Actual Fraud and Constructive Fraud and Other Fraud

Posted on July 26, 2010 by Neil Garfield

From M. Solimon

Editor’s Note: Pretty Good Entry From M. Solimon discussing aspects of fraud. I would add the following:
  1. FRAUD: A false statement wherein the speaker knows it is false, intends for it to be relied upon to the detriment of the receiver, who does reasonably rely on it to his/her financial detriment.
  2. FRAUD IN THE EXECUTION: A trick where the signor believes he/she is signing something other than what the document says it is. Probably applicable in the mortgage mess because the truth is people did not know they were signing the equivalent of their own financial destruction whereas the parties presenting the document pretended it was a standard mortgage loan that had been properly subject to industry standard verification and underwriting standards.
  3. FRAUD IN THE INDUCEMENT: A lie causing a person to execute a document, and otherwise meeting the definition of FRAUD as above. Examples “This is the fair market value of your new house,” or “Housing prices always go up, nevr down,” or “we’ll be able to refinance the property, give you more money out of it, all before the time for reset of the payments.”

Deceit and fraud are defined separately in statutes. Under Civ. Code §§1709 and 1710, deceit is defined in simple terms. See Civ. Code §§1572 for both actual fraud and 1573constructive fraud.

Loook at Liability for actual fraud is limited to acts committed by or with the connivance of a party to a contract with the intent to deceive another party to the contract and induce that party to enter into the contract. Look under Civ. Code §1572

Deceit is appropriate under a material beach or perhaps cause of action. The notion of a lender, who willfully deceives its borrowers or customers leading to foreclosure so to remedy an investor issue and to avoid recourse.

]I suggest you use it there or for the servicing argument for showing the willful intent to induce the consumer homeowners of a right to modifications ad compliance with 2923. to alter his or her position towards litigation (and eat up the balance of legal reserves their intended for a defense and their attorneys). These guys, I know all too well and it’s all too much. The consumer’s injury or risk is liable for any damage suffered as a result of the deceit. [Civ. Code §1709] etc, etc.

My take on this is too isolate the actual fraud that consists of any of the following acts, committed by or with the connivance of a party to a contract who is the assignor and its agents and not the successors.

The argument is it is with willful intent a lost beneficial interest woefully deceives a trustor or mortgagor to the contract, solely to induce the other party to enter into the contract [see Civ. Code §1572]:

Deceit and Actual Fraud combined

•Servicing rights violate SEC 1122 AB,
•Accounting rules violations under FAS 140, FIN 115,
•Trust assets are restricted to passive investments,
•Lenders controlling interest revoke the powers of sale and foreclosure,
•Parties lack standing to bring a foreclosure by appointment,
•Conspiracy to commit fraud where Trustee, Beneficiary and Transferee are all one in the same
•Bid rigging at trustee sale
•Fraud perpetrated against the country recorder
•A nominal interest has powers that conflict in the original assignment,
•Violations of the Code of federal regulations “CFR”
Your feed back will be critical and evident where I have gone as far as I can. It’s not getting through to skilled litigators that still don’t get it. Maybe I am lacking your codifications eloquence and ledger capacity to zero into the abuses of GAAP in more subtle terms; LOL!

he head of the OCC stated in 2009 “I don’t know why getting relief from offering modifications is not working?”


That said, even after the effort and inability for the US Secretary to further tweak FASB to get them to completely roll over.

Few are winning here. Even Judges who are deciding the matter favorably are commenting from a wrong perspective. There is no demand on UCC judicial interpretations for perfection in a bonefide sale.

The District Courts hearing these chapter proceedings provide comments after deciding the matter favorably are merely suggesting it’s all about “get it right next time”. That wrong where it says’s to a lender they can bring it back, even when a decision is favorable.

The key arguments come down to the fact the lender transfers each receivable as a “whole loan” sale. For Pete’s sake, looks at the general ledger where the asset was entered as a “Receivable” and “Loan Held for Sale”.

That’s not “Loan Held to Maturity” but “Sale”.

The cost to capitalize and reserve a 30 year loan held to maturity defeats the arguments lenders are making that “they did not sell the subject loan. It’s the old “blank assignment” gimmick. Its arguments are lost in court where the problem peaks the Judges curiosity and that’s about it.

We know the value of the open assignment argument is defining for the court where it’s a bank surety and liquidity play. It’s also a GAAP disclosure fraud.

Therein the consumer is disadvantaged arguing defects after being instrumental in a lenders shuffling of assets for maintaining REPO requirements and in its pursuit for shareholder earnings and profitability.

My take on the matter is to let them have the consumer’s home. The consumer then makes the lender pay the price of foreclosure claiming recognition, for reclassifying the sales as debt and restating earnings.

These UD attorneys are so smart that they may cost these bank power houses a debt load totaling about $3 trillion and more in liabilities left off the books. It’s a scary thought actually whe
re you put Citigroup out while not looking and as they still struggle with a $65 billion tax tab carried by consumer taxpayers. BAC may end fighting for their life with a private right to call receivership.

Foreclosures cannot continue in violation of GAAP and where lenders circumvent basis accounting laws while continuing to force the sale treatment issue and while denying they are controlling assets.

It’s the best of both worlds with sale on the front side and as if it was leveraged borrowing upon liquidation and egress.

As we sit I’ll show you the subtle instances of apparently innocent manipulation and confusion befallen o to the courts from errors and omissions which lenders are getting away with. That is happening as the courts say . . . . So what!

The errors and omissions are the desperate means for seeking to maintain some semblance of SFAS140 adherence while employing lawyers as third parties appointed by agents of agents by a nominal interest.
I personally have given up on the right MERS arguments as MERS is entitled to act as an accommodation and even a nominal interest, possibly.

It’s just so easy for one to see the obvious that it has become lost. The nominee cannot execute instruments upon being replaced by the signature below it. Hello guys, right! That’s the purpose of the nominee! And, while one courts rules in favor of the consumer it misses the call.

Something basic is getting lost and I’m not getting through. Unique “floating” entities cannot appear from nowhere to execute assignments by virtue of meritless appointments.

If one of your cases is picked up by the Fed it should register a nice settlement . As one District court judge put it with disgust. . . “The SEC is turning into a penalty and fine system where they are to quick to settle the matter for a couple hundred million every time allowing the defendants’ to save face.”

“That’s not bad!

The US AG office thinks there is a case for bid rigging but I’m not sure the AG’s office knows where to look. Yet as one Judge told me in court “speak English.”

The precise and distinct GAAP and FASB rules violation are clearly demonstrated in each foreclosure. Lenders are violating GAAP even with the recent codification, including revisions and interpretation.

It’s all mind boggling when you consider the distance in communication here and counsel’s alternative to grab the lowest hanging fruit. . . .A RESPA audit (what is that anyway) and a QWR that together are just not going to cut it.

These bank execs fail to realize maybe that these and other Enron style crimes, like those stated in the Fastow confessional, will gets you 10 years . . .at least.



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