaranteed by government wards Fannie Mae and Freddie Mac among others, could encourage people to suspend payments.
But what about the moral obligation to pay off a debt?
Elected officials have been chipping away at that by blaming the foreclosure crisis largely on predatory lenders. In a campaign fact sheet, President-elect Barack Obama says he “recognizes that the real victims in the subprime mortgage crisis are not the lenders, but the millions of borrowers who followed the rules and whose only crime was taking out mortgages that lenders told them they could afford.” (Read more from sfgate.com)
The state of Minnesota seems to have debunked it:
www.lawlibrary.state.mn.us/askfaq.html#credit
The case couldn’t be a precedent because it was handled by a justice of the peace and different rulings were made in other cases.
It seems Daly might have taken out the mortgage with the full intention of making this argument, for which he was disbarred later. I took a law class over the summer, and what made me skeptical about this case is that one important aspect of consideration is that it can be anything. If you give me something worth $1 million, I can give you $1 for it if you’ll accept it, and the dollar is my consideration. It might not be fair to the average person, but that’s enough for a court to decide is fair under the law. So the bank could easily make the argument that it had spent time and employee costs on Daly’s mortgage and that was its consideration.
There are perhaps excellent points to be made here by someone who is not biased, but the people who have made this argument in court are those who benefited by the system and when they no longer want to pay up, decide they should make this argument. If you truly believe mortgages are fraudulent and unconstitutional, then you shouldn’t take one. It’s not fair to anyone to suddenly decide that the bank that has been lending you money was doing it fraudulently and you should magically get to keep the house without making payments.
Good comment. Thanks.