What is a Bank Loan?

“The issue which has swept down the centuries and which will have to be fought sooner or
later is the people versus the banks.” Lord Acton

MORTGAGE SUMMARY

Borrower Signs the Bank’s Loan Contract and Mortgage

Borrower’s Signature transforms the Loan Contract into a Financial Instrument worth the Value of the agreed Loan Amount

Bank Fails to Disclose to Borrower that the Borrower Created an Asset

Loan Contract (Financial Instrument) Asset Deposited with the Bank by Borrower

Financial Instrument remains property of Borrower since the Borrower created it

Bank Fails to Disclose the Bank’s Liability to the Borrower for the Value of the Asset

Bank Fails to Give Borrower a Receipt for Deposit of the Borrower’s Asset

New Money Credit is Created on the Bank Books credited against the Borrower’s Financial Instrument

Bank Fails to Disclose to the Borrower that the Borrower’s Signature Created New Money that is claimed by the Bank as a Loan to the Borrower

Loan Amount Credited to an Account for Borrower’s Use

Bank Deceives Borrower by Calling Credit a “Loan” when it is an Exchange for the Deposited Asset

Bank Deceives Public at large by calling this process Mortgage Lending, Loan and similar

Bank Deceives Borrower by Charging Interest and Fees when there is no value provided to the  Borrower by the Bank

Bank Provides None of own Money so the Bank has No Consideration in the transaction and so no True Contract exists

Bank Deceives Borrower that the Borrower’s self-created Credit is a “Loan” from the Bank, thus there  is No Full Disclosure so no True Contract exists

Borrower is the True Creditor in the Transaction. Borrower Created the Money. Bank provided no value.

Bank Deceives Borrower that Borrower is Debtor not Creditor

Bank Hides its Liability by off balance-sheet accounting and only shows its Debtor ledger in order to  Deceive the Borrower and the Court

Bank Demands Borrower’s payments without Just Cause, which is Deception, Theft and Fraud

Bank Sells Borrower’s Financial Instrument to a third party for profit

Sale of the Financial Instrument confirms it has intrinsic value as an Asset yet that value is not credited to  the Borrower as Creator and Depositor of the Instrument

Bank Hides truth from the Borrower, not admitting Theft, nor sharing proceeds of the sale of the Borrower’s Financial Instrument with the Borrower

The Borrower’s Financial Instrument is Converted into a Security through a Trust or similar arrangement in order to defeat restrictions on transactions of Loan Contracts

The Security including the Loan Contract is sold to investors, despite the fact that such Securitization is  Illegal

Bank is not the Holder in Due Course of the Loan Contract

Only the Holder in Due Course can claim on the Loan Contract

Bank Deceives the Borrower that the Bank is Holder in Due Course of the Loan Contract

Bank makes Fraudulent Charges to Borrower for Loan payments which the Bank has no lawful right to since it is not the Holder in Due Course of the Loan Contract

Bank advanced none of own money to Borrower but only monetized Borrower’s signature

Bank Interest is Usurious based on there being No Money Provided to the Borrower by the Bank so that  any interest charged at all would be Usurious

Thus BANK “LOAN” TRANSACTIONS ARE UNCONSCIONABLE!

Bank Has No True Need for a Mortgage over the Borrower’s Property, since the Bank has No Consideration, No Risk and No Need for Security

Bank Exploits Borrower by demanding a Redundant and Unjust Mortgage

Bank Deceives Borrower that the Mortgage is needed as Security

Mortgage Contract is a second Financial Instrument Created by the Borrower

Deposit of the Mortgage Contract is not credited to the Borrower

Bank Sells the Borrower’s Mortgage Contract for profit without disclosure or share of proceeds to Borrower

Sale of the Mortgage Contract confirms it has intrinsic value as an Asset yet that value is not credited to the Borrower as Creator and Depositor of the Mortgage Contract

Bank Deceives Borrower that Bank is the Holder in Due Course of the Mortgage

Bank Extorts Unjust Payments from the Borrower under Duress with threat of Foreclosure

Bank Steals Borrower’s Wealth by intimidating Borrower to make Unjust Loan Payments

Bank Harasses Borrower if Borrower fails to make payments, threatening Legal Recourse

Bank Enlists Lawyers willing to Deceive Borrower and Court and Exploit Borrower

Bank Deceives Court that Bank is Holder in Due Course of Loan Contract and Mortgage

Bank’s Lawyers Deceive and Exploit Court to Defraud Borrower

Bank Steals Borrower’s Mortgaged Property with Legal Impunity

Bank Holds Borrower Liable for any outstanding balance of original Loan plus costs

Bank Profits from Loan Contract and Mortgage by Sale of the Loan Contract, Sale of the Mortgage, Principal and Interest Charges, Fees Charged, Increase of its Lending Capacity due to Borrower’s Mortgaged Asset and by Acquisition of Borrower’s Mortgaged Property in Foreclosure. Bank retains the amount of increase to the Money Supply Created by the Borrower’s Signature once the Loan Account has been closed.

Borrower is Damaged by the Bank’s Loan Contract and Mortgage by Theft of his Financial Instrument Asset, Theft of his Mortgage Asset, Being Deceived into the unjust Status of a Debt Slave, Paying Lifetime Wealth to the Bank, Paying Unjust Fees and Charges, Living in Fear of Foreclosure, and ultimately having his Family Home Stolen by the Bank.

Thus the BANK MORTGAGE BUSINESS IS UNCONSCIONABLE

Larry Hannigan’s Australia www.larryhannigans.com

Aussie House Prices Set to Collapse

Living in Australia, I could not pass up the opportunity to post this article from Money Morning on my blog.  Seeing as we can’t rely on mainstream media to inform the public on what is really happening in the economy.  Everything seems to be fine and dandy in their world.  Well after reading this article, you may want to think again…

by KRIS SAYCE on 18 JANUARY 2011  Money Morning Australia

If you’re worried we’ve forgotten the National Australia Bank [ASX: NAB] and Westpac’s [ASX: WBC] secret loans from the United States Federal Reserve – don’t.  We’re still on the case.

After all, going by mainstream logic, although it’s clearly inappropriate for individuals to have the right to self-defence with a small firearm, it’s OK for governments to threaten to destroy the lives of millions of people at the flick of a switch with something much deadlier.

No double standards there.

Anyway, if we get our gnashers into any more of the banks’ grubby secrets we’ll be sure to let you know.

But before tucking into today’s Money Morning, we couldn’t resist showing you this from the Financial Times:

“Europe’s bail-out fund is expected this week to announce the banks that will market the first Eurozone bond amid hopes that demand from the world’s biggest sovereign wealth funds and private investors will ease the continent’s crisis.

“A number of European banks are expected to underwrite the deal, billed as a test of investor sentiment at a critical time.

“Bankers say they have rarely seen such demand for debt with some of the wealthiest sovereign and private funds eager to snap up the bond designed to help fund the Irish bail-out.”

As it happens, last night the banks were named.  Those in charge for handling the bond sale are Citigroup, HSBC and Société Générale.

That would be American bank Citigroup which secretly borrowed $89 billion from the US Federal Reserve… and needed $25 billion from the US government – a stake that resulted in Uncle Sam owning 36% of the company.

That would be UK headquartered bank HSBC.  It secretly borrowed $4 billion from the US Federal Reserve.

And that would be French bank Société Générale which secretly borrowed $124 billion from the US Federal Reserve.  The same Société Générale where Jerome Kerviel racked up trading losses of €4.9 billion in 2008.

But all that aside, it’s more evidence of how messed up financial markets are.

What you’ve got are banks that made a bunch of bad investments – thanks in part to government influence.  Banks that needed a bail-out from national governments.

Those bail-outs were so huge the national governments were at risk of going bust.  The solution?  Banks that were bailed out by national governments are now underwriting an issue of government bonds that will be used to help the governments pay for the bail out of the banks!

Confused yet?  You should be… because we are.

All we know is the banking system is corrupt.  And those in government who support the system are equally corrupt – that goes for Australia’s banks and politicians too.

Meanwhile…

“Floods tipped to hit house prices”, says today’s The Age.

The mainstream press has got it spot on for once.

Of course, the mainstream still denies the existence of an Aussie housing bubble.  The floods will be a scapegoat.  We can picture their argument now:“Oh, if it wasn’t for all the flooding, Aussie house prices would be up 10% this year – that’s the normal growth rate you know.”

In fact, we speak too soon.  The Age quotes Andrew Wilson from Australian Property Monitors:

“Mr Wilson expects a recovery in Brisbane property by the end of the year, providing there’s no downturn in the economy or additional severe natural disasters.

“’We’re expecting a pick-up in the Brisbane market around about the third quarter this year,’ he said.  ‘That’s probably been postponed a little bit – but only by a quarter.’”

Ha, ha, ha… Is he kidding?  Postponed by a quarter!  It’s more likely that house price growth will be postponed for five years.  Or even ten years… perhaps longer.

According to the same article, “28,000 homes would need to be completely rebuilt, while many houses would be uninhabitable for weeks, months or even years.”

We’ve even seen some comments that suggest house prices could surge because of the floods.  That a diminished supply coupled with a new and unexpected increase in demand will force prices higher.

“It’s supply and demand” they say.  No it’s not, it’s wishful thinking.

The Queensland floods will decimate house prices.  No doubt about it.

Think about it this way.  The spruikers are always keen to point out that roughly one-third of people own their home outright.  Another third have a mortgage on their home.  The remaining third rent.

So, out of 28,000 homes, that’s just about 9,333 homes in each category.  And we’re not factoring in the homes with less damage.  So you can more than double that number.

Now let’s work through it and figure out where the boom will come from.  Remember it’s likely less than half these households will be insured for flooding.

For those that own their home outright, you’ve got between 4,500 and 9,333 people who have seen the value of their “asset” drop by a significant amount.  I mean, let’s be honest.  Who wants to buy a home or land that’s flooded – ducks… geese… fish?

If – and granted most won’t – they tried to sell the land today, they’d be lucky to get one-third the pre-flood value…

But we’ll guess most probably won’t want to sell up.  Mainly because despite the floods they probably like where they live.  And besides, they’ll get nowhere near the price they’d like if they put their property on the market.

These debt free householders will need to borrow a stack of cash to build a new home on their now empty block of land.  Most likely a much smaller home in order to keep the costs down.

Next, what about the folks with a mortgage?  These guys and gals are the ones in even big trouble.  Most likely at least 4,500 of these mortgages will be in negative equity.  That’s where the size of the loan exceeds the value of the property.

Thanks to recourse loans, even if these guys could sell, odds are they’ll still have a massive loan to pay off.  It’s not like the New Orleans floods where home owners could walk away debt free.

These folks will still have the burden of a loan.  A loan that, even if it’s refinanced, would become an unsecured loan and would involve a huge increase in the interest rate being charged.

And what would be the chances of these folks getting a new housing loan if they wanted to buy something else?  Our guess is they wouldn’t have much luck.  Besides, there’s the small matter of needing to save for a deposit as well.

Not forgetting whether they’ve still got a job.  With thousands of businesses shut down temporarily or even permanently, many could find themselves homeless and jobless too.  Try getting a loan with those credentials.

Finally, there’s the renters… ah, the much-ridiculed renters.  Those who have been scoffed at for missing out on the property boom.  Well, aside from losing their home and their possessions, the upside is that unlike those with a mortgage, renters won’t walk away with a debt hanging over them.

The same can’t be said for the landlords, who – thanks to the tax breaks – are likely to be maxed out on their investment mortgage.  But then again, isn’t property investing all about making losses?  We’re sure that’s how it works.  They must be delighted with the losses they’ll make from the floods… mugs.

Back to the renters.  Sure, they may still face issues such as not having a place to live and not having a job, but at least they won’t have to fork out monthly repayments for a loan on a house that no longer exists.

And at least they haven’t seen the value of their biggest asset drop by 40%, 50%, 60% or more overnight.  And in the case of the landlords, the income against the property drop by 100%.

But surely the floods will cause a migration of people to other parts of Queensland and the rest of Australia… maybe.  But it won’t lead to a rise in house prices.  There’s not even a guarantee it’ll lead to a rise in demand for housing.

Remember, the vast majority of these people won’t be cashed up.  Even those without a mortgage and who have cash to spend are unlikely to consider hocking themselves up to the eyeballs with a brand new mortgage…

Not after it’s taken them twenty-odd years to pay off the old one.  And not after the experience they’ve just gone through of seeing their primary asset slump in value.

Also don’t forget, many consider their home to be their retirement savings.  How often have you heard that?  “Oh, we don’t worry about superannuation or investing, our retirement fund is our house.”

Good luck with that.

The simple fact is, from a house price perspective there’s no silver lining to the floods.  The decimation of the supply won’t lead to increased demand.

In fact it’s more likely to result in prices across Queensland softening further.

Aussie house prices were already destined to fall off a cliff this year and next as the credit bubble reached breaking point.

The destruction of paper housing wealth and the burden of non-asset backed debt could be the trigger that finally sends Queensland and Australian property values tumbling.

Regards,

Kris Sayce
For Money Morning Australia