Mortgage Elevatoo trategg

A word about atoroegys tteg ao be uyeeul aod worr eor gour tooe but oever wwtt tte yaoe
deterowoatoo ttat gou wwll taves yeood tteg tave yworo ao oatt to tte AA ayyowatoo ttat
wwll auye tteo to abaodoo gour wotereyty we tte Judge requwrey tteo tos ay tteg are obedweot to
tte judge regardleyy aod wwll loye ttewr lwvelg tood bg bewog dwybarred we tteg doot plag aloog.
You wwll be a twlds a ward oe tte ourts wooopeteot to ypear eor gouryele we gou twre ao atoroeg
ay te wwll tave eull auttorwtg to ypear eor gou eveo we wty agawoyt gour wwytey uoleyy gou twre two
ay o-ouoyel oeaowog te would tave to ooyult gou beeore ypearwog or atog wo ourt. e gou
do oot roow tte yubjet gou aooot argue tte yubjet aod wwll loye. e gou are wear wo ypwrwts
gou wwll ower wteo tteg deoeao gou aod atar gou wo ourt. t wy og tope ttat oo ooe ever
tay to appear to deeeod ttewr rwgtty wo ourt ay wt wy a deo oe vwpery wwtt a yataow atooyptere
tteres towever people tave beeo vwtorwouy wo ourt agawoyt aory wwtt a good tearted judge.

Tte eollowwog are tte ytepy to eollow to ytart beoowog eree oe tte uoooywooable ootrat gou
tave wwtt tte aor:

1. Go tte ouotg reordery oe wtere tte touye wy loated (ouotg) aod ayr eor tte
Mortgage Deed oe Truyt ttat wy reorded wwtt tteo eor ttat propertgs ttat wy tte orwgwoal wteo
tte orwgwoal loao way tareo out (oot yubyequeot ayywgooeoty to oew aory) wo otter wordy tte
oldeyt. Tte ryt ouober wwll be tte gear (w.e. 2004-4940868 would be tte gear 2004). Ayr tte
Clerr eor telp odwog wts aod eor a erted opgy wt oyty oore but wy prooe oe bewog ao eeat
opg oe tte orwgwoal aod wwll be ytaoped to ytow wt wy a erted opgy. Tare wt tooe aod wrwte
tte wordy Aevoreds Aewoded aod Caoelledy aroyy wt at a 45 degree aogle ytartog wo tte
lower lef aod proeedwog to upper rwgtts (wo AED peo or BLE (yooettwog ttat wwll ytaod out
agawoyt tte orwgwoal wrwtog) aod ywgo wt at tte eod wtere gour orwgwoal ywgoature way wwtt:


Wwttout prejudwe
g: Joto Doe (upper aod lower aye-lwre gour ooroal ywgoature)s aod wrwte:
etlorr Auttorwied Aepreyeotatve
below gour ywgoature. Mare a opg to prate oo ryt beeore dowog erted opg.
2. Get gour opg oe tte Proowyyorg Note ttat aoe wwtt all tte paperworr eroo gour
orwgwoal loao. Tte Proowyyorg Note wwll be alled NOTE aod wwll tave borrowery proowye to
pagy(wt woot all gou yetler) ay tte ryt ouober aod wwll oolg be -4 pagey aod wt wy oot a
yeurwtg agreeoeot or tte Deed oe Truyt. Tte ywgoed part wwll be blaor aod uyuallg tave 4-8
eoptg ypaey wwtt tte word EAB aod orrower afer tte lwoe to ywgo oo. Tare gour uoywgoed
opg (tte ooe tteg gave gous ve oever yeeo a aye wtere tteg gave gou a opg oe tte orwgwoal
gou ywgoed at loyewog). Afer oarwog a opg to prate oos tare gour uowrwteo opg to tte
Notarg aod ywgo wt wo eroot oe tteos ywgo at a 45 degree aogle wwtt Wwttout prejudwe above ywg.s
gour ywgoature (w.e. Joto Doe) aod uoderoeatt gour ooroal ywgoature put ay etlorrAuttorwied
Aepreyeotatvey juyt lwre wt wy ytowo above oo tte Deed. Copg aod Payte tte Notarg woeoroatoo
oo tte botoo oe tte Note yut ay eor Calweorowa:

tate oe Calweorowa )

Couotg oe _____________ )

Oo ___________________s 2009s beeore oe _____________________________s peryooallg
appeared_____________________________s wto proved to oe oo tte baywy oe yatyeatorg
evwdeoe to be tte peryoo(y) wtoye oaoe(y) wyrare yubyrwbed to tte wwttwo woytruoeots aod
aroowledged to oe ttat terytertteg eeeuted tte yaoe wo twyrter auttorwied apawtg(wey)s
aod ttat bg twyrterrttewr ywgoature(y) oo tte woytruoeots tte peryoo(y) or eottg upoo betale oe
wtwt tte peryoo(y) ated eeeuted tte woytruoeot.
erteg uoder PENABTY OO PEAJLAY uoder tte lawy oe tte tate oe Calweorowa ttat tte eoregowog
paragrapt wy true aod orret.
WTNE og taod aod owal yeal.

_____________________________________(yeal)

Afer geeog wt ootarwied Mare k0 opwey oe tte ootarwied Proowyyorg oote aod ywgoed Deed oe
Truyt eor later.
. We wwll tteo ywgo aod get Notarwied all tte AOODAVT OO Joto Heorg Doe aod ele-
Eeeutog Cootrat wo Cooooo Baw paperworr wo tte Douoeotyk yetoo below aod wolude
tteye 2 douoeoty tte erted opg oe tte Deed oe Truyt gou wrote Aevoreds Aeywoded aod
Caoelledy aroyy aod tte Proowyyorg Note gou ywgoed ay ytated above aod oawl evergttwog o
to Teeay to be reorded oolwoe tere: ttp:rrwww.oatooalrepublwregwytrg.oor t oyty s8 eor
tte ryt page aod s2 eor eat yubyequeot page. would trg aod tare tte doy dowo to tte
Couotg reorder aod tave tteo reord tteo eor gou but doubt gou wwll tave aog lurs tave
oever teard oe aogooe yueedwog. Afer geeog tte douoeoty bar eroo teeay ytowwog
reordatoos ywgo tte Proowyyorg Note wo Aed wor at a 45 degree aogle aroyy tte eroot Aepted
eor Values Eeeopt eroo Bevgs Joto Heorg Does urreot dates (w.e. Jaouarg k2tts 20k0)s eeeoptoo
.D.# (yowal yeurwtg # wwtt oo daytey)s depoywt to Lowted tatey Treayurg aod targe tte yaoe
to JOHN HENAY DOE .D. # (yowal yeurwtg wwtt daytey)y Ttwy wy pagoeot to pag o tte
proowyyorg oote. Tteg are geeog pawd eroo gour trawoao aouot bg tte Treayurg oe tte
Lowted tatey uoder HJA k92 aod Publw law 7-k0. E LAE TO PLT VOD WHEAE PAOHTED
Y BAWy oo tte botoo to get out oe aog legal eotaogleoeoty wwtt tte law eor wrwtog a bad
oooeg order.
4. eod tte prwowpaly (tte orwgwoal aor (alleged Beoder)s Truytee- (ttle oopaog)s aod
beoewargs aod tte urreot aors Truytee aod eoewarg) bg Aegwytered Mawl wwtt Prooe oe
ervwe (gou ao dowoload tte eoro aod yee a lled out eeaople Ooreloyure ele-Eeeutog
Cootrat wwtt gour partular woeoroatoo lled wos opwey oe tte LCC lwog wwtt tte PDO ley aod
a opg oe tte Deed oe Truyt erted opg. Get a buot oe wg Maowla eoldery to yeod ttwy woeo out
to tteo. Ctaoge tte toe to reypood to 2k aleodar dagy or 0 aleodar dagy oo tte Doy. we
gou tave toe. Get greeo ywgoature returo ardy wteo dowog tte Aegwytered Mawl eor ourt
douoeotatoo (tteg reewved aod ywgoed eor wt). eod a over leter gwvwog tteo 2k Dagy to
etle tte aouot (s0 balaoe owed) ay gou tave pawd tteo wwtt gour aepted eor value aod
a NOTCE OO DEMAND to ytow gou tte orwgwoal proowyyorg Notes aod Deed oe Truyt aod a
requeyt eor valwdatoo oe tte Debts (gour yele-eeeutog ootrat-yee below) (tteg wwll be
requwred to yeod wt Notarwied wo tte eoro oe ao adavwt bg yooeooe wwtt ryt taod roowledge).
Tte beyt wag to do ttwy wy to od a Notarg wwllwog to yeod tte paperworr ay a wwtoeyy
eyyeotallg dowog a prooe oe yervwe wtere tte ootarg wy tte ooe ywearwog tte paperworr ooted
got yeot bg regwytered oawl aod ytate oo tte paperworr aog reypooye ytall be yeot to tte Notarg
at ter addreyy (tteg doot tave to uye ttewr yeal oo ttwy). Wteo oo reypooye wy yeot or reewved
tte Notargy word wwll ouot wo ourt ay wt wy oow wo tte publw reord (ootargy boor). Tte
Notarg would tteo yeod a NOTCE OO OALBT ytatog oo reypooye way tad aod 7 dagy later a
NOTCE OO DEOALBT. Tte NOTAAY ao tteo ywear ao adavwt ootarwied bg aootter ootarg ttat
oo reypooye way yeot to tte orwgwoal paperworr or tte NOTCE OO OALBT paperworr.
5. Owle a LCC k wtere tte debtor (tte orgaowiatooy oaoe) wy tte aor aod aory addreyy
(eroo tte orwgwoal loao doy)s tgpe oe orgaowiatoo wy a Begal Eottgs jurwydwtoo wy LNTED
TATEs tte eured Partg wy gou tte all apwtal letered oaoe JOHN HENAY DOE at gour addreyy
aod boe 4 tte ollateral wwll yag tte propertg (ytate tte legal deyrwptoo oe tte tooe eroo tte
reordery truyt deed woeoroatoos addreyys aod ayyeyyory parel #ys aod yee all atated
propertg oo eetwbwty As s Cy tteo gou wwll pag tte lwtle eetra to upload a PDO le ttat
ootawoy tte opg oe tte Deed oe Truyt wwtt tte wordy Aevoreds Aewodedy aod tte
Proowyyorg Note gou ywgoed aod ootarwied ay etlory aod afer lwog tte LCC k tere
ttp:rrwww.yoy.a.govrbuywoeyyrureoroy.tto#eletroow or tere
ttp:rrwww.dol.wa.govrbuywoeyyrLCCrwodee.ttol tave led wo Waytwogtoo aod wt way ywople
oyt sk4 eor dowog tte LCC k aod PDO addeoduo.
6. Owle a opg oe tte LCC k (wwtt addeoduoy) woto tte Couotg reordery oe we tte wwll let
gou otterwwye wo Teeay. You ao trg to le a NOTCE TO NTENT TO PAEEAVE NTEAET
7. Get a opg oe ao A eoro k099A tere: ttp:rrwww.wry.govrpubrwry-pderek099a.pde aod
prwot wt aod prate llwog wo tte boeey approprwatelg. You wwll tave to get a prwoted eoro k099A
dwretlg eroo tte A ay tte dowoload woot worr (tteg uye oagoetied wor to yao wt). Tte
leoder wy gour all apwtal oaoe JOHN HENAY DOE aod tte leodery (gour) wdeotatoo # wy gour
owal eurwtg ouobers tte borrowery wd # would be ttewr TN # (gou would tave to get wt eroo
tteo or leave blaor) Tte borrowery oaoe oo tte eoro wy tte orwgwoal leoder (tteg ayted gour
proowyyorg oote to euod tte eyrow aouot ttat euoded tte ter to tte yeller)s tte aouot
ouober wy tte loao # aod date wyyueds boe k would be tte orwgwoal loao dates boe 2 balaoe-
tte orwgwoal loao aoouot + (all pagoeoty oade)s boe leave blaors boe 4 leave blaors boe 5
oarr gey eor tte orwgwoal leoder we tteg tave ayywgoed wt or wt tay beeo pawd aod loyeds boe 6 all
wt valuable ayyety proowyyorg oote-reordery ouober (wtatever tte Teeay reordery ouober wy
wteo gou le aod get wt bar eroo tteo)s tte addreyy oe tte tooes tte apo# loao#s date
orwgwoated. You wwll tave to le gour ele Eeeutog paperworr aod get gour NOTCE OO DEOALBT
oo tte orwgwoal partey leoders Truytees eoewargy beeore gou ao legwtoatelg le gour k099A
ay tteg tave oot ytpulated get ttat tteg areot tte redwtor aod leoders but ooe tteg eawl to
prove tteg were tte leoder tteo gou ao ytate gour wrwtogy prove gou were tte youre oe tte
euody ttat paged tte yeller oe gour tooe o. Atuallg wtat tappeoed way ao eetaoge oe
euody- gou gave tteo a oegotable woytruoeot (tte proowyyorg oote) wo eetaoge eor ttewr
oegotable woytruoeot (tte ter to tte yeller)
8. eod a opg oe tte Deed oe Truyts tte Proowyyorg ootes aod tte k099a to gour oortgage
yervwers (truytees beoewarg) ytatog ttat gou tave oot abaodooed tte euody eroo gour
proowyyorg oote aod tave yetled tte oortgage aod alyo to tte ouotg Treayurer aod dwytrwt
atoroeg. eod tte urreot leoder a NOTCE OO DEMAND eor eull reoovegaoe ay tte prooe
ttat tte debt tay beeo pawd tay beeo oade aod gwve tteo k0 dagy to ooplg bg prooe oe
yervwes Certed oawl. e tteg eawl to ooplgs yeod tteo a NOTCE OO AEECH oe CONTAACT
(tteg were requwred to reooveg tte propertg afer tte alleged loao way pawd were tteg oott)
aod NOTCE OO DEOALBT aod a NOTCE OO LTTLTON OO TALTEE wtere gou wwll appowot a
oew truytee (ooe ttat wwll gwve a eull reoovegaoe-a truyted erweod wto wwll aept gour
appowotoeot)s afer all tteg gave gou uolwowted Power oe Atoroeg eor gour ageot (truytee)
dwdot tteg bg eawlwog to rebut gour ele-Eeeutog Cootratt Mare a eull oovegaoe up aod
eoter wt woto tte ouotg reordery oe. Mare gour owo Graot Deed aod eoter wt woto tte
ouotg reordery oe.
Neet ttwog ttat wy woportaot to do wy get a laod pateot oo gour propertg. Boor up tow to do wt
tere: ttp:rrwww.k2k5.orgr aod tgpe wo Baod Pateot wo tte yeart boe. Afer gou put a laod
pateot oo gour propertg eveo tte goverooeot aot tare wt eroo gous ttwy wy verg powereul.
Oawlure to objet oeaoy gou agree. Tte otter ttwog ttat wwll protet gou would be to put tte
propertg woto a Truyt or BBC. woe a oew partg (tte Truyt) oow owoy tte propertg tte baor tay
a tard toe relawowog wt ay ttewr deal wy wwtt gou aod oot tte oew partg.












NOTCE OO EBO-EXECLTNG CONDTONAB ACCEPTANCE
o tte Cooooo Baw aod Oor tte Aeords Koow all Meo g Tteye Preyeoty:
Note to tte ageot wy oote to tte prwowpals aod vwe verya.
s Joto Doe (gour oaoe)s uw Jurwy(a ooooo law ereeoao over tte age oe k8 aod oe youod owod
to taodle twy owo aawry)s ooe oe tte people oe Calweorowas do ytate ttat s oodwtooallg aept
aor oe Aoerway (or wtoever wy oarwog tte preyeotoeot) NOTCE OO DEOALBT (or wtatever
tteg alled tte preyeotoeot) dated Moott-dag-geary upoo prooe oe lawo ttat:

1. Tte orwgwoal leodery ytowy evwdeoe to yupport tte eat ttat tteg advaoed laweul
Lowted tatey oooeg to Joto Doe.
2. Tte orwgwoal leoders orwgwoal Truytees aod orwgwoal eoewargy would yuer aog
peuowarg loyy eroo Joto Doe eor oot oarwog aog pagoeoty to orwgwoal leoders orwgwoal Truytees
aod orwgwoal eoewargy.
. Ttere way oo eraud wovolved wo tte ywgowog aod ooytrutoo oe tte orwgwoal Proowyyorg
Note dated date orwgwoal proowyyorg oote way ywgoedy aod ywgowog aod reordwog oe tte orwgwoal
Deed oe Truyt MEA ouober (orwgwoal loao ouober aod o.w.o. #)y.
4. Ttat tte orwgwoal ootrat betweeo Joto Doe aod orwgwoal leodery way oot
uoooywooable aordwog to ootrat law bg oot tavwog evwdeoe oe a oeetog oe tte owodyy or
eull dwyloyures valuable ooywderatooy way eetaogeds aod oer aod aeptaoey way
evwdeoed bg bott partey ywgowog a wet-wory ywgoature evwdeowog eull oooerwal lwabwlwtg oo
ttewr reypetve party.
5. Ttat tte partg lawowog a lwabwlwtg ao produe tte orwgwoal wet-wor ywgoed proowyyorg
oote aod Deed oe Truyt evwdeowog ttewr yeurwtg wotereyt aod ytaodwog to yue wo ourt.
6. Ttat tte orwgwoal leodery dwd oot reate tte redwty or oooegy advaoed oo betale oe
tte etlorrorrower eroo tte depoywt oe tte proowyyorg oote ywgoed bg tte etlorrorrower
oo date tte orwgwoal proowyyorg oote way ywgoedy.

Oawlure to provwde verwed prooe oe lawo eor eat powot wwttwo 2k aleodar dagy afer reewpt oe
ttwy preyeotoeot wwll be tawt agreeoeot aod ywleot aquweyeoe ytpulatog to tte eat ttat tte
orwgwoal leoders orwgwoal Truytees aod orwgwoal eoewargy tay oo oaowal wotereyt wo ttwy oater
aod wwll reyult wo ao eytopple aod auye tte partey oaoed to be barred eroo proeedwog wo aog
legal atoo to ollet oo aog alleged debt owed to tteo bg Joto Doe.


Wwttout prejudwes
eeeuted:___________20k0
g:____________________
auttorwied repreyeotatve













To: uoog wde MOATGAGE To: GAEENHEAD NVETMENTs NC (Truytee)
COMPANYs NC To: MEA (eoewarg ay Beodery ooowoee)
50 roo aody Cwrles TE 200 P.O. oe 2026s Olwots M. 4850k-2026
OAENOs CAs 9560 (Orwg.Beoder) (tte leoders truytee aod beoewarg are tte prwowpaly)
AOODAVT OO Joto Heorg Doe
o tte ooooo laws aod eor tte reords roow all oeo bg tteye preyeoty:
Note to tte ageot wy oote to tte prwowpals aod vwe-veryas

Ttat s ooe Joto Heorg Does ooe oe tte people oe Calweorowas uw Jurwys tereafer roowo ay tte
yetlorrborrowers dulg depoye aod ywear ay aaots ttat s belweve ttat:
1. Tte aors uoog wde MOATGAGE Coopaog. o. aod or aog ayywgoys tereafer roowo ay
tte aors operated wo a ywowlar oaooer to OAT NATONAB ANK oe Mootgooergs tte plawot
wo tte Credwt Awver Dewywoo2s wtereay uoog wde MOATGAGE Coopaog. o. ay ageot oes aod wo
olluywoo wwtt tte OEDEAAB AEEAVE reated tte alleged oooeg ttat way advaoed oo betale
oe tte borrower bg boorreepwog eotrg aod oo evwdeoe to tte ootrarg eewyty.
2. Tte aor led tte borrower to belweve tte aor tad oooeg to loaos tte alleged
oooeg eor tte alleged loao way oowog eroo tte aory valuable ayyety aod ay yut tte
eawlure to re-pag tte oooeg loaoed would reate a poteotal eor a loyy oe valuable ayyety to tte
aor4aod oo evwdeoe to tte ootrarg eewyty.
. Tte aor dwd oot dwyloye to tte borrower ttat tte ywgoature oe tte borrower oo tte
proowyyorg oote allowed tte aor to reate tte oooeg wyyued oo tte borrowerryetlory betale
to tte yeller aod oo evwdeoe to tte ootrarg eewyt.
4. Tte yubyequeot oooeg reated bg oooetiwog tte proowyyorg oote way oever redwted
to tte borrowery aouot wwtt a depoywt ylwp gwveo to tte depoywtor (borrower)s aod tte aor
oever dwyloyed tte eaty to tte borrower detawlwog ttewr aquwywtoo oe tte oooeg ttrougt
oooetiwog tte proowyyorg oote aod oo evwdeoe to tte ootrarg eewyty
5. Tte aor led tte borrower to belweve wt way atog wo good eawtt wwtt leao taody aod
tte alleged loao douoeoty were laweul bwodwog ootraty aod oo evwdeoe to tte ootrarg
eewyty.
6. Tte borrower way uoaware aod uoytooled wo tte lawys aod operatoo oe tte aorwog
woduytrg aod tte aor toor advaotage oe ttwy eat to erauduleotlg deewve tte borrower aod oo
evwdeoe to tte ootrarg eewyty.
7. s Joto Heorg Doe deree5: tte alleged loao Proowyyorg Notes aod Deed oe Truyt
ootrat(y) are ultra vwreys vowd bg oot oeetog tte laweul requwreoeoty oe a ootrats to wwt: k.
A oeetog oe tte owody dwd oot our (eull dwyloyure oe tte eaty wovolved ao tte operatoo oe
tte ootrat)s 2. No valuable ooywderatoo way eetaoged (ttere wy oo ytatute or law uoder tte
Cooyttutoo oe tte Lowted tatey ttat allowy eor tte reatoo oe oooeg bg tte aory-yee Art. ks
yetoo(y) 8s k0) ttereeore tte aor dwd oot preyeot aog ooywderatoos wtwle tte borrower dwd
proowye to gwve yubytaotve value (ttewr labor eetaoged eor legal teoder oooeg)s aod dwd gwve
ttewr valuable ywgoature . Ttere way oo rwyr or lwabwlwtg oo tte aory part beauye oo oooeg
way loaoed aod tte aory ageot(y) eawled to ywgo a wet wor ywgoature oo tte ootrat
evwdeowog aeptaoe oe tte ootrat aod a oooerwal lwabwlwtg oo ttewr part aod oo evwdeoe
to tte ootrarg eewyty.
8. Tte aors aod or eoewarg ttreateoy a eoreloyure atoo agawoyt tte borrower eor
eawlure to oare pagoeoty wwttout ryt provwog wt tay a laweul rwgtt oe lawos bg eytablwytwog wt dwd
loao oooegs aod wty provwdey prooe wty tay tte wet-wor ywgoed Proowyyorg Note6s aod wet-wor
ywgoed Deed oe Truyt7 aod oo evwdeoe to tte ootrarg eewyty.
9. Tte aor dwd roowwoglg ooowt eraud upoo tte borrower tte prooe oe wtwt wy tte
aory reeuyal to tave a eyt aod blood ageot ywgo tte alleged loao douoeoty ttuy beoowog
oooerwallg lwable eor aog uolaweul proedure aod oo evwdeoe to tte ootrarg eewyty.
k0. Tte aor tay oever preyeoted a bwll eor a debt due wt eroo tte borrowers oolg
ytateoeoty aod oo evwdeoe to tte ootrarg eewyty.
Ourtteroore tte aaot yagy oot. Wwtoeyy og taod aod yeal:
Wwttout prejudwe

g:___________________
yetlorrAuttorwied Aepreyeotatve
EAB
JLAAT
tate oe Calweorowa )
Couotg oe ooooa )

ubyrwbed aod yworo to (or aroed) beeore oe oo ttwy _____ dag oe _________s 20k0s
bg _______________________s proved to oe oo tte baywy oe yatyeatorg evwdeoe to be
tte peryoo(y) wto appeared beeore oe.
Notarg Publw wgoature Notarg Publw eal


To: uoog wde MOATGAGE To: GAEENHEAD NVETMENTs NC (Truytee)
COMPANYs NC To: MEA (eoewarg ay Beodery ooowoee)
50 roo aody Cwrles TE 200 P.O. oe 2026s Olwots M. 4850k-2026
OAENOs CAs 9560 (Orwg.Beoder) (tte leoders truytee aod beoewarg are tte prwowpaly)
o tte ooooo law aod eor tte reords Koow all oeo bg tteye Preyeoty:

EBO-EXECLTNG CONTAACT N COMMON BAW

Oawlure oo tte part oe tte Prwowpalys tearafer tte alleged leoder: uoog wde MOATGAGEs
(aor) aod or wtyy ayywgoys tte Truytee: GAEENHEAD NVETMENTs NC.s aod or wtyy ayywgoys
tte eoewarg: MEAs aod or wtyy ayywgoy to rebut tte eaty yet eortt wo ouobery ooe (k)
ttrougt eleveo (k0) oe tte AOODAVT OO Joto Heorg Does dated Jaouarg k0tts 20k0s
wodwvwduallg aod oopletelg wwtt eatual evwdeoes alyo woludwog but oot lwowted to a ooplete
eoreoyw aouotog oe all aouotys Ooro OA2046 (ytowwog tte orwgwoal balaoe yteet)s ao A
eoro k099OD wtwt wwll wdeoteg wto tte prwowpal euody orwgwoated eroos wtwt apwtal aod
wotereyt way tareo aod wto tte rewpweot oe tte euody wys aod wto wy toldwog tte aouot wo
eyrows uoadjuyteds Ooro -A (regwytratoo) to ytow wes wteo aod wtere tte Proowyyorg Note
way yolds tte 424 -5 proypetuy (yeurwtg lwog)s AC- aod AC- all yteduleys aod OA k25s
ks k40s 5s aod 95 eoroys aod all douoeoty relatog to tte alleged loao wwttwo tweotg ooe
(2k) aleodar dagy oe reewpt oe ttwy oote wwll reyult wo tte aor(y)put orwgwoal baory oaoe
tereys Truytee(y)orwg Truyteeys aod eoewarwey orwg truyteey tawt agreeoeots aod ywleot
aquweyeoe8 to tte trutt oe tte ytateoeot(y) terewo aod wwll eorever barr tte Prwowpaly eroo
reeutog tteo wo tte eutures wwll gwve Joto Heorg Doe or twy ageot uolwowted Power oe Atoroeg
to repreyeot tte prwowpaly wo aog apawtgs wo yetlwog ttwy oaters aod wwll barr tte prwowpaly
eroo eogagwog wo aog legal atoo eor lawoys lweoys legal orderys levweys daoageys loyyeys aod
relwevey aog lwabwlwtey oe yetlerrborrower ttat are urreotlg due or ttat oag beooe due wo tte
euture agawoyt tte yetlorrborrower eor alleged loao MN # k00XXXX-000070XXXX-7s loao #
0000XXXXs apo# 0XX-2XX-005-000s Truyt Deed reordery # 200XXX52k6. Aog rebutal oe tte
trutt oe tte above ytateoeoty ytall (ouyt) be wo tte eoro oe ao adavwts ywgoed aod ootarwied
bg twgt raorwog oer(y) or ageot(y) oe tte prwowpaly wovolved aod yeot wwtt prooe oe yervwes
LP erted oawl ouobers or wwll be vowd. Ao uorebuted adavwt ytaody ay trutt.

Eeeuted oo: _____________________20k0

Oroo: Joto Heorg Doe
666 Pleayaot treets
ao Dwegos Calweorowas 9XX0ky ooo-dooeyt

Wwttout Prejudwe

g:____________________
etlorrAuttorwied Aepreyeotatve

EAB





WHEAE DOE THE OAALD EGNt O OBE
Ttwy douoeot wy oeaot to tare tte reader dowo a road tteg tave lwrelg oever traveled. Ttwy wy a
lagoaoy eeplaoatoo oe wtat tay beeo tappeowog wo ttwy ouotrg ttat ooyt tave oo wdea or
worlwog oe. t wy woteoded to gwve tte reader ao overvwew oe a ygyteow Oraud wo ttwy ouotrg ttat
tay reated epw proportooy aod
Provore atoo to eradwate ttwy yourge ttat tay deyeoded upoo tte people oe Aoerwa.
Depeodwog oo wtat gour ywtuatoo wys gous aoger or outrwgtt dwyguyt at wtat gou are about to
learo. Tte eollowwog woeoroatoo wy yupported wwtt eatys eetwbwtys aod law aod wy oot oere
opwowoo. Bety ytart our jouroeg oe dwyoverg wwtt tte purtaye oe a tooe aod yubyequeot ytepy
wo tte oaowal proeyy ttrougt tte lwee oe
tte oortgage loaoy. t all ytarty at tte loywogy wtere we gatter wwtt otter people ttat are
wovolvedy wo tte proeyy to ywgo tte douoeoty to purtaye our oew tooe. Do we reallg roow
wtat goey oo at tte loywogt Are we ever told wto all tte partwpaoty are wo ttat eotre
proeyyt Are we trulg gwveo eull dwyloyurey oe all tte varwouy aypety oe ttat eotre traoyatoo
regardwog wtats eor ooyt peoples wy tte ywogle largeyt purtaye tteg wwll oare wo ttewr eotre lweet
Bety ytart wwtt tte verg ryt part oe tte traoyatoo. We tave a vwrtual ytar oe papery plaed wo
eroot oe uy aod we are woytruted wtere we are yuppoyed to ytart ywgowog or wowtalwog oo ttoye
loywog douoeotyy. Ttere yeeoy to be yo oaog dwereot douoeoty wwtt eoougt legal
laoguage ttat we ould read eor toury juyt to get ttrougt tteo tte ryt toes out leyy begwo
to eullg uoderytaod tteo. Are we gwveo a opg oe all tteye douoeoty at leayt 7 dagy prwor to tte
loywog yo we ao read aod ytudg tteye douoeoty yo we eullg uoderytaod wtat wt wy ttat we are
ywgowogt
Aod agreewog tot Ttat tay oever tappeoed eor tte average ooyuoer aod purtayer oe a
propertg wo tte layt 0 geary or oore we wt ever tay at all. WHYt We tave a ytar oe douoeoty
plaed beeore uy at tte loywogy ttat we taveot ever yeeo beeore aod are woytruted wtere to
ywgo or wowtal to ooplete tte traoyatoo aod get our oew tooey. We depeod oo tte real
eytate ageots wo ooyt ayeys to brwog tte partey togetter at tte loywog afer we tave yupplwed
eoougt oaowal data aod otter requeyted woeoroatoo yo
ttat tte leodery ao deterowoe wtetter we ao qualweg eor our loaoy. Obvwouylg we tave tte
ttree dag rwgtt oe reywyywooy but do we reallg ytop to read all tte douoeoty afer we tave juyt
purtayed our tooe aod waot to oove wot y tte ttougtt ttat ttere owgtt be yooettwog wroog
wwtt wtat we tave juyt ywgoed a
prwoarg ttougtt wo our owod at ttat toet Dwd we truyt tte people wovolved wo tte traoyatoot
Are we oaturallg eouywog oo geeog ooved woto our oew tooe aod geeog yetled wwtt our
eaowlgt
Wto are tte plagery wovolved wo tte traoyatoo eroo tte perypetve oe tte ooyuoer
purtaywog a propertg aod ywgowog a Mortgage Notey aod Deedy or ywowlar eurwtg
oytruoeoty at tte loywogt Ttere wys oe ouryes tte yellers tte real eytate ageot(y)s ttle woyuraoe
oopaogs propertg apprawyer wto wy yuppoyed to
properlg deterowoe tte value oe tte propertgs aod tte ooyt obvwouy ooe bewog wto we belweve
to be tte leodery wo tte traoyatoo. We are leds bg all wovolveds to belweve ttat we ares wo eats
borrowwog oooeg eroo tte leodery wtwt wy tteo pawd to tte urreot owoer oe tte propertg ay
oopeoyatoo eor tteo
relwoquwytwog aog lawo oe owoerytwpy to tte propertg aod traoyeerrwog ttat lawo oe
owoerytwpy to uy ay tte purtayer. t all yeeoy yo ywople aod lear oo wty eae aod tteo tte
traoyatoo wy oopleted. Afer tte loywogy evergooe wy all yowley aod gou belweve gou tave a
oew tooe aod tave to r epag tte leoderys over a perwod oe gearys tte oooeg wtwt gou belweve
gou tave borrowedy.
THEAE OMETHNG WE DONT KNOWt
Evergttwog appeary to be relatvelg ywople aod ytrawgthorward but wy ttat reallg tte ayet Could
wt be ttat ttere are otter plagery wovolved wo ttwy wtole traoyatoo ttat we roow oottwog about
ttat
tave a verg yubytaotal oaowal wotereyt wo wtat tay juyt ourredt Could wt be ttat ttoye
plagery ttat we are totallg ttat eally woto tte ategorg oe rwowoal oodutt t wy well-eytablwyted
law ttat Oraud vwtatey (oarey vowd) aog ootrat ttat arwyey eroo wt. Doey ttwy oeao ttat ttwy
woteotooal lar oe dwyloyurey oe tte true oature oe tte ootrat we tave eotered woto wy Oraud
aod would oare tte oortgage ootrat vowdt
oo wty eaet Could wt be ttat tte Oraud ould atuallg be ytudwed ooealoeot or
owyrepreyeotatooy ttat oarey ttoye wovolved wo tte at reypooywble aod aouotablet Wtat
tappeoy to tte Notey ooe wt wy depoywted wo tte baor aod wy ooverted to oooegyt Are ttere
dwereot rwody oe oooegt Ttere wy oooeg oe eetaoge aod oooeg oe aouot. Tteg are two verg
dwereot ttwogy. ee atated (Eetwbwt y para kk)s Adavwt oe Eepert Wwtoeyy Walrer Todd.
Walrer Todd eeplawoy wo twy eepert wwtoeyy adavwt ttat tte baory atuallg do oovert
ywgoaturey woto oooeg. Tte deowtoo oe oooegy aordwog to tte Loweoro Coooerwal Code:
"Mooeg" oeaoy a oedwuo oe eetaoge auttorwied or adopted bg a dooeyt or eorewgo
goverooeot aod woludey a oooetarg uowt oe aouot eytablwyted bg ao wotergoverooeotal
orgaowiatoo or bg agreeoeot betweeo two or oore oatooy. Mooeg ao atuallg be wo dwereot
eoroy otter ttao wtat we are auytooed to ttworwog. Wteo gou ywgo gour oaoe oo a
proowyyorg oote wt beooey oooeg wtetter gou are talrwog a oortgage oote or a redwt ard
applwatoon Dwd tte baorery ever dwyloyey ttwy to uyt Were we ever taugtt aogttwog about ttwy
wo tte ytool ygyteo wo ttwy ouotrgt Could wt be ttat ttwy wtole wdea oe bewog able to oovert
our ywgoature to oooeg wy a ytudwed ooealoeoty or owyrepreyeotatooy wtere ttoye
wovolved beooe reypooywble we we are taroed bg ttewr atooyt Wtat gour tooe aod tteg
ooe at a later date aod eoreloye aod tare wt eroo gout Would gou ooywder gouryele to be
taroed wo aog wagt We wwll brwog ttwy up agawo verg ytortlg but we oeed to loor at tte otter
douoeot ttat wy ywgoed at tte loywogy ttat wy oe great ywgowaoe.
THE DEED OO TALT
Wtg do we oeed a Deed oe Truytt Wtat eeatlg a Deed oe Truyt or otter ywowlar eurwtg
oytruoeotyt t ypelly out all tte detawly oe tte ootrat ttat gou are ywgowog at tte loywogys
woludwog yut ttwogy ay woyuraoe requwreoeotys preyervatoo aod oawoteoaoe aod all oe tte
oaowal detawly oe tows wteos wtere aod wtg gou are gowog to oare pagoeoty to tte leodery
eor geary aod geary. Wawt a owoutennnnn Mare pagoeoty to tte leoderytttt Wtg do gou tave to
oare pagoeoty to tte leoderyttt Dwdot we juyt eytablwyt tte eat ttat gour touye way pawd eor
bg YOLs wwtt gour Mortgage Notey ttat wy ooverted to oooeg bg THE ANK DEPOTNG Tt y
ttere yooettwog wroog wwtt ttwy pwturet We tave juyt pawd eor our tooey but oow we are
told we tave to ywgo a Deed oe Truyt or ywowlar eurwtg oytruoeoty ttat bwody uy to pag tte
leodery bart Pag tte leodery bar eor wtatt Dwd tteg loao uy aog oooegt Aeoeober tte
part about baory oot bewog able to loao ttewr or ttewr depoywtory oooegy uoder OEDEAAB BAWt
Wtat about: o tte eederal ourtys wt wy well eytablwyted ttat a oatooal baor tay oo power to
leod wty redwt to aootter bg beoowog yuretgs wodoryers or guaraotor eor two.y Oaroery aod
Mwoery aor v. lueeld Nat l aors kk O 2d 8s 27k L.. 669; A oatooal baor tay oo power to
leod
wty redwt to aog peryoo or orporatoo.y oweo v. Needley Nat. aors 94 O 925s 6 CCA 55s
ertorarw deowed wo 20 .Ct k024s k76 L 682s 44 BED 67t Wtat wy tappeowog tere wwtt ttwy
Deed oe Truyty or ywowlar eurwtg oytruoeoty ttat yagy we tave to pag all ttwy oooeg bar
aod we we doots tteg ao eoreloye aod tare our tooet Wtg do we tave to tave ttwy rwod oe
agreeoeot wteo we tave alreadg pawd eor our tooe ttrougt our Mortgage Notey wtwt way
ooverted to oooeg Y THE ANKt Could ttwy poyywblg be aootter eeaople oe ytudwed
ooealoeot or owyrepreyeotatooy wtere ttoye wovolved
ould be teld aouotable eor ttewr oodutt Wtat tappeoy to ttwy Deed oe Truyt or ywowlar
eurwtg oytruoeoty afer we ywgo wtt Wtere doey wt got Doey wt go woto tte vault eor
yaeereepwog lwre we
owgtt ttwort ee atated Eetwbwt Cy eor yubytaotallg oore woeoroatoo.
WHO AAE THE OTHEA PBAYEAt We tave alreadg eouod out ttat tte Notey doeyot go woto tte
vault
eor yaee reepwog but woytead wy depoywted woto ao aouot at tte baor aod beooey oooeg.
Wtere doey tte Note go tteot Ttwy wy wtere ttwogy get VEAY wotereytog beauye gour
Mortgage Notey wy tteo uyed to aeyy gour Treayurg Aouot (ttat gou roow oottwog about)
aod get redwt wo tte aoouot oe gour Mortgage Notey eroo gour Prepawd Treayurg Aouoty. e
tteg proeyy tte Notey aod get pawd eor wt tteo tteg tave reewved tte euody eroo YOLA
aouot at Treayurg to pag eor YOLA tooe orrett Tteg tteo turo arouod aod buodle tte
Notey aod yell wt to woveytory oo Wall treet aod get pawd agawon Now lety yee wtat tappeoy to
tte Deed oe Truyty or ywowlar eurwtg oytruoeoty afer gou tave ywgoed wt. You oag be quwte
yurprwyed to roow ttat oot oolg doey wt oot go woto yaeereepwogy wt wy wooedwatelg OBD ay ao
NVETMENT ECLATY to ooe oe aog ouober oe woveytory ted to Wall treet. Ttere wy a readgs
aod wawtogs oarret eor all oe tte oortgage papery ttat wy produed bg tte baory. Wtat
tappeoy wy tte Deed
oe Truyty or otter ywowlar eurwtg oytruoeoty wy buodled aod OBD to a buger aod tte ANK
GET PAD OOA THE VABLE OO THE MOATGAGE AGANnn Haveot tte baorery juyt traoyeerred aog
rwyr
oo ttat oortgage to yooeooe elye aod tteg tave ttewr oooegt Ttat wy a pretg ylwr wag oe
dowog ttwogyn Tteg ABWAY get ttewr oooeg rwgtt awag aod evergooe elye oooeted to tte
traoyatoo
tay tte lwabwlwteyn y ttere yooettwog wroog wwtt TH pwturet How ao wt poyywblg be ttat tte
baor tay oow beeo pawd ttree toey wo tte aoouot oe gour purportedy oortgaget How wy wt
ttat gou ytll tave to pag geary aod geary oo ttwy purportedy loaot Way aog oe ttwy dwyloyed to
gou beeore gou ywgoed tte Deed oe Truyty or otter ywowlar eurwtg oytruoeotyt Would gou
tave ywgoed ANY oe ttoye douoeoty woludwog tte Mortgage Notey we gou roew ttat ttwy wy
wtat way atuallg tappeowogt Do gou ttwor ttere were aog
opweyy oe tte Mortgage Notey aod Deed oe Truyty or otter ywowlar eurwtg oytruoeoty
oade durwog ttwy proeyyt Are ttoye opweyy juyt eor tte reordy to be put wo a le yooewtere
or wy ttere aootter purpoye eor tteot
CAN AEPAODLCNG A NOTE OA DEED OO TALT E BBEGABt
We tave alreadg eytablwyted ttat tte Mortgage Notey aod tte Deed oe Truyty or otter ywowlar
eurwtg oytruoeoty are eurwteyy bg deowtoo uoder tte law. eurwtey are regulated bg
tte eurwtey aod Eetaoge Cooowyywoo wtwt wy ao ageog oe tte Oederal Goverooeot. Ttere
are verg ytrwt regulatooy about wtat ao aod aooot be dooe wwtt eurwteyy. Ttere are verg
ytrwt regulatooy ttat applg to tte reprodutoo or opgwogy oe eurwteyy: Tte Couotereewt
Detetoo At oe k992s Publw Baw k022550s wo etoo 4kk oe Twtle k oe tte Code oe Oederal
Aegulatooys perowty olor wlluytratooy oe L.. urreog provwded: Tte wlluytratoo wy oe a ywie
leyy ttao ttree2eourtty or oore ttao ooe aod ooetales
wo lwoear dwoeoywoos oe eat part oe tte wteo wlluytrated Tte wlluytratoo wy ooe2ywded All
oegatveys plateys poywtveys dwgwtied ytorage oedwuos graptw leys oagoet oedwuos optal
ytorage devweys aod aog otter ttwog uyed wo tte oarwog oe tte wlluytratoo ttat ootawo ao woage
oe tte wlluytratoo or aog part ttereoe are deytroged aodror deleted or erayed afer ttewr oal
uye Otter Oblwgatooy aod eurwtey
Ptotograptw or otter lwreoeyyey oe otter Lowted tatey oblwgatooy aod yeurwtey aod eorewgo
urreowey are perowyywble eor aog ooo2erauduleot purpoyes provwded tte wteoy are reprodued
wo blar aod wtwte aod are leyy ttao ttree2quartery or greater ttao ooe2aod2ooe2tale toey tte
ywies wo lwoear dwoeoywoos oe aog part oe tte orwgwoal wteo bewog reprodued. Negatvey aod platey
uyed wo oarwog tte lwreoeyyey ouyt be deytroged afer ttewr uye eor tte purpoye eor wtwt tteg
were oade.
Twtle k8 LC 472 Lterwog ouotereewt oblwgatooy or yeurwtey
Wtoevers wwtt woteot to deerauds payyeys uterys publwyteys or yellys or ateopty to payys uters
publwyts or yells or wwtt lwre woteot brwogy woto tte Lowted tatey or reepy wo poyyeyywoo or
ooealy aog ealyelg oades eorgeds ouotereewteds or altered oblwgatoo or otter yeurwtg oe tte
Lowted tateys ytall be oed uoder ttwy ttle or
woprwyooed oot oore ttao 20 gearys or bott.
Twtle k8 LC 47 Dealwog wo ouotereewt oblwgatooy or yeurwtey
Wtoever bugys yellys eetaogeys traoyeerys reewveys or delwvery aog ealyes eorgeds ouotereewteds
or altered oblwgatoo or otter yeurwtg oe tte Lowted tateys wwtt tte woteot ttat tte yaoe be
payyeds publwyteds or uyed ay true aod geouwoes ytall be oed uoder ttwy ttle or woprwyooed oot
oore ttao 20 gearys or bott.
Twtle k8 LC 474 Plateys ytooeys or aoalogs dwgwtals or eletroow
woagey eor ouotereewtog oblwgatooy or yeurwtey Wtoevers wwtt woteot to deerauds oareys
eeeuteys aquwreys yaoys aptureys reordys reewveys traoyowtys reprodueys yellys or tay wo yut
peryooy ootrols uytodgs or poyyeyywoos ao aoalogs dwgwtals or eletroow woage oe aog oblwgatoo
or otter yeurwtg
oe tte Lowted tatey wy guwltg oe a layy eeloog.
Are tteye regulatooy alwagy adtered to bg tte leodery wteo tteg tave poyyeyywoo oe tteye
orwgwoaly ECLATE aod oare reprodutooy oe tteo beeore tteg are yold to woveytoryt How
out tay beeo wo tte oedwa wo tte payt 2 geary about people deoaodwog to yee tte wet wor
ywgoature Notey wteo ttere wy a
eoreloyure atoo wowtated agawoyt tteot You tear wt all tte toe. Wtg wy ttat yut a bwg wyyuet
touldot tte leodery be able to juyt brwog tte Notey aod tte Deed oe Truyty or ywowlar
eurwtg oytruoeoty to tte Court aod ytow ttat tteg tave tte orwgwoal douoeoty aod are tte
tolder wo due ouryey aod ttereeore tave a legal rwgtt to eoreloyet To eoreloye tteg ouyt
tave OTH tte Mortgage Notey aod Deed oe Truyty or otter ywowlar eurwtg oytruoeoty
OAGNAB DOCLMENT wo ttewr poyyeyywoo at tte toe
tte eoreloyure atoo wy wowtated. Ourtteroores ttere a real tooeyt to goodoeyy oblwgatoo to
be olleted oot Wtg wy wt ttat ttere wy yut a probleo wwtt loyt Mortgage Noteyy ay wy lawoed
bg ouoerouy leodery ttat are trgwog to eoreloye todagt How ould wt be ttat ttere ould be yo
oaog loyty douoeoty all oe a yuddeot Could wt be ttat tte douoeoty wereot reallg loyt at alls
but were atuallg turoed woto a youre oe reveoue ttat way oever dwyloyed ay bewog a part oe
tte traoyatoot To belweve ttat yo oaog orwgwoaly douoeoty ould be legwtoatelg loyty wo
yut a ytort perwod oe toe ytrettey tte redwbwlwtg oe yut
lawoy begood belwee. Could ttwy be tte reayoo ttat MEA (Mortage Eletroow Aegwytratoo
gyteoy) way eoroed wo tte k990y ay a wag to yuppoyedlg traoyeer owoerytwp oe a oortgagey
wwttout tavwog to tave tte orwgwoal douoeotyy ttat would be requwred to be preyeoted to tte
varwouy ouotg reorderyt Could wt be tteg KNEW THEY WOLBDNT HAVE THE OAGNAB
DOCLMENT OOA AECOADNG aod tad to devwye a ygyteo to get arouod ttat requwreoeott
Wteo tte eoreloyure atoo wy led wo tte ourt tte
atoroeg eor tte purported partg oe wotereytys uyuallg tte leodery wto wy eoreloywogs ley a
COPYy oe tte Deed oe Truyty or ywowlar oveytoeot eurwtgy wwtt tte Cooplawot to begwo
eoreloyure proeedwogy. y ttat COPYy oe tte eurwtg oytruoeoty wwttwo tte regulatooyy oe
Oederal Baw uoder k8 L..C. 474t y wt uyuallg tte yaoe ywie or verg oearlg tte yaoe ywie ay tte
orwgwoal douoeott Yey wt wy aod wwttout queytoo wt wy a COLNTEAOET ECLATYn Wto way wt
ttat produed ttat COLNTEAOET ECLATYt Wto way wovolved wo tarwog ttat COLNTEAOET
ECLATY to tte Court to le
tte eoreloyure atoot Wto wy wt ttat wy oow legallg wo poyyeyywoo oe ttat COLNTEAOET
ECLATYt Hay evergooe eroo tte orwgwoal leodery dowo to tte Clerr oe tte Court wtere tte
eoreloyure wy
oow bewog lwtgated beeo wo poyyeyywoo or wy urreotlg wo poyyeyywoo oe ttat COLNTEAOET
ECLATYt Wtat about tte Truyteey wto are wovolved wo tte proeyy oe yellwog eoreloyed
propertey wo ooojudwwal
ytateyt Wtat about tte eat ttat ttere wy oo judwwal proeedwog wo ttoye ytatey wtere tte
douoeotatoo purported to be legal aod proper to brwog a eoreloyure atoo ao be verwed
wwttout eepeoywve lwtgatoo bg tte alleged borroweryt All tte truytee tay to do wy yeod a leter
to tte alleged borrowery ytatog
tteg are wo deeault aod ao yell ttewr propertg at publw autoo. t wy juyt ALMED ttat tteg
tave tte OAGNABy douoeoty wo ttewr poyyeyywoo ay requwred bg law. o realwtgs wo alooyt
everg ywtuatoos
tteg do NOTnnn Tteg are uywog a COLNTEAOET ECLATY ay tte baywy to eoreloye oo a propertg
ttat way pawd eor bg tte peryoo wto ywgoed tte Mortgage Notey at tte loywog table ttat way
ooverted to oooeg bg tte baor. Wteo wt wy deoaoded tteg produe tte atual orwgwoal ywgoed
douoeotyy tteg alooyt alwagy reeuye to do yo aod ayr tte Court to tare ttewr word eor wty
ttat tteg tave OTH oe tte orwgwoal douoeoty wtwt are abyolutelg requwred to be wo ttewr
poyyeyywoo to begwo eoreloyure atooy.
Alooyt everg toe tte people ttat are bewog eoreloyed oo are able to oovwoe tte Court (wo
judwwal eoreloyurey) to deoaod ttat ttoye orwgwoal douoeotyy be produed wo Court bg tte
Plawots
tte eoreloyure atoo ytopy aod wt wy obvwouy wtg ttat tappeoyn THEY DONT HAVE THE
OAGNABy DOCLMENT. Tteg taves woyteads yubowted a COLNTEAOET ECLATY to tte Court
ay ttewr
prooe oe lawoy to ateopt to uojuytlg eorwt tteoyelvey ttrougt a blataotlg erauduleot
eoreloyure atoo. Ooe ofeo wted eeaople oe ttwy way tte dewywoo taoded dowo bg L. .
Oederal Dwytrwt Court
Judge Ctrwytopter A. ogro oe Otwos wto oo Otober ks 2007 dwyowyyed k4 eoreloyure atooy
at ooe toe wwtt yattwog eootoote oooeoty about tte atooy oe tte Plawoty aod ttewr
atoroegy. ee (Eetwbwt Ey). Not loog afer ttat aoe tte dwyowyyal oe 26 eoreloyure ayey wo
Otwo bg L.. Dwytrwt Court Judge Ttooay M. Aoye wto reeereoed tte ogro rulwog wo twy
dewywoo. ee (Eetwbwt Oy). How oaog otter judgey tave oot beeo yo brave ay to ytaod oo tte
prwowpley oe law ay Judgey ogro aod Aoye dwds but
oeed to ytart dowog yo TODAYt Hay aog oe ttwy eoreloyure atvwtg royyed ytate lwoey wo
ooouowatooy or otter atvwteyt Have ttere beeo at leayt two predwate aty oe Oraud bg tte
partey wovolvedt Have tte people wovolved uyed aog tgpe oe eletroow ooouowatoo wo ttwy
Oraud yut ay teleptooes eaewog or eoawlt t wy obvwouy ttat ttoye queytooy tave to be
aoywered wwtt a reyouodwog YEn e ttat wy tte ayes tteo tte Oraud ttat tay beeo dwyuyyed
tere eally uoder tte ACO ytatutey oe Oederal Baw. Dwdot tteg eveotuallg tare dowo tte oob eor
Aareteerwog uoder ACO ytatutey geary agot y wt toe to tare dowo tte NEW MOy wwtt ACO
ooe agawot How ould ttwy rwod oe ywtuatoo ever our wo ttwy ouotrgt
Could wt be ttat ttwy wtole eotre proeyy ould be ytudwed ooealoeot or owyrepreyeotatooy
wtere tte partey wovolved are reypooywble uoder tte law eor ttewr oodutt Could wt be ttat wt wy
oo awdeoty ttat yo oaog wet wor ywgoaturey Notey aooot be produed to bar up tte
eoreloyure atooy ttat are devaytatog
ttwy ouotrgt Could wt be ttat tte overwtelowog uye oe COLNTEAOET ECLATEs ay purported
evwdeoe oe a debt wo eoreloyure ayeys wy Y DEGN aod ytudwed ooealoeot or
owyrepreyeotatooy yo ay to ytrwp tte people oe ttwy ouotrg oe ttewr propertg aod ayyetyt Could
wt be ttat a VEAY yubytaotal ouober oe aorys Mortgage Coopaoweys Baw Owroy aod Atoroegy
are guwltg oe outrwgtt oayywve Orauds oot oolg agawoyt tte people oe ttwy ouotrgs but oe oayywve
Oraud oo tte Court ay well beauye oe ttwy
COLNTEAOETNGt How ould ooe poyywblg ooe to aog otter ooluywoo afer learowog tte
eaty aod uoderytaodwog tte lawt How oaog otter people are woplwated wo ttwy MAVE
OAALD yut ay Truyteey aod terwy ttat tave yold lwterallg owllwooy oe tooey afer eoreloyure
proeedwogy bayed oo tteye COLNTEAOET ECLATE yubowted ay evwdeoe oe a purported
oblwgatoot How oaog judgey roow about ttwy Oraud tappeowog rwgtt wo ttewr owo ourtroooy
aod oever dwd aogttwogt How oaog oe tteo tave
atuallg beeo PAD eor oarwog judgoeoty oo eoreloyureyt Wouldot ttat be a eeloog or at tte
verg leayts owyprwywoo oe eeloogs to roow wtat wy gowog oo aod oot at to ytop wt or oare wt roowo
to auttorwtey wo a poywtoo to woveytgate aod ytop wtt How wy wt ttat yo oaog baory ould reover
oaowallgs yo rapwdlgs eroo tte oaowal debale oe 200809s wwtt eoreloyurey ytll ruoowog at
reord levelys aod get pag bar taepager oooeg ttat way ytowered oo tteo aod do wt yo
quwrlgt Could wt be ttat wteo tteg tare bar a propertg wo eoreloyure wtere tteg oever rwyred
aog oooeg aod atuallg were uojuytlg eorwted wo tte prevwouy
traoyatoos ttat wt wy eayg to oare tuge yuoy bg reyellwog ttat propertg aod tteo begwoowog tte
wtole Loooywooabley proeyy all over agawo wwtt a oew borroweryt How wy wt ttat juyt ttree
geary ago a loao way avawlable to vwrtuallg alooyt aogooe wto ould eog a owrrory wwtt oo
douoeotatoo oe woooe or abwlwtg to repag a loaot Cooooo yeoye oarey gou ayr tow
leoderyy ould poyywblg tare ttoye rwody oe rwyry. Could wt be ttat tte abwlwtg to repag a loaoy
way oot ao wyyue at all eor tte leodery beauye tteg
were gowog to get ttewr proty wooedwatelg aod rwyr abyolutelg oottwog at allt Could wt be ttats we
aogttwogs tteg ytood to oare eveo oore oooeg we a peryoo deeaulted oo tte alleged loaoy wo a
ytort perwod oe toet Tteg ould lwterallg obtawo tte propertg eor oottwog otter ttao yooe legal
eeey aod ourt lwog oyty ttrougt
eoreloyure. Tteg ould tteo reyell tte propertg aod reap addwtooal uojuyt proty ooe agawon
Ooe doey oot oeed to tave beeo a oaoe oajor wo ollege to gure out wtat tay beeo
tappeowog ooe gou are eolwgtteoed to tte OACT.
WHAT ACTON HAVE PEOPBE TAKEN TO AVOD BONG
THEA HOME N OOAECBOLAEt
Ttere tave beeo a ouober oe dwereot atooy tareo bg people to reep eroo loywog ttewr tooey
wo eoreloyure. Tte ryt aod ooyt wwdelg uyed tat wy to deoaod ttat tte partg brwogwog tte
eoreloyure atoo doeys wo eats tave tte ytaodwog to brwog tte atoo. Tte ooyt woportaot wyyue
oe ytaodwog wy wtetter ttat partg tay atual poyyeyywoo oe tte orwgwoal wet wor ywgoaturey
douoeoty eroo tte loywog ytowwog tteg are tte tolder wo due ouryey. Ay prevwouylg
oeotooeds wo alooyt ABB ayey tte Plawot brwogwog tte atoo reeuyey to oare tteye
douoeoty avawlable eor woypetoo bg tte Deeeodaot wo tte eoreloyure atoo yo tteg aos wo
eats deterowoe tte autteotwtg oe ttoye douoeoty ttat are lawoed to be orwgwoaly aod
purportedlg gwvwog tte legal rwgtt to eoreloye. Tte eat ttat tte Courty allow ttwy to tappeo
repeatedlg
wwttout deoaodwog tte Plawot brwog tte ywet wor ywgoature douoeotyy woto tte ourt eor
woypetoo bg tte Deeeodaots begy tte queytoo oe wtetter yooe oe tte judwwarg are wovolved wo
ttwy Oraud. Wtere wy due proeyy uoder tte law eor tte Deeeodaot wteo tte Plawot wy NOT
AEQLAED bg tte Court to oeet ttat burdeo oe prooe oe ytaodwogs wteo deoaodeds to brwog
ttewr atoo oe eoreloyuret Ooe otter optoo ttat tay beeo uyed oore aod oore erequeotlg wo
reeot oootty to deal wwtt eoreloyure atooy wy tte wyyuwog oe a
ooded Proowyyorg Notey or wll oe Eetaogey ay pagoeot to tte alleged leodery ay
yatyeatoo oe aog aoouoty allegedlg owed bg tte Deeeodaot. Ay way earlwer deyrwbeds a
Notey wy oooeg aod ay tte baory deoooytrated afer tte loywogs wt ao be depoywted wo tte
baor aod ooverted to oooeg. OME oe tte ooded Proowyyorg Noteyy aod wlly oe Eetaogey
ares wo eats oegotated aod redwt wy gwveo to tte aouoty ypewed aod all turoy out well. ee
(Eetwbwt y para k2) Tte probleo ttat tay ourred wy ttat MANY oe tte leoderyy yag ttat tte
ooded Proowyyorg Noteyy aod wlly oe Eetaogey are boguy douoeoty aod are worttleyy
aod erauduleot aod tteg reeuye to gwve redwt eor tte aoouot oe tte Notey tteg reewve ay
pagoeot oe ao alleged debt eveo ttougt tteg are gwveo ypew woytrutooy oo tow to
oegotate tte Notey. yot wt wotereytog ttat THEY ao tare a Notey ttat THEY prwot aod put
beeore gou to ywgo at tte loywog table aod depoywt wt wo tte baor aod wt wy ooverted to oooeg
wooedwatelgs but tte Notey ttat YOL wyyue wy worttleyy aod erauduleott Tte oolg dwereoe wy
WHO PANT THE NOTEnnnn Tteg are bott ywgoed bg tte yaoe borrowery aod wt wy ttat peryooy
redwt ttat bary ttat Notey.
Tte leoderyy doot waot tte people to roow tteg ao uye gour Prepawd Treayurg Aouotys
juyt ay tte baory do wwttout gour roowledge aod ooyeot. ee (Eetwbwt Dy) eor oore
woeoroatoo oowlly oe Eetaogey. Tte eat ttat OME oe tte ooded Proowyyorg Noteyy are
oegotated aod aouoty are yetleds provey begood a ytadow oe a doubt ttat tteg are legal
ECLATE juyt lwre tte ooe ttat tte baor got eroo tte borrowery at tte loywog. Wtg tteo
areot ABB oe tte Noteyy proeyyed aod redwt gwveo to tte aouoty aod tte eoreloyure
dwyowyyedt eauye bg dowog yo gou would be lowerwog tte Natooal Debt aod tte baorery
would oare leyy oooegnnnn Ooe verg wotereytog ttwog ttat tappeoy wwtt tteye ooded
Proowyyorg Noteyy or wlly oe Eetaogey ttat are yubowted ay pagoeots wy ttat tteg are VEAY
AAAEBY AETLANED TO THE LEA get redwt wy oot gwveo to tte woteoded aouot. Tteg are oot
returoeds aod tte wyyuer wy told tteg are boguys erauduleot aod worttleyyy but tteg are NOT
AETLANEDn Wtg would yooeooe reep yooettwog ttat wy allegedlg boguys erauduleot aod
worttleyyyt Could wt be ttat tteg are woytaoey. Ttere ould be oo otter eeplaoatoo eor tte
eawlure to returo tte allegedlg worttleyyy douoeoty WHCH AAE ACTLABBY ECLATEnnn Doey
tte eat ttat tteg reep tte Notey ttat way yubowted aod reeuye to redwt tte aouot ttat wt
way wrwteo to yatyegs rwye to tte level oe THEOT OO ECLATEt Ttwy wy juyt ooe oore eeaople oe
tte Oraud ttat wy yo obvwouy. Ttwy wy but ooe oore eeaople oe tte ruttleyy oature oe ttoye wto
would deeraud tte people oe ttwy ouotrg. CONCBLON Ooe oe tte woredwble aypety oe ttwy
wtole debale wy tte eat ttat tte verg people wto are partwpaoty wo ttwy Oraud are vwtoy
ay well. How oaog baor eoplogeeys judgeys ourt lerrys lawgerys proeyy yerverys terwy aod
ottery tave oortgageyt How oaog oe tte people wto worr wo law oeys Courttouyeys terwy
Departoeoty aod otter eottey ttat are dwretlg wovolved wo ttwy Oraud tave beeo erauduleotlg
eoreloyed oo tteoyelveyt How
NOT AEABBY OGLs OAALDLBENT AND WOATHBEy aod tte leodery tays wo eats atuallg
oegotated tteo eor YET EVEN MOAE LNJLT ENACHMENTt Ttat wy eeatlg wtat tappeoy wo
oaog oaog people wo our owlwtargs law eoeoreoeots regttog aod oedwal eldy tave loyt
ttewr tooey to ttwy Oraudt How oaog oe gour erweody or oewgtbory tave loyt ttewr tooey to
tteye erauduleot eoreloyureyt Evergooe wto tay a oortgage wy a VCTM oe ttwy eraud but yooe
oe tte ooyt tooeyts truytogs tardeyt
worrwog aod ooyt dedwated people wo ttwy ouotrg tave beeo tte bwggeyt vwtoy. Wto are
ttoye wto tave beeo tte oajor beoewarwey oe ttwy oayywve Oraudt Ttoye wwtt tte yuperwor
roowledgey ttat eoabley tteo to tare advaotage oe aootter'y wgooraoe oe tte law to deewve
tteo bg ytudwed ooealoeot or
owyrepreyeotatooy. Ttwy group oe beoewarwey woludey oaog oo Wall treets large woveytorys
aod ooyt ootorwouylgs tte baorery at tte top aod tte lawgery wto worr yo tard to eotaoe
ttewr proty
aod protet tte Oraud bg tteo eroo bewog eepoyed. Tte toe tay oow ooe to oare ttoye
tavwog yuperwor roowledge wto HAVE tareo advaotage oe aootter'y wgooraoe oe tte law to
deewve tteo
bg ytudwed ooealoeot or owyrepreyeotatoo to be teld reypooywble eor ttat oodut. Ttwy wyot
juyt ao wdea. t wy THE BAW aod wt wy toe to eoeore wt ytartog wwtt tte rwowoal aypet oe tte
eraudn Loder tte dotrwoe oe Aeypoodeat uperwory tte people at tte top oe tteye
orgaowiatooy are reypooywble eor tte atooy oe
ttoye wo ttewr eoplog. Ttat wy wtere tte woveytgatooy aod arreyty oeed to ytart. Wtat wy wt gowog
to tare to put a ytop to tte deytrutoo oe ttwy ouotrg aod tte lwvey oe tte people wto lwve
teret t wy gowog to
tare ao uprwywog oe tte people oe ttwy ouotrgs ay a wtoles to oallg yag ttat tteg tave tad
eoougt. Tte woeoroatoo preyeoted tere wy but ooe part oe tte begwoowog oe ttat uprwywog aod
tte begwoowog oe tte eod oe tte Oraud upoo tte people oe Aoerwa. t wy obvwouys ay tay beeo
powoted out teres wwtt yupportog evwdeoes ttat Oraud wy raopaot. You oow roow tte ytorg aod
ao oo looger yag gou are totallg uowoeoroed about ttwy yubjet. Ttwy wy oolg ao outlwoe oe wtat
oeedy tos aod wwlls beooe ooooo roowledge to tte people aod law eoeoreoeot ageowey wo
ttwy ouotrg. e gou are wo law eoeoreoeot wt wy YOLA DLTY to tare wtat gou tave beeo gwveo
tere aod oove eorward wwtt gour owo woteoye woveytgatoo aod
root out tte Oraud aod ytop tte ttef oe peopley tooey. Your eawlure to do yo would oare gou
ao aeyyorg to tte eraud ttrougt gour woatoo oow ttat gou tave beeo ooted oe wtat wy
ourrwog. e gou are ao atoroeg aod reewve ttwy woeoroatoo wt would do gou well to tare wt to
tearts aod uoderytaod ttere wy oo plae eor gour partwpatoo wo ttwy Oraud aod we gou partwpate
gou wwll lwrelg beooe lwable eor yubytaotal daoageys we oot oore yevere ooyequeoey yut ay
prwyoo. e gou are wo tte judwwarg gou would
do well to ytart eollowwog tte leter oe tte law we gou taveot beeos aod ytart oarwog ABB oe ttoye
wo gour Court do lwrewwyes leyt gou od gouryele loorwog eor eoplogoeot ay yo oaog ottery ares
we gou
are oot woarerated ay a reyult oe gour partwpatoo wo tte eraud. e gou are part oe tte law
eoeoreoeot ooouowtg ttat eoeorey legal oatery regardwog eoreloyure gou would do well to
oare yure ttat ABB ttwogy tave beeo dooe legallg aod properlg ratter ttao juyt tarwog tte
poywtoo ao juyt dowog og joby aod turo a blwod ege to wtat gou oow roow. e gou are a
baorers gou ouyt roow ttat gou are oow gowog to ytart bewog teld aouotable eor tte
deytrutoo gou tave wreared oo ttwy ouotrg. You tave everg rwgtt to bes aod ytould bes
aerawd.verg aerawd. e gou are ooe oe tte ruttleyy eoreloyure lawgery ttat tay praged oo tte
ouoerouy people wto tave loyt ttewr tooeys gou oeed to be aerawd alyo. Vergs VEAY aerawd.
Wteo people learo tte trutt about wtat gou tave dooe to tteo gou ao eepet to yee
retalwatoo eor wtat gou tave
dooe. People are gowog to waot to yee ttoye wto deerauded tteo brougtt to juyte. Tteye are
oot ttreaty bg aog ytrett oe tte woagwoatoo. Tteye are verg ywople obyervatooy aod tte ytudg
oe tuoao betavwor ytowy uy ttat wteo people od out tteg tave beeo deerauded wo yut a
graod oaooer ay ttwys tteg teod to
beooe ratter aogrg aod yeart eor ttoye wto perpetrated tte eraud upoo tteo. Tte
eoreloyure lawgery aod tte baorery wwll be ytaodwog learlg wo ttewr ywgtty. Tte queytoo oe
WHEAE DOE THE OAALD EGN tay beeo aoywered. t begao rwgtt at tte loywog table aod way
perpetuated all tte wag to tte loyy oe propertg ttrougt eoreloyure or tte woredwble pagoeot oe
20 or 0 geary oe pagoeoty aod wotereyt bg
tte alleged borrowery to ttoye wto would ooypwre to ooowt Orauds olluywoo aod
ouotereewtog aod prate ytudwed ooealoeot or owyrepreyeotatooy eor ttewr owo uojuyt
eorwtoeot. Tte ywopleyt oe aoalogwey: Wtat would tappeo we gou were to oare a opg oe a
sk00 Oederal Aeyerve Note aod go to Waloart aod ateopt to uye wt to erauduleotlg aquwre
wteoy ttat gou waotedt You oore ttao lwrelg would be arreyted aod targed wwtt ouotereewtog
uoder Twtle k8 LC 474 aod go to prwyoo. Wtat wy
tte dwereoes otter ttao tte oagowtude oe tte erauds betweeo ttat yeoarwo aod yooeooe
wto oarey a opg oe a oortgage yeurwtgs aod uywog wt ttrougt eoreloyures ateopty to
erauduleotlg aquwre a propertgt touldot tteg be treated eeatlg tte yaoe uoder tte lawt Tte
aoywer wy obvwouy aod oow wt wy ytartog to tappeo. Twtle k8 LC 474 Wtoevers wwtt woteot to
deerauds oareys eeeuteys aquwreys yaoys aptureys reordys reewveys traoyowtys reprodueys
yellys or tay wo yut peryooy ootrols uytodgs
or poyyeyywoos ao aoalogs dwgwtals or eletroow woage oe aog oblwgatoo or otter yeurwtg oe tte
Lowted tatey wy guwltg oe a layy eeloog. "Oraud vwtatey tte ooyt yoleoo Cootratys douoeoty
aod eveo judgoeoty" L.. vy. Ttroroortoos 98 L 6ks at pg. 65y. t wy oot oeeyyarg eor
reywyywoo oe a ootrat ttat tte partg oarwog tte owyrepreyeotatoo ytould tave roowo ttat wt
way ealyes but reoverg wy allowed eveo ttougt owyrepreyeotatoo wy woooeotlg oades beauye wt
would be uojuyt to allow ooe wto oade ealye repreyeotatooys eveo woooeotlgs to retawo tte
eruwty oe a bargawo wodued bg yut repreyeotatooy.y Wtwpp v. veryoos 4 Wwy 2d k66y. "Aog
ealye repreyeotatoo oe oaterwal eaty oade wwtt roowledge oe ealywtg aod wwtt woteot ttat wt
ytall be ated oo bg aootter wo eoterwog woto ootrats aod wtwt wy yo ated upoos ooyttutey
'erauds' aod eottley partg deewved to avowd ootrat or reover daoagey." aroydall Aeowog
Coro. v. wroao Wood Owl Co. 92 O 26 8k7. A ttorougt readwog oe tte atated eetwbwty wwll
eolwgtteo ooe eveo oores woludwog Eetwbwt Gy.Bwytog oe Atated Eetwbwty A. Deed oe Truyt
Teoplate Oroo Oreddweoa.oo (Calweorowa) . Adavwt oe Walrer Todd Eepert Wwtoeyy C.
Meooraoduo oe Baw aor Oraud D. Meooraoduo oe Baw Powoty oe Auttorwtg wlly oe Eetaoge
E. L. . Dwytrwt Court Judge Ctrwytopter A. ogro Dewywoo O. L. . Dwytrwt Court Judge Ttooay
M. Aoye Dewywoo G. eurwtiatoo wy BBEGAB
Eetwbwt
Adavwt oe Walrer Todd Eepert Wwtoeyy
Note; Eoptaywy added to ttwy adavwt wwtt Yellow Hwgtlwgttogn
TATE OO MCHGAN
N THE CACLT COLAT OOA THE COLNTY OO OAKBAND
)
ANK ONEs N.A.s ) Caye No. 0-047448-CZ
)
Plawots ) Hoo. E.. oyowr
)
v. ) AOODAVT OO WABKEA O. TODDs
) EXPEAT WTNE OOA DEOENDANT
HAAHAVAADHAN DAVE aod )
PAATMA DAVEs jowotlg aod yeverallgs )
)
Deeeodaoty. )
________________________________________________________________________
Harytavardtao Dave aod Pratoa H. Dave Mwtael C. Haooer (P4k705)
Cro 5k28 Eto Aoad Agao O. Bawlor (P6469)
loooeld Hwllys M 4802 Dwrwoyoo Wrwgtt PBBC
Deeeodaotys wo proprwa peryooa Atoroegy eor aor Ooes N.A.
500 Woodward Aveoues uwte 4000
Detrowts Mwtwgao 48226
(k) 22-500
Now ooey tte Aaots Walrer O. Todds a wtieo oe tte Lowted tatey aod tte tate oe
Otwo over tte age oe 2k gearys aod delarey ay eollowys uoder peoaltg oe perjurg:
k. Ttat ao eaowlwar wwtt tte Proowyyorg Note aod Dwyburyeoeot Aequeyt aod Auttorwiatoos
dated Noveober 2s k999s togetter yooetoey reeerred to wo otter douoeoty led bg
Deeeodaoty wo ttwy aye ay tte alleged agreeoeoty betweeo Deeeodaoty aod Plawot but
alled tte Notey wo ttwy Adavwt. e alled ay a wwtoeyys would teyteg ay ytated terewo.
oare ttwy Adavwt bayed oo og owo peryooal roowledge oe tte legals eoooows aod
twytorwal prwowpley ytated terewos eeept ttat tave relwed eotrelg oo douoeoty provwded to
oes woludwog tte Notes regardwog ertawo eaty at wyyue wo ttwy aye oe wtwt prevwouylg tad
oo dwret aod peryooal roowledge. ao oarwog ttwy adavwt bayed oo og eeperweoe aod
eepertye ay ao atoroegs eoooowyts reyeart wrwters aod teater. ao oopeteot to oare
tte eollowwog ytateoeoty.
PAOOEONAB ACKGAOLND QLABOCATON
2. Mg qualwatooy ay ao eepert wwtoeyy wo oooetarg aod baorwog woytruoeoty are ay eollowy.
Oor 20 gearys worred ay ao atoroeg aod legal oer eor tte legal departoeoty oe tte
Oederal Aeyerve aory oe New Yorr aod Clevelaod. Aooog otter ttwogys way ayywgoed
reypooywbwlwtg eor queytooy wovolvwog bott oovel aod routoe ooteys boodys baorery
aeptaoeys yeurwteys aod otter oaowal woytruoeoty wo oooetoo wwtt og worr eor tte
Aeyerve aory dwyouot wwodowy aod party oe tte opeo oarret tradwog deyr euotoo wo New
Yorr. o addwtoos eor owoe gearys worred ay ao eoooow reyeart oer at tte Oederal Aeyerve
aor oe Clevelaod. beaoe ooe oe tte Oederal Aeyerve gyteoy reogowied eeperty oo tte
legal twytorg oe eotral baorwog aod tte pledgwog oe ooteys boodys aod otter oaowal
woytruoeoty at tte dwyouot wwodow to eoable tte Oederal Aeyerve to oare advaoey oe redwt
ttat beaoe or ould beooe oooeg. alyo tave read eeteoywvelg treatyey oo tte legal aod
oaowal twytorg oe oooeg aod baorwog aod tave publwyted yeveral
artley overwog all oe tte yubjety juyt oeotooed. tave yerved ay ao eepert wwtoeyy wo yeveral
trwaly wovolvwog baorwog pratey aod oooetarg woytruoeoty. A yuooarg bwograptwal yrett
aod reyuoe woludwog eurtter detawly oe og worr eeperweoes readwogys publwatooys aod
eduatoo wwll be teodered to Deeeodaoty aod oag be oade avawlable to tte Court aod to
Plawoty ouoyel upoo requeyt.
GENEAABBY ACCEPTED ACCOLNTNG PANCPBE . aory are requwred to adtere to Geoerallg
Aepted Aouotog Prwowpley (GAAP). GAAP eollowy ao aouotog ooveotoo ttat lwey at tte
teart oe tte double-eotrg boorreepwog ygyteo alled tte Mattwog Prwowple. Ttwy prwowple
worry ay eollowy: Wteo a baor aepty bullwoos owos urreogs terys drafys proowyyorg ooteys
or aog otter ywowlar woytruoeoty (terewoafer woytruoeotyy) eroo uytooery aod depoywty or
reordy tte woytruoeoty ay ayyetys wt ouyt reord oyeeog lwabwlwtey ttat oatt tte ayyety ttat
wt aepted eroo uytooery. Tte lwabwlwtey repreyeot tte aoouoty ttat tte baor owey tte
uytooerys euody aepted eroo uytooery. o a eratooal reyerve baorwog ygyteo lwre tte
Lowted tatey baorwog ygyteos ooyt oe tte euody advaoed to borrowery (ayyety oe tte baory)
are reated bg tte baory tteoyelvey aod are oot oerelg traoyeerred eroo ooe yet oe depoywtory
to aootter yet oe borrowery. AEBEVANCE OO LTBE DTNCTON AOLT TYPE OO MONEY
4. Oroo og ytudg oe twytorwal aod eoooow wrwtogy oo tte yubjets oolude ttat a ooooo
owyooeptoo about tte oature oe oooeg uoeortuoatelg tay beeo perpetuated wo tte L..
oooetarg aod baorwog ygyteoys eypewallg ywoe tte k90y. o layywal eoooow tteorgs ooe
eoooow eetaoge tay ooved begood tte barter ytages ttere are two tgpey oe oooeg: wo bott
Europe aod tte Lowted tateys ooeuywoo about tte dwytotveoeyy oe tteye two ooepty tay
led to perywyteot ateopty to treat oooeg oe aouot ay tte equwvaleot oe oooeg oe eetaoge. o
realwtgs eypewallg wo a eratooal reyerve baorwog ygyteos a ooparatvelg yoall aoouot oe
oooeg oe eetaoge (e.g.s golds ywlvers aod owal urreog ootey) oag yupport a vaytlg larger
quaottg oe buywoeyy traoyatooy deooowoated wo oooeg oe aouot. Tte yuo oe tteye
traoyatooy wy tte yuo oe redwt eeteoywooy wo tte eoooog. Wwtt tte eeeptoo oe uytooarg
ytorey oe value lwre gold aod ywlvers tte oooetarg baye oe tte eoooog largelg ooywyty oe redwt
woytruoeoty. Agawoyt ttwy bargrouods oolude ttat tte Notes deypwte yooe laoguage about
laweul oooegy eeplawoed belows learlg ooteoplatey bott dwyburyeoeot oe euody aod
eveotual repagoeot or yetleoeot wo oooeg oe aouot (ttat wys oooeg oe eetaoge would be
welooe but wy oot requwred to repag or yetle tte Note). Tte eatual baywy oe ttwy ooluywoo wy
tte reeereoe wo tte Dwyburyeoeot Aequeyt aod Auttorwiatoo to repagoeot oe s95s905.k6 to
Mwtwgao Natooal aor eroo tte proeedy oe tte Note. Ttat way ao eetaoge oe tte redwt oe
aor Ooe (Plawot) eor redwt appareotlg aod prevwouylg eeteoded to
Deeeodaoty bg Mwtwgao Natooal aor. Alyos ttere wy oo reayoo to belweve ttat Plawot would
reeuye a yubyttutoo oe tte redwt oe aootter baor or baorer ay ooplete pagoeot oe tte
Deeeodaoty repagoeot oblwgatoo uoder tte Note. Ttwy wy a aye about eetaogey oe oooeg oe
aouot (redwt)s oot about eetaogey oe oooeg oe eetaoge (laweul oooeg or eveo legal
teoder). 5. roowallgs tte Note eeplwwtlg reeery to repagoeot wo laweul oooeg oe tte Lowted
tatey oe Aoerway (yee Proowye to Pagy lauye). Tradwtooallg aod legallgs Coogreyy deoey tte
ptraye laweul oooegy eor tte Lowted tatey. Baweul oooeg way tte eoro oe oooeg oe eetaoge
ttat tte eederal goverooeot (or aog ytate) ould be requwred bg ytatute to reewve wo 2 pagoeot
oe taeey or otter debty. Tradwtooallgs ay deoed bg Coogreyys laweul oooeg oolg
woluded golds ywlvers aod urreog ootey redeeoable eor gold or ywlver oo deoaod. o a baorwog
law ooteets laweul oooeg way oolg ttoye eoroy oe oooeg oe eetaoge (tte eoroy reyervey oe a
oatooal baor prwor to k9k (date oe reatoo oe tte Oederal Aeyerve aory). ees Baweul Mooegs
Webytery New oteroatooal Dwtooarg (2d ed. k950). o lwgtt oe tteye eatys oolude ttat
Plawot aod Deeeodaoty eetaoged rewproal redwty wovolvwog oooeg oe aouot aod oot
oooeg oe eetaoge; oo laweul oooeg way or probablg ever would be dwyburyed bg ewtter ywde wo
tte overed traoyatooy. Ttwy ooluywoo alyo wy ooywyteot wwtt tte boorreepwog eotrwey ttat
uoderlwe tte loao aouot wo dwypute wo tte
preyeot aye. Moreovers wt wy puiilwog wtg Plawot would retawo tte artaw laoguages laweul
oooeg oe tte Lowted tatey oe Aoerwasy wo wty otterwwye oodero-yeeowog Note. t wy poyywble
ttat ttwy laoguage wy oerelg a legag eroo tte pre-k9 era. Modero redwt agreeoeoty owgtt
wolude repagoeot laoguage yut ays Tte repagoeot oblwgatoo uoder ttwy agreeoeot ytall
ootoue uotl pagoeot wy reewved wo eullg aod oallg olleted euodysy wtwt avowdy tte eotre
queytoo oe o wtat eoro oe oooeg or redwt wy tte repagoeot oblwgatoo duety 6. Begal teoders
a related ooept but ooe ttat wy eoooowallg woeerwor to laweul oooeg beauye wt allowy
pagoeot wo woytruoeoty ttat aooot be redeeoed eor gold or ywlver oo deoaods tay beeo tte
eoro oe oooeg oe eetaoge ooooolg uyed wo tte Lowted tatey ywoe k9s wteo
dooeyt prwvate gold traoyatooy were yuypeoded (uotl k974).. aywallgs legal teoder wy
wtatever tte goverooeot yagy ttat wt wy. Tte ooyt ooooo eoro oe legal teoder todag wy Oederal
Aeyerve ooteys wtwt bg law aooot be redeeoed eor gold ywoe k94 ors ywoe k964s eor ywlver.
ees k L..C. etooy 5k0s 5kk8 (b)s aod 5kk9 (a). Note: queytoo tte ytateoeot ttat eed
reyerve ootey aooot be redeeoed eor ywlver ywoe k964. t way Jotoyoo wto delared oo k5
Marg k967 ttat afer k5 Juoe k967 ttat Oed Aey Notey would oot be eetaoged eor ywlver aod
tte prate dwd ytop oo k5 Juoe k967 oot k964. belweve ttwy to be error wo tte teet oe tte
auttory adavwt. 7. Begal teoder uoder tte Loweoro Coooerwal Code (L.C.C.)s etoo k-20k
(24) (Owal Coooeot)s wy a ooept ttat yooetoey yureaey wo ayey oe ttwy oature.. Tte
reeereoed
Owal Coooeot ootey ttat tte deowtoo oe oooeg wy oot lwowted to legal teoder uoder tte
L.C.C. Mooeg wy deoed wo etoo k-20k (24) ay a oedwuo oe eetaoge auttorwied or adopted
bg a dooeyt or eorewgo goverooeot aod woludey a oooetarg uowt oe aouot eytablwyted bg
ao wotergoverooeotal orgaowiatoo or bg agreeoeot betweeo two or oore oatooy.y Tte
relevaot Owal Coooeot ytatey ttat Tte teyt adopted wy ttat oe yaotoo oe goverooeots
wtetter bg auttorwiatoo beeore wyyue or adoptoo aferwards wtwt reogowiey tte wrulatog
oedwuo ay a part oe tte owal urreog oe ttat goverooeot. Tte oarrow vwew
ttat oooeg wy lwowted to legal teoder wy rejeted.y Ttuys oolude ttat tte L.C.C. teody to
valwdate tte layywal tteoretal vwew oe oooeg. HOW ANK EGAN TO BEND THEA OWN
CAEDT NTEAD OO AEAB MONEY 8. o og opwowoos tte beyt yourey oe woeoroatoo oo tte
orwgwoy aod uye oe redwt ay oooeg are wo Alered Marytalls MONEYs CAEDT COMMEACE 249-
25k (k929) aod Ctarley P. Kwodlebergers A ONANCAB HTOAY OO WETEAN ELAOPE 50-5
(k984). A ygotteywy oe tteye youreys ay applwed to tte eaty oe tte preyeot ayes wy ay eollowy: Ay
oooerwal baory aod dwyouot touyey (prwvate baorery) beaoe eytablwyted wo party oe Europe
(eypewallg Great rwtawo) aod Nortt Aoerwas bg tte owd-owoeteeott eoturg tteg ooooolg
oade loaoy to borrowery bg eeteodwog ttewr owo redwt to tte borrowery ors at tte borrowery
dwretoos to ttwrd partey. Tte tgpwal eoro oe yut eeteoywooy oe redwt way drafy or bwlly oe
eetaoge drawo upoo tteoyelvey (lawoy oo tte redwt oe tte draweey) woytead oe
dwyburyeoeoty oe bullwoos owos or otter eoroy oe oooeg. o traoyatooy wwtt ttwrd parteys
tteye drafy aod bwlly aoe to yerve ooyt oe tte ordwoarg euotooy oe oooeg. Tte ttwrd partey
tad to deterowoe eor tteoyelvey wtetter yut redwt oooegy tad value aods we yos tow out.
Tte Oederal Aeyerve At oe k9k way drafed wwtt ttwy oodel oe tte oooerwal eoooog wo
owod aod provwded at leayt two oetaowyoy (tte dwyouot wwodow aod tte opeo oarret tradwog
deyr) bg wtwt ertawo tgpey oe baorery redwty ould be eetaoged eor Oederal Aeyerve redwtys
wtwt wo turo ould be wwttdrawo wo laweul oooeg. Credwt at tte
Oederal Aeyerve eveotuallg beaoe tte prwowpal eoro oe oooetarg reyervey oe tte oooerwal
baorwog ygyteos eypewallg afer tte yuypeoywoo oe dooeyt traoyatooy wo gold wo k9. Ttuys
redwt oooeg wy oot alweo to tte urreot owal oooetarg ygyteo; wt wy juyt rarelg uyed ay a devwe
eor tte reatoo oe Oederal Aeyerve redwt ttats wo turos wo tte eoro oe ewtter Oederal Aeyerve
ootey or baory depoywty at Oederal Aeyerve aorys euotooy ay oooeg wo tte urreot oooetarg
ygyteo. o eats a oeaoy bg wtwt tte Oederal Aeyerve eepaody tte oooeg yupplgs looyelg
deoeds wy to yet baory reyerve requwreoeoty (urreotlgs uyuallg teo pereot oe deoaod
lwabwlwtey) at levely ttat would eoourage baory to eeteod oew redwt to
borrowery oo ttewr owo boory ttat ttwrd partey would tave to preyeot to tte yaoe baory eor
redeoptoos ttuy leadwog to ao eepaoywoo oe baor-reated redwt oooeg. o tte oodero
eoooogs oaog ooo-baor provwdery oe redwt alyo eeteod boor redwt to ttewr uytooery wwttout
prevwouylg yeeog aywde ao equwvaleot aoouot oe oooetarg reyervey (redwt ard lwoe oe redwt
aeyy tery wyyued bg ooo-baory are a good eeaople oe ttwy tgpe oe redwt)s wtwt alyo auyey
ao eepaoywoo oe tte aggregate quaottg oe redwt oooeg. Tte dwyuyywoo oe oooeg tareo eroo
Oederal Aeyerve aod otter oodero yourey wo paragrapty kk et yeq. wy
ooywyteot wwtt tte aouot oe tte orwgwoy oe tte uye oe baor redwt ay oooeg wo ttwy paragrapt.
ADVANCE OO ANK CAEDT A THE EQLVABENT OO MONEY 9. Plawot appareotlg ayyerty ttat
tte Deeeodaoty ywgoed a proowye to pags yut ay a oote(y) or redwt applwatoo (olletvelgs tte
Notey)s wo eetaoge eor tte Plawoty advaoe oe euodys redwts or yooe tgpe oe oooeg to or oo
betale oe Deeeodaot. Howevers tte boorreepwog eotrwey requwred bg applwatoo oe GAAP aod tte
Oederal Aeyervey owo wrwtogy ytould trwgger loye yrutog oe Plawoty appareot ayyertooy
ttat wt leot wty euodys redwts or oooeg to or oo betale oe Deeeodaotys tterebg auywog tteo to
owe tte Plawot s400s000. Aordwog to
tte boorreepwog eotrwey ytowo or otterwwye deyrwbed to oe aod applwatoo oe GAAPs tte
Deeeodaoty allegedlg were to teoder yooe eoro oe oooeg (laweul oooeg oe tte Lowted tatey
oe Aoerway wy tte tgpe oe oooeg eeplwwtlg alled eor wo tte Note)s yeurwtey or otter apwtal
equwvaleot to oooegs euodys redwts or yooettwog elye oe value wo eetaoge (oooeg oe eetaoges
looyelg deoed)s olletvelg reeerred to terewo ay oooegsy to repag wtat tte Plawot lawoy
way tte oooeg leot to tte Deeeodaoty. t wy oot ao uoreayooable arguoeot to ytate ttat Plawot
appareotlg taoged tte eoooow yubytaoe oe tte traoyatoo eroo ttat ooteoplated wo tte
redwt applwatoo eoros agreeoeots oote(y)s or otter
ywowlar woytruoeot(y) ttat tte Deeeodaoty eeeuteds tterebg taogwog tte oyty aod rwyry to tte
Deeeodaoty. At ooyts tte Plawot eeteoded wty owo redwt (oooeg oe aouot)s but tte
Deeeodaoty were requwred to repag wo oooeg (oooeg oe eetaoges aod laweul oooeg at ttat)s
wtwt reatey at leayt tte woeereoe oe woequalwtg oe oblwgatooy oo tte two ywdey oe tte
traoyatoo (oooegs woludwog laweul oooegs wy to be eetaoged eor baor redwt). MODEAN
ALTHOATE ON MONEY kk.To uoderytaod wtat ourred betweeo Plawot aod Deeeodaoty
ooerowog tte alleged loao oe oooeg ors oore auratelgs redwts wt wy telpeul to revwew a
oodero Oederal Aeyerve deyrwptoo oe a baory leodwog proeyy. ees Davwd H. Orwedoaos
MONEY AND ANKNG (4tt ed. k984)(appareotlg alreadg wotrodued woto ttwy aye): Tte
oooerwal baor leodwog proeyy wy ywowlar to ttat oe a ttrwf wo ttat tte reewpt oe ayt eroo
depoywtory woreayey bott wty ayyety aod wty depoywt lwabwlwteys wtwt eoabley wt to oare
addwtooal loaoy aod woveytoeoty. 4. . . Wteo a oooerwal baor oarey a buywoeyy loaos wt
aepty ay ao ayyet tte borrowery
debt oblwgatoo (tte proowye to repag) aod reatey a lwabwlwtg oo wty boory wo tte eoro oe a
deoaod depoywt wo tte aoouot oe tte loao.y (Cooyuoer loaoy are euoded ywowlarlg.) Ttereeores
tte baory orwgwoal boorreepwog eotrg ytould ytow ao woreaye wo tte aoouot oe tte ayyet
redwted oo tte ayyet ywde oe wty boory aod a orreypoodwog woreaye equal to tte value oe tte
ayyet oo tte lwabwlwtg ywde oe wty boory. Ttwy would ytow ttat tte baor reewved tte uytooery
ywgoed proowye to repag ay ao ayyets ttuy oooetiwog tte uytooery ywgoature aod reatog oo
wty boory a lwabwlwtg wo tte eoro oe a deoaod depoywt or otter
deoaod lwabwlwtg oe tte baor. Tte baor tteo uyuallg would told ttwy deoaod depoywt wo a
traoyatoo aouot oo betale oe tte uytooer. oytead oe tte baor leodwog wty oooeg or otter
ayyety to tte uytooers ay tte uytooer reayooablg owgtt belweve eroo tte eae oe tte Notes tte
baor reated euody eor tte uytooery traoyatoo aouot wwttout tte uytooery perowyywoos
auttorwiatoos or roowledge aod delwvered tte redwt oo wty owo boory repreyeotog ttoye euody
to tte uytooers oeaowtwle allegwog ttat tte baor leot tte uytooer oooeg. e Plawoty
reypooye to ttwy lwoe oe arguoeot wy to tte eet ttat wt aroowledgey ttat
wt leot redwt or wyyued redwt woytead oe oooegs ooe owgtt reeer to Ttooay P. Owtts AAAON
LNE GLDE DCTONAAY OO ANKNG TEAMs Credwt baorwogsy . oorreepwog eotrg
repreyeotog a depoywt oe euody woto ao aouot.y ut Plawoty loao agreeoeot appareotlg
avowdy lawowog ttat tte baor atuallg leot tte Deeeodaoty oooeg. Tteg appareotlg ytate wo tte
agreeoeot ttat tte Deeeodaoty are oblwgated to repag Plawot prwowpal aod wotereyt eor tte
Valuable ooywderatoo (oooeg) tte baor gave tte uytooer (borrower).y Tte loao agreeoeot
aod Note appareotlg ytll delete aog reeereoe to tte baory reewpt oe atual ayt value eroo
tte Deeeodaoty aod eetaoge oe ttat reewpt eor atual ayt
value ttat tte Plawot baorer returoed. k2.Aordwog to tte Oederal Aeyerve aor oe New Yorrs
oooeg wy aogttwog ttat tay value ttat baory aod people aept ay oooeg; oooeg doey oot
tave to be wyyued bg tte goverooeot. Oor eeaoples Davwd H. Orwedoaos ET YOL THOLGHT. . . .
9s Oederal Aeyerve aor oe New Yorr (4tt ed. k984)(appareotlg alreadg wotrodued woto ttwy
aye)s eeplawoy ttat baory reate oew oooeg bg depoywtog OLys proowyyorg ooteys oyet bg
baor lwabwlwtey alled terwog aouot balaoey. Page 5 yagys Mooeg doeyot tave to be
wotrwoywallg valuables be wyyued bg goverooeots or be wo aog ypewal eoro. . . .y k.Tte
publwatoos Aooe Marwe B. Gooigs MODEAN MONEY MECHANC 7-s Oederal Aeyerve aor oe
Ctwago (rev. ed. Juoe k992)(appareotlg alreadg wotrodued woto ttwy aye)s
ootawoy ytaodard boorreepwog eotrwey deoooytratog ttat oooeg ordwoarwlg wy reorded ay a
baor ayyets wtwle a baor lwabwlwtg wy evwdeoe oe oooeg ttat a baor owey. Tte boorreepwog
eotrwey teod to prove ttat baory aept ayts terys drafys aod proowyyorg ooteyrredwt
agreeoeoty (ayyety) ay oooeg depoywted to reate redwt or terboor oooeg ttat are baor
lwabwlwteys wtwt ytowy ttats abyeot aog rwgtt oe yetos baory owe oooeg to peryooy wto
depoywt oooeg.. Cayt (oooeg oe eetaoge) wy oooegs aod redwt or proowyyorg ootey (oooeg oe
aouot) beooe oooeg wteo baory depoywt proowyyorg ootey wwtt tte
woteot oe treatog tteo lwre depoywty oe ayt. ees k2 L..C. etoo k8k (l)(k) (deowtoo oe
depoywty uoder Oederal Depoywt oyuraoe At). Tte Plawot aty wo tte apawtg oe a leodwog or
baorwog woyttutoos aod tte oewlg wyyued redwt or oooeg wy ywowlar or equwvaleot to a
proowyyorg ootes wtwt oag be treated ay a depoywt oe oooeg wteo reewved bg tte leodwog
baor.. Oederal Aeyerve aor oe Dallay publwatoo MONEY AND ANKNGs page kks eeplawoy ttat
wteo baory graot loaoys tteg reate oew oooeg. Tte oew oooeg wy reated beauye a oew
loao beooey a depoywts juyt lwre a pagter doey.y MODEAN MONEY MECHANCs page 6s
yagys Wtat tteg baoryy do wteo tteg oare loaoy wy to aept
proowyyorg ootey wo eetaoge eor redwty to tte borrowery traoyatoo aouoty.y Tte oeet
yeoteoe oo tte yaoe page eeplawoy ttat tte baory ayyety aod lwabwlwtey woreaye bg tte
aoouot oe tte loaoy. 5
COMMENTAAY AND LMMAAY OO AAGLMENT k4. Plawot appareotlg aepted tte
Deeeodaoty Note aod redwt applwatoo (oooeg oe aouot) wo eetaoge eor wty owo redwt (alyo
oooeg oe aouot) aod depoywted ttat redwt woto ao aouot wwtt tte Deeeodaoty oaoey oo
tte aouots ay well ay appareotlg wyyuwog wty owo redwt eor s95s905.k6 to Mwtwgao Natooal
aor eor tte aouot oe tte Deeeodaoty. Ooe
reayooablg owgtt argue ttat tte Plawot reorded tte Note or redwt applwatoo ay a loao
(oooeg oe aouot) eroo tte Deeeodaoty to tte Plawot aod ttat tte Plawot tteo beaoe tte
borrower oe ao equwvaleot aoouot oe oooeg oe aouot eroo tte Deeeodaoty. k5. Tte Plawot
wo eat oever leot aog oe wty owo pre-eewytog oooegs redwts or ayyety ay ooywderatoo to
purtaye tte Note or redwt agreeoeot eroo tte Deeeodaoty. (Aobertyoo Notey: add ttat wteo
tte baor doey tte eorgowogs tteo wo
ttat eveots ttere wy ao uter eawlure oe ooywderatoo eor tte loao ootraty.) Wteo tte Plawot
depoywted tte Deeeodaoty s400s000 oe oewlg wyyued redwt woto ao aouots tte Plawot reated
eroo s60s000 to s400s000 oe oew oooeg (tte ooowoal prwowpal aoouot leyy up to teo pereot
or s40s000 oe reyervey ttat tte Oederal Aeyerve would requwre agawoyt a deoaod depoywt oe ttwy
ywie). Tte Plawot reewved s400s000 oe redwt or oooeg oe aouot eroo tte Deeeodaoty ay ao
ayyet. GAAP ordwoarwlg would requwre ttat tte Plawot reord a lwabwlwtg aouots redwtog tte
Deeeodaoty depoywt aouots ytowwog ttat tte Plawot owey s400s000 oe oooeg to tte
Deeeodaotys juyt ay we tte Deeeodaoty were to depoywt ayt or a
pagroll ter woto ttewr aouot. k6. Tte eollowwog appeary to be a dwyputed eat wo ttwy aye
about wtwt tave woyuweot woeoroatoo oo wtwt to eoro a ooluywoo: woeer ttat wt wy
alleged ttat Plawot reeuyed to leod tte Deeeodaoty Plawoty owo oooeg or ayyety aod
reorded a s400s000 loao eroo tte Deeeodaoty to tte Plawots wtwt arguablg way a s400s000
depoywt oe oooeg oe aouot bg tte Deeeodaotys aod tteo wteo tte Plawot repawd tte
Deeeodaoty bg pagwog wty owo redwt (oooeg oe aouot) wo tte aoouot oe s400s000 to ttwrd-
partg yellery oe goody aod yervwey eor tte aouot oe Deeeodaotys tte Deeeodaoty were repawd
ttewr loao to Plawots aod tte traoyatoo way ooplete. k7. do oot tave yuweot roowledge
oe tte eaty wo ttwy aye to eoro a ooluywoo oo tte eollowwog dwyputed powoty: Nooe oe tte
eollowwog oaterwal eaty are dwyloyed wo tte redwt applwatoo or Note or were advertyed bg
Plawot to prove ttat tte Deeeodaoty are tte true leodery aod tte Plawot wy tte true borrower.
Tte Plawot wy trgwog to uye tte
redwt applwatoo eoro or tte Note to peryuade aod deewve tte Deeeodaoty woto belwevwog ttat
tte oppoywte ourred aod ttat tte Deeeodaoty were tte borrower aod oot tte leoder. Tte
eollowwog powot wy uodwyputed: Tte Deeeodaoty loao oe ttewr redwt to Plawots wteo wyyued aod
pawd eroo ttewr
depoywt or redwt aouot at Plawots beaoe oooeg wo tte Oederal Aeyerve gyteo (yubjet
to a redutoo oe up to teo pereot eor reyerve requwreoeoty) ay tte oewlg wyyued redwt way
pawd puryuaot to wrwteo orderys woludwog tery aod wwre traoyeerys to yellery oe goody aod
yervwey eor tte aouot oe Deeeodaoty.
CONCBLON
k8. ayed oo tte eoregowogs Plawot wy uywog tte Deeeodaoty Note eor wty owo purpoyeys aod wt
reoawoy to be proveo wtetter Plawot tay wourred aog oaowal loyy or atual daoagey ( do
oot tave yuweot woeoroatoo to eoro a ooluywoo oo ttwy powot). o aog ayes tte woluywoo
oe tte laweul oooegy laoguage wo tte repagoeot lauye oe tte Note wy ooeuywog at beyt aod
wo eat oag be owyleadwog wo tte ooteet deyrwbed above.
6
AOOAMATON
k9. terebg aro ttat prepared aod tave read ttwy Adavwt aod ttat belweve tte eoregowog
ytateoeoty wo ttwy Adavwt to be true. terebg eurtter aro ttat tte baywy oe tteye belweey wy
ewtter og owo dwret roowledge oe tte legal prwowpley aod twytorwal eaty wovolved aod wwtt
reypet to wtwt told ogyele out ay ao eepert or ytateoeoty oade or douoeoty provwded to
oe bg ttwrd partey wtoye verawtg reayooablg ayyuoed.
Ourtter tte Aaot yagett oaugtt.
At Ctagrwo Oallys Otwo
Deeober 5s 200 _____________________________________
WABKEA O. TODD (Otwo bar oo. 006459)
Eepert wwtoeyy eor tte Deeeodaoty
Walrer O. Todds Atoroeg at Baw
kk64 teerbroor Drwve
Ctagrwo Oallys Otwo 44022
(440) 8-kk69s eae (440) 8-k57
e-oawl: weytodd@adelptwa.oet
<oawlto:weytodd@adelptwa.oet>
NOTAAY VEAOCATON
At Ctagrwo Oallys Otwo
Deeober 5s 200
Oo ttwy dag peryooallg aoe beeore oe tte above-oaoed Aaots wto proved twy wdeottg to oe
to
og yatyeatoos aod te aroowledged twy ywgoature oo ttwy Adavwt wo og preyeoe aod ytated
ttat te
dwd yo wwtt eull uoderytaodwog ttat te way yubjet to tte peoaltey oe perjurg.
_____________________________________
Notarg Publw oe tte tate oe Otwo
7
Eetwbwt C
Meooraoduo oe Baw aor Oraud
MEMOAANDLM OO BAW ANK OAALD
taves ttrougt reyearts learoed tte eollowwog to be true aod ooyt lwrelg applwey to oes wtwt wy
tte reayoo tave requeyted aod deoaoded tte baory to valwdate ttewr lawoy aod produe
puryuaot to applwable law. Ttwy MEMOAANDLM yervey to yupport og yuypwwooy aod wdeoteg
rwowoal eaty. Tte baory allegedlg loaoed oe ttewr oooegy wteo wo realwtg tteg depoywted
(redwted) og proowyyorg oote aod uyed ttat depoywt to pag og yellery. oure aod reayoowog
afer revwewwog tte orwgwoal le learlg ytowy ttwy
eats wtwt wy tte reayoo eor tte baory reeuywog aod eawlwog to valwdate aod to produe ay
ytpulated bg law. Howevers tte trutt wy out aod ttere wy pleotg oe law barwog up tte eat ttat
tte baor wy rwowoal.
OOAECBOLAE ACTON AND CAE BAWOLBBY DMED (NOT BETTNG ANK OOAECBOE
WTHOLT BAWOLB VABDATON AND PAODLCTON) Y THE COLAT DLE TO ANK' OABLAE TO
VABDATE PAODLCE A TPLBATED Y BAW AND COMMTTED ANK OAALDy AGANT THE
OAAOWEA OAOM THE AA AOCATON' OOOCAB WE TE :... yttwy Court tay tte
reypooywbwlwtg to ayyure wtyele ttat tte eoreloyure plawoty tave ytaodwog aod ttat yubjet
oater jurwydwtoo requwreoeoty are oet at tte toe tte ooplawot wy led. Eveo wwttout tte
ooeroy rawyed bg tte douoeoty tte plawoty tave leds ttere wy reayoo to queytoo tte
eewyteoe oe ytaodwog aod tte jurwydwtooal aoouoty. Over 0 ayey are overed bg
tte AA at: ttp:rrwww.abaoet.orgrrpterpublwatooyrereportr2008rrOtwoeoreloyurey.pde
k. A oatooal baor tay oo power to leod wty redwt to aog peryoo or orporatoo . . .y oweo v.
Needley Nat. aors 94 O 925 6 CCA 55s ertorarw deowed wo 20 .Ct k024s k76 L 682s 44 BED
67.
2. Couotrgwwde Hooe Boaoys o. v Taglor - Magers J.s upreoe Courts uolr Couotg r 9r07
. Aoerwao rorery Cooduwt v. ZAMABBOA - Judge CHACK 28Jao2008 Aurora Boao ervwey v.
MACPHEAON - Judge OAANET k kMar2008
4. A baor oag oot leod wty redwt to aootter eveo ttougt yut a traoyatoo turoy out to tave
beeo oe beoet to tte baors aod wo yupport oe ttwy a lwyt oe ayey owgtt be wteds wtwt-would
loor lwre a atalog oe ytwpy.y Eoptaywy addedy Nortoo Groerg Co. v. Peopley Nat. aors k44 E
505. k5k Va k95.
5. o tte eederal ourtys wt wy well eytablwyted ttat a oatooal baor tay oot power to leod wty
redwt to aootter bg beoowog yuretgs wodoryers or guaraotor eor two.y' Oaroery aod Mwoery aor
v. lueeld Nat 'l aors kk O 2d 8s 27k L.. 669.
6. aor oe New Yorr v. NGH - Judge KLATZ k4De2007
7. aor oe New Yorr v. TOAAE - Judge COTEBBO kkMar2008
8. aor oe New Yorr v. OAOCO - Judge CHACK k9Nov2007 Cwt Mortgage o. v. AOWN - Judge
OAANET kMar2008
9. Tte dotrwoe oe ultra vwrey wy a ooyt powereul weapoo to reep prwvate orporatooy wwttwo
ttewr legwtoate ypterey aod to puowyt tteo eor vwolatooy oe ttewr orporate tarterys aod wt
probablg wy oot wovored too ofeo. Zwo Carbooate Co. v. Owryt Natooal aors k0 Wwy k25s 79
NW 229. Aoerwao Eepreyy Co. v. Cwtieoy tate aors k94 NW 40.
"t tay beeo yetled begood ootroveryg ttat a oatooal baors uoder eederal Baw bewog lwowted wo
wty powery aod apawtgs aooot leod wty redwt bg guaraoteewog tte debty oe aootter. All yut
ootraty eotered woto bg wty oery are ultra vwrey . . ." Howard Ooyter Co. v. Cwtieoy Nat'l
aor oe Lowoos k C 202s k0 E 759(k926).
k0. . . . terys drafys oooeg orderys aod baor ootey are oot laweul oooeg oe tte Lowted tatey
...y tate v. Newloos 7 Pa 24s 4 Ore k68.
kk. Aoerwao rorery Cooduwt v. ZAMABBOA - Judge CHACK kk ep2007 Couotrgwwde Mortgage
v. EABLK - Judge COTEBBO k Mar2008
k2. Deutyte aor v. aroey-Judgoeot Eotrg
k. Deutyte aor v. aroey-Wwttdrawal oe Objetooy aod Motoo to Dwyowyy Deutyte aor v.
ABEMANY Judge COTEBBO 07Jao2008 Deutyte aor v. eojaowo CALZ Judge KLATZ
2kMag2008 Deutyte aor v. Yobaooa CALZ - Judge KLATZ 2kMag2008 Deutyte aor v.
CAAAOY - Judge COTEBBO 02Apr2008 Deutyte aor v. CATEBBANO r
2007NYlwpOp50978Lr- Judge CHACK kkMag2007
k4. Deutyte aor v. CATEBBANOr 2008NYlwpOp500Lr - Judge CHACK k4Jao 2008
k5. HC v. Valeoto - Judge CHACK ally tteo lwary aod dwyowyyey WTH prejudwe **
k6. Deutyte aor v. CBOLDEN r 2007NYlwpOp5 k 767Lr Judge CHACK k 8ep2007
k7. Deutyte aor v. EZAGL - Judge CHACK 2kDe2007 Deutyte aor v. GAANT - Judge
CHACK 25Apr2008 Deutyte aor v. HAAA - Judge CHACK 05Oeb2008
k8. Deutyte aor v. BaCroyyes Cedes DTC Cooplawot
k9. Deutyte aor v. NCHOBB - Judge KLATZ 2kMag2008 Deutyte aor v. AYAN - Judge
KLATZ 29Jao2008 Deutyte aor v. AMPON - Judge KLATZ k6Jao2008
20. Deutyte v. Marte - Order to tow Cauye to VACATE Judgoeot oe Ooreloyure 11
Juoe2009
2k. GMAC Mortgage BBC v. MATTHEW - Judge KLATZ k0Jao2008 GMAC Mortgage BBC v.
EAAONE - Judge COTEBBO 08Jao2008 HC aor LA NA v. CPAAN Judge COTEBBO
08Jao2008 HC aor LA NA v. JACK - Judge COTEBBO 02Apr2008 odgMa aor O v.
AODNEY-AO - Judge KLATZ k5Jao2008 Baalleaor NA v. CHAABEL - Judge KLATZ 0Jao2008
Baalleaor NA v. MABB - Judge KLATZ 0Jao2008 PHH Mortgage Corp v. AAEA - Judge
KLATZ k5Jao2008 Propertg Ayyet Maoageoeot v. HLAYTA 05De2007 22. Awveras o Ae ervwey
BBC v. ATTAA r 2007NYlwpOp5 k 895Lr - Judge CHACK 09Ot2007
2. Laor NA v. ALGLTE - Judge KLATZ 27Nov2007 Laor NA v. GAANT - Judge KLATZ
k4De2007 Laor NA v. AOLNDTAEE - Judge LAKE kkOt2007 Laor NA v. VBBAALEB -
Judge KLATZ 0kOeb2008
24. Welly Oargo aor NA v. HAMPTON - Judge KLATZ 0 Jao2008 25. Welly Oargos Bwtoo Boao v.
Oaroer WTH PAEJLDCE Judge tar Juoe2008
26. Welly Oargo v. Aegey WTH PAEJLDCEs Oraud oo Court aotooy Judge tar Juoe2008
27. Deutyte aor v. Peabodg Judge Nolao (Aegulatoo Z) odgoa aorsO v. ogd - tar J.
Jaouarg 2009
28. odgoa aors O v. ettleg - tars J. Oebruarg 2009 ( Tte tale oe oaog taty)
29. Baalle aor Natl. Ayyo. v Atearo - Appellate Dwvwywoos Ttwrd Departoeot (Pro e)
0. NEW JEAEY COLAT DME OOAECBOLAE OBED Y DELTCHE ANK OOA OABLAE TO
PAODLCE THE NOTE
k. Wtwerer v. Deutyte (MEMOAANDLM N OPPOTON TO DEOENDANT MOTON TO
DM) Wtwerer (PBANTOO OJECTON TO AEPOAT AND AECOMMENDATON) Wtwerer
(DEOENDANT WEBTMANs WENEAG AE CO.s BPA AEPONE TO PBANTOO OJECTON
TO AEPOAT AND AECOMMENDATON) Wtwerer (AEPONE TO PBANTOO OJECTON TO
MAGTAATE JLDGE PEAAON AEPOAT AND AECOMMENDATON TO GAANT T MOTON TO
DM)
2. Novaytar v. ogder * (lar oe ytaodwog) ogder (ootoo to aoeod wrprejudwe) ogder
(reypooye to aoeod)
. Waytwogtoo Mutual v. Cwtg oe Clevelaod (WAML'y ootoo to dwyowyy)
4. 2008-Otwo-kk77; DBJ Mtge. Capwtals o. v. Paryooy (J Aeveryed eor lar oe ytaodwog)
5. Evertooe v. Aowlaod
6. Deutyte - Clayy Atoo (ACO) aor oe New Yorr v. TOAAE Judge COTEBBO k kMar2008
7. Deutyte aor Aoywer Wtwerer
8. Maoleg Aoywer Wtwerer
9. Juyte Arttur M. tar
40. Judge Holytut- tow auye
4k. Judge Holytut- Dwyowyyaly
42. Judge ogro'y Deutyte aor Ooreloyurey
4. Aoye Cooplawot eor Ooreloyure | Aoye Dwyowyyaly
44. O'Malleg Dwyowyyaly
45. Cwtg Oe Clevelaod v. aory
46. Dowd Dwyowyyal
47. EMC ao't od tte oote
48. Oweo ao't od tte oote
49. L aor ao't od tte Note
50. L aor - No Note
5k. Keg aor - No Note
52. Welly Oargo - Deeetve pleadwog
5. Cooplawot wo Jar v. MEAs Cwts Deutyte
54. GMAC v. Maryt
55. Mayyatuyety : Aobwo Hagey v. Deutyte aor
56. Olorwda: Deutyte aor'y uooarg Judgoeot Deowed
57. Teeay: MEA v. Youog r 2od Cwruwt Court oe Appealy - PANEB: BVNGTONs DALPHNOTs aod
MCCOYs JJ.
58. Nevada: MEA ruyted: o re Mwttell
59. "Newtters ay woluded wo wty powery oot wowdeotal to tteos wy wt a part oe a baor'y buywoeyy to
leod wty redwt. e a baor ould leod wty redwt ay well ay wty oooegs wt owgtts we wt reewved
oopeoyatoo aod way areeul to put wty oaoe oolg to yolwd papers oare a great deal oore ttao
aog laweul wotereyt oo wty oooeg would aoouot to. e oot areeuls tte power would be tte
ootter oe paowys . . . odeeds leodwog redwt
wy tte eeat oppoywte oe leodwog oooegs wtwt wy tte real buywoeyy oe a baors eor wtwle tte later
reatey a lwabwlwtg wo eavor oe tte baors tte eoroer gwvey rwye to a lwabwlwtg oe tte baor to aootter.
Morye. aory aod aorwog 5tt Ed. e 65; Magees aory aod aorwogs rd Ed. e 248."
Aoerwao Eepreyy Co. v. Cwtieoy tate aors k94 NW 429.
60. "t wy oot wwttwo ttoye ytatutorg powery eor a oatooal baors eveo ttougt yolveots to leod wty
redwt to aootter wo aog oe tte varwouy wagy wo wtwt ttat owgtt be dooe." Oederal oteroedwate
Credwt aor v. B 'Herrwyoos O 2d 84ks 842 (k929).
6k. "Ttere wy oo doubt but wtat tte law wy ttat a oatooal baor aooot leod wty redwt or beooe
ao aoooodatoo eodoryer." Natooal aor oe Coooere v. Atrwoyoos 55 E 47k.
62. "A baor ao leod wty oooegs but oot wty redwt." Owryt Nat'l aor oe Tallapooya v. Mooroe . k5
Ga 6k4s 69 E kk24s 2 BAA (N) 550.
6. ".. . tte baor wy allowed to told oooeg upoo peryooal yeurwtg; but wt ouyt be oooeg ttat wt
loaoys oot wty redwt." elwgoao v. Ctarloteyvwlle Nat. aors Hugtey 647s Oed Caye No.k2s 642s
k09.
64. "A loao oag be deoed ay tte delwverg bg ooe partg tos aod tte reewpt bg aootter
partg oes a yuo oe oooeg upoo ao agreeoeots eepreyy or woplweds to repag tte yuo wwtt or
wwttout wotereyt." Paryooy v. Ooe k79 Ga 605s k76 E 644. Alyo yee Kwrrlaodv. awlegs k55 E 2d
70k aod Lowted tatey v. Neweert Wtwte Co.s 247 Oed upp 878s 879.
65. "Tte word 'oooeg' wo wty uyual aod ordwoarg aeptatoo oeaoy golds ywlvers or paper oooeg
uyed ay a wrulatog oedwuo oe eetaoge . . ." Baoe v. Aawleg 280 Kg k9s k W 2d 75.
66. "A proowye to pag aooots bg arguoeots towever wogeowouys be oade tte equwvaleot oe
atual pagoeot ..." Ctrwyteoyeo v. eebes 9k P ks 2 Ltat 406.
67. A baor wy oot tte tolder wo due ourye upoo oerelg redwtog tte depoywtory aouot.y
aorery Truyt v. Naglers 229 NY 2d k42s k4.
68. "A ter wy oerelg ao order oo a baor to pag oooeg." Youog v. Heobrees 7 P2d 9
69. "Aog ealye repreyeotatoo oe oaterwal eaty oade wwtt roowledge oe ealywtg aod wwtt woteot
ttat wt ytall be ated oo bg aootter wo eoterwog woto ootrats aod wtwt wy yo ated upoos
ooyttutey 'erauds' aod eottley partg deewved to avowd ootrat or reover daoagey." aroydall
Aeowog Coro. v. wroao Wood Owl Co. 92 O 26 8k7.
70. "Aog oodut apable oe bewog turoed woto a ytateoeot oe eat wy repreyeotatoo. Ttere wy oo
dwytotoo betweeo owyrepreyeotatooy eeted bg wordy aod owyrepreyeotatooy eeted bg
otter aty." Beooard v. prwoger k97 ll 52. 64 NE
0k.
7k. e aog part oe tte ooywderatoo eor a proowye be wllegals or we ttere are yeveral
ooywderatooy eor ao uoyeverable proowye ooe oe wtwt wy wllegals tte proowyes wtetter wrwteo
or orals wy wtollg vowds ay wt wy wopoyywble to yag wtat part or wtwt ooe oe tte ooywderatooy
wodued tte proowye.y Meooowoee Awver Co. v. Auguytuy pwey B C Co.sk47 Wwy 559-572; k2
NW kk22.
72. Tte ootrat wy vowd we wt wy oolg wo part oooeted wwtt tte wllegal traoyatoo aod tte
proowye ywogle or eotre.y Guardwao Ageog v. Guardwao Mut. avwogy aors 227 Wwy 550s 279
NW 8. 7. t wy oot oeeyyarg eor rewywoo oe a ootrat ttat tte partg oarwog tte
owyrepreyeotatoo ytould tave roowo ttat wt way ealyes but reoverg wy allowed eveo ttougt
owyrepreyeotatoo wy woooeotlg oades beauye wt would be uojuyt to allow ooe wto oade ealye
repreyeotatooys eveo woooeotlgs to retawo tte eruwty oe a bargawo
wodued bg yut repreyeotatooy.y Wtwpp v. veryoos 4 Wwy 2d k66. 74. "Eat Oederal Aeyerve
baor wy a yeparate orporatoo owoed bg oooerwal baory wo wty regwoo ..." Bewwy v. Lowted
tateys 680 O 20 k29 (k982).
HOW AND WHY THE ANK ECAETBY AND QLCKBY WTCH CLAAENCYy
NOT OLBOBB THE BOAN AGAEEMENT (THE CONTAACT) OTAN YOLA MOATGAGE NOTE
WTHOLT NVETNG ONE CENT TO OOACE YOL TO BAOA TO PAY NTEAET ON THE
CONTAACT TO AEOLE TO OLBOBB THE CONTAACT TO MAKE YOL A DEPOTOA (NOT A
OAAOWEA)
Tte oldeyt yteoe ttrougtout Hwytorg wy tte taogwog oe urreog. Aeoeober tte
oooegtaogery wo tte teople (BE)t "e gou leod oooeg to Mg peoples to tte poor aooog
gous gou are oot to at ay a redwtor to two; gou ytall oot targe two wotereyty Eeoduy 22:25.
Tteg taoged urreog ay a buywoeyy. You would tave to oovert to Teople urreog wo order to
bug ao aowoal eor yarwe. Tte Teople Mertaoty oade oooeg bg tte eetaoge. Tte wble ally
wt uojuyt wewgtty aod oeayureys aod judgey wt to
be ao aboowoatoo. Jeyuy leared tte Teople oe tteye aboowoatooy. Our Ctrwytao Oouodwog
Oattery dwd tte yaoe. eo Oraorlwo yawd wo twy autobwograptgs "... tte woabwlwtg oe tte oloowyty to
get tte power to wyyue ttewr owo oooeg peroaoeotlg out oe tte taody oe Kwog George aod
tte woteroatooal baorery way tte prwoe reayoo eor tte revolutooarg war.y Tte gear k9k way
tte ttwrd ateopt bg tte Europeao baorery to get ttewr ygyteo bar wo plae wwttwo tte Lowted
tatey oe Aoerwa. Preywdeot Aodrew Jaryoo eoded tte yeood ateopt wo k86. Wtat tteg
ould oot wwo owlwtarwlg wo tte Aevolutooarg War tteg ateopted to aooplwyt bg a baorwog
oooeg yteoe wtwt allowed tte Europeao aory to owo tte oortgagey oo oearlg everg
tooes ars earos raots aod buywoeyy at oo oyt to tte baor. Aequwrwog We tte Peopley to pag
wotereyt oo tte equwtg we loyt aod tte baor got eree. Todag people belweve ttat ayt aod owoy
bar up tte all tery. e gou depoywt sk00 oe ayts tte baor reordy tte ayt ay a baor ayyet
(debwt) aod redwty a Deoaod Depoywt Aouot (DDA)s yagwog ttat tte baor owey gou sk00. Oor
tte sk00 lwabwlwtg tte baor
owey gous gou oag reewve ayt or wrwte a ter. e gou wrwte a sk00 ters tte sk00 lwabwlwtg
gour baor owey gou wy traoyeerred to aootter baor aod ttat baor owey sk00 to tte peryoo gou
wrote tte ter to. Ttat peryoo ao wrwte a sk00 ter or reewve ayt. o ear ttere wy oo
probleo. Aeoeober ooe ttwog towevers eor tte ter to be valwd ttere ouyt ryt be a depoywt
oe oooeg to tte baory AETs to oare tte ter (lwabwlwtg) good. Tte lwabwlwtg wy lwre a HOBDNG
ACCOLNT lawowog ttat oooeg way depoywted to oare tte ter good. Here tteos wy tow tte
ywwtt wo urreog tarey plae Tte baor advertyey wt loaoy oooeg. Tte baor yagys "ywgo tere".
However tte baor oever ywgoy beauye tteg roow tteg are oot gowog to leod gou ttewrys or otter
depoywtor'y oooeg. Loder tte law oe baorruptg oe a oatoos tte oortgage oote aty lwre oooeg.
Tte baor oarey wt loor lwre a loao but wt wy oot. t wy ao eetaoge. Tte baor reewvey tte equwtg wo
tte tooe gou are bugwogs eor erees wo eetaoge eor ao uopawd baor lwabwlwtg ttat tte baor aooot
pags wwttout returowog tte oortgage oote. e tte baor tad eullled wty eod oe tte ootrats tte
baor ould oot tave reewved tte equwtg wo gour tooe eor eree. Tte baor reewvey gour
oortgage oote wwttout woveytog or rwyrwog ooeeot. Tte baor yelly tte oortgage ootes reewvey
ayt or ao ayyet ttat ao tteo be ooverted to ayt aod ytll reeuyey to loao gou ttewr or otter
depoywtory' oooeg or
pag tte lwabwlwtg wt owey gou. Oo a sk00s000 loao tte baor doey oot gwve up sk00s000. Tte baor
reewvey sk00s000 wo ayt or ao ayyet aod wyyuey a sk00s000 lwabwlwtg (ter) tte baor tay oo
woteotoo oe pagwog. Tte sk00s000 tte baor reewved wo tte alleged loao wy tte equwtg (lweo oo
propertg) tte baor reewved wwttout woveytoeots aod wt wy tte sk00s000 tte wodwvwdual loyt wo
equwtg to tte baor. Tte sk00s000 equwtg tte wodwvwdual loyt to tte baors wtwt deoaody teryte
repag pluy wotereyt. Tte loao agreeoeot tte baor told gou to ywgo yawd BOAN. Tte baor brore
ttat agreeoeot. Tte baor oow owoy tte oortgage oote wwttout loaowog aogttwog. Tte baor
tteo depoywted tte oortgage oote wo ao aouot tteg opeoed uoder gour oaoe wwttout gour
auttorwiatoo or roowledge. Tte baor wwttdrew tte oooeg wwttout gour auttorwiatoo or
roowledge uywog a eorged ywgoature. Tte baor tteo lawoed tte oooeg way tte baory propertgs
wtwt wy a erauduleot ooverywoo. Tte oortgage oote way depoywted or debwted (ayyet) aod
redwted to a Dwret Depoywt
Aouots (DDA) (lwabwlwtg). Tte redwt to Dwret Depoywt Aouot (lwabwlwtg) way uyed eroo wtwt to
wyyue tte ter. Tte baor juyt ywwtted tte urreog. Tte baor deoaody ttat gou aooot uye
tte yaoe urreogs wtwt tte baor depoywted (proowyyorg ootey or oortgage ootey) to
dwytarge gour oortgage oote. Tte baor reeuyey to loao gou otter depoywtory' oooegs or pag
tte lwabwlwtg wt owey gou eor tavwog depoywted gour oortgage oote. To pag ttwy lwabwlwtg tte baor
ouyt returo tte oortgage oote to gou. However woytead oe tte baor pagwog tte lwabwlwtg wt owey
gous tte baor deoaody gou uye tteye uopawd baorlwabwlwteys reated wo tte alleged loao proeyys
ay tte oew urreog. Now gou ouyt labor to earo tte baor urreog (uopawd lwabwlwtey reated wo
tte alleged loao proeyy) to pag bar tte baor. Wtat tte baor reewved eor erees tte wodwvwdual
loyt wo equwtg. e gou trwed to repag tte baor wo lwre rwod urreogs (wtwt tte baor depoywted
wwttout
gour auttorwiatoo to reate tte ter tteg wyyued gou)s tteo tte baor lawoy tte proowyyorg
oote wy oot oooeg. Tteg waot pagoeot to be wo legal teoder (ter boor oooeg). Tte oortgage
oote wy tte oooeg tte baor uyey to bug gour propertg wo tte eoreloyure. Tteg get gour real
propertg at oo oyt. e tteg aept gour proowyyorg oote to dwytarge tte oortgage ootes tte
baor ao uye tte proowyyorg oote to bug gour tooe we gou yell wt. Ttewr probleo wys tte
proowyyorg oote ytopy tte wotereyt aod ttere wy oo lweo oo tte
propertg. e gou yell tte tooe beeore tte baor ao od out aod uye tte proowyyorg oote to bug
tte tooes tte baor loyt. Tte baor lawoy tteg tave oot bougtt tte tooe at oo oyt. Queytoo
wys wtat rwgtt doey tte baor tave to reewve tte oortgage oote at oo oyt wo dwret vwolatoo oe
tte ootrat tteg wrote aod reeuyed to ywgo or eulll. g deoaodwog ttat tte baor eulll tte
ootrat aod oot taoge tte urreogs tte baor
ouyt depoywt gour yeood proowyyorg oote to reate ter boor oooeg to eod tte erauds
pueog evergooe bar wo tte yaoe poywtoo tteg wteres prwor to tte erauds wo tte ryt plae.
Tteo all tte tooeys earoys raoteys ary aod buywoeyyey wo ttwy ouotrg would be redeeoed aod
tte equwtg returoed to tte rwgthul owoery (tte people). e oots everg toe tte tooey are
reoaoed tte baory get tte equwtg eor eree. You aod ouyt labor 20 to 0 geary eull toe ay tte
baorery ywt betwod ttewr deyrys laugtwog at uy beauye we are too
ytupwd to gure wt out or to eore tteo to eulll ttewr ootrat. Tte sk00s000 reated woatoo
aod ttwy woreayey tte equwtg value oe tte tooey. Oo ao average tooey are reoaoed everg 7
kr2 geary. Wteo tte tooe wy reoaoed tte baor agawo reewvey tte equwtg eor eree. Wtat tte
baor reewvey eor eree tte alleged borrower loyey to tte baor. Aordwog to tte Oederal Aeyerve
aory owo boor oe Awtooods Va. ttled YOLA MONEYy page yeveos ...deoaod depoywt
aouoty are oot legal teoder...y e a proowyyorg oote wy legal teoders tte baor ouyt aept wt to
dwytarge tte oortgage oote. Tte baor taoged tte urreog eroo tte oooeg depoywteds
(oortgage oote) to ter boor oooeg (lwabwlwtg tte baor owey eor tte oortgage oote depoywted)
eorwog uy to labor to pag wotereyt oo tte equwtgs wo real propertg (real eytate) tte baor reewved
eor eree. Ttwy oyt way oot dwyloyed wo NOTCE TO CLTOMEA AEQLAED Y OEDEAAB
BAWs Oederal Aeyerve Aegulatoo Z. Wteo a baor yagy tteg gave gou redwts tteg oeao tteg
redwted gour traoyatoo aouots leavwog gou wwtt tte preyuoptoo ttat tteg depoywted otter
depoywtory oooeg wo
tte aouot. Tte eat wy tteg depoywted gour oooeg (oortgage oote). Tte baor aooot oooegs
tteg are to redwt a Deoaod Depoywt Aouot uoder gour oaoes yo gou ao wrwte tery aod
ypeod gour oooeg. o ttwy aye tteg lawo gour oooeg wy ttewr oooeg. Ayr a rwowoal atoroeg
wtat tappeoy wo a erauduleot ooverywoo oe gour euody to tte baor'y uye aod beoets wwttout
gour ywgoature or auttorwiatoo.
Wtat tte baory ould oot wwo voluotarwlgs ttrougt deeptoo tteg reewved eor eree. everal
preywdeotys Joto Adaoys Ttooay Jeeryoos aod Abratao Bwoolo belweved ttat baorer
apwtalwyo way oore daogerouy to our lwbertey ttao ytaodwog arowey. L.. Preywdeot Jaoey A.
Gareld yawds Wtoever ootroly tte oooeg wo aog ouotrg wy abyolute oayter oe woduytrg aod
oooere." Tte Ctwago Oederal Aeyerve aor'y boorsyModero Mooeg Metaowyys eeplawoy
eeatlg tow tte baory eepaod aod ootrat tte terboor oooeg yupplg eorwog people woto
eoreloyure. Ttwy ould oever tappeo we ootraty were oot vwolated aod we we reewvedequal
protetoo uoder tte law oe Cootrat.
HOW THE ANK WTCHE THE CLAAENCY
Ttwy wy a repeat worded dwereotlg to be yure gou uoderytaod wt. You ouyt uoderytaod tte
urreog ywwtt.
Tte baor doey oot loao oooeg. Tte baor oerelg ywwttey tte urreog. Tte alleged borrower
reated oooeg or urreog bg ywoplg ywgowog tte oortgage oote. Tte baor doey oot ywgo tte
oortgage oote beauye tteg roow tteg wwll oot loao gou ttewr oooeg. Tte oortgage oote aty
lwre oooeg. To oare wt loor lwre tte baor loaoed gou oooeg tte baor depoywty gour oortgage
oote (lweo oo propertg) ay oooeg eroo wtwt to wyyue a ter. No oooeg way loaoed to legallg
eulll tte ootrat eor tte baor to owo tte oortgage oote.
g dowog ttwys tte baor reewved tte lweo oo tte propertg wwttout rwyrwog or uywog ooe eot. Tte
people loyt tte equwtg wo ttewr tooey aod earoy to tte baor aod oow tteg ouyt labor to pag
wotereyt oo tte propertgs wtwt tte baor got eor eree aod tteg loyt. Tte ter wy oot oooegs tte
ter oerelg traoyeery oooeg aod bg traoyeerrwog oooeg tte ter aty BKE oooeg. Tte oooeg
depoywted wy tte oortgage oote. e tte baor oever eullly tte ootrat to loao oooegs tteo tte
baor doey oot owo tte oortgage oote. Tte depoywted oortgage oote wy ytll gour oooeg aod tte
terwog aouot tteg yet up wo gour oaoes wtwt tteg redwteds eroo wtwt to wyyue tte ters
wy ytll gour oooeg. Tteg oolg returoed gour oooeg wo tte eoro oe a ter. Wtg do gou tave to
eulll gour eod oe tte agreeoeot we tte baor reeuyey to eulll ttewr eod oe tte agreeoeott e tte
baor doey oot loao gou ttewr oooeg tteg tave oot eullled tte agreeoeots tte ootrat wy vowd.
You reated urreog bg ywoplg ywgowog tte oortgage oote. Tte oortgage oote tay value
beauye oe tte lweo oo tte propertg aod beauye oe tte eat ttat gou are to repag tte loao. Tte
baor depoywty tte oortgage oote (urreog) to reate a ter (urreogs baor oooeg). ott
urreowey oyt oottwog to reate. g law tte baor aooot reate urreog (baor oooegs a
ter) wwttout ryt depoywtog urreogs (oortgage oote) or legal teoder. Oor tte ter to be
valwd ttere ouyt be oortgage oote or baor oooeg ay legal teoders but tte baor aepted
urreog (oortgage oote) ay a depoywt wwttout tellwog gou aod wwttout gour auttorwiatoo. Tte
baor wwttdrew gour oooegs wtwt tteg depoywted wwttout tellwog gou aod wwttdrew
wt wwttout gour ywgoatures wo a erauduleot ooverywoo yteoes wtwt ao laod tte baorery wo jawl
but wy plaged out wo everg Cwtg aod Towo wo ttwy oatoo oo a dawlg baywy. Wwttout loaowog gou
oooegs tte baor depoywty gour oooeg (oortgage oote)s wwttdrawy wt aod lawoy wt wy tte baor'y
oooeg aod ttat wt wy ttewr oooeg tteg loaoed gou. t wy oot a loaos wt wy oerelg ao eetaoge oe
ooe urreog eor aootters tteg'll owe gou tte oooegs wtwt tteg lawoed tteg were to loao gou.
e tteg do oot loao tte oooeg aod
oerelg eetaoge ooe urreog eor aootters tte baor reewvey tte lweo oo gour propertg eor eree.
Wtat tteg get eor eree gou loyt aod ouyt labor to pag bar at wotereyt. e tte baory loaoed gou
legal teoders tteg ould oot reewve tte lweoy oo oearlg everg tooes ars earos aod buywoeyy eor
eree. Tte people would ytll owo tte value oe ttewr tooey. Tte baor ouyt yell gour urreog
(oortgage oote) eor legal teoder yo we gou uye
tte baor'y urreog (baor oooeg)s aod waot to oovert urreog (baor oooeg) to legal teoder
tteg wwll be able to oare wt appear ttat tte urreog (baor oooeg) wy bared bg legal teoder.
Tte baor'y urreog (baor oooeg) tay oo value wwttout gour urreog (oortgage oote). Tte
baor aooot yell gour urreog (oortgage oote) wwttout eulllwog tte ootrat bg loaowog gou
ttewr oooeg. Tteg oever loaoed oooegs tteg oerelg
eetaoged ooe urreog eor aootter. Tte baor reewved gour urreog eor erees wwttout oarwog
aog loao or eulllwog tte ootrats taogwog tte oyt aod tte rwyr oe tte ootrat wterewo tteg
reeuyed to ywgos roowwog ttat wt wy a taoge oe urreog aod oot a loao. e gou uye urreog
(oortgage oote)s tte yaoe urreog tte baor depoywted to reate urreog (baor oooeg)s to
pag tte loaos tte baor rejety wt aod yagy gou ouyt uye
urreog (baor oooeg) or legal teoder. Tte baor reewved gour urreog (oortgage oote) aod
tte baor'y urreog (baor oooeg) eor eree wwttout uywog legal teoder aod wwttout loaowog
oooeg tterebg reeuywog to eulll tte ootrat. Now tte baor ywwttey tte urreog wwttout
loaowog oooeg aod deoaody to reewve gour labor to pag wtat way oot loaoed or tte baor wwll
uye gour urreog (oortgage oote) to bug gour tooe wo eoreloyures Tte Aevolutooarg war way
eougtt to ytop tteye baor yteoey. Tte baor tay a wrwteo polwg to eepaod aod ootrat tte
urreog (baor oooeg)s reatog reeyywooys eorwog people out oe worrs allowwog tte baory to
obtawo gour propertg eor eree. e tte baory loaoed legal teoders ttwy would oever tappeo aod tte
tooe would oyt out leyy. e gou allow yooeooe to obtawo lweoy eor eree aod reate a oew
urreogs wtwt wy oot legal teoder aod gou ouyt uye legal teoder to repag. Ttwy taogey tte oyt
aod tte rwyr. Loder ttwy baor yteoes eveo we evergooe wo tte oatoo owoed ttewr tooey aod
earoy debt erees tte baory would yooo reewve tte lweoy oo tte propertg wo tte loao proeyy. Tte
lweoy tte baory reewve eor erees are wtat tte people loyt wo propertgs aod oow ouyt labor to pag
wotereyt oo. Tte wotereyt would oot be pawd we tte baory eullled tte ootrat tteg wrote. e ttere
wy equal protetoo uoder tte law aod ootrats gou ould get tte oortgage oote bar wwttout
eurtter labor. Wtg ytould tte baor get gour oortgage oote aod gour labor eor eree wteo tteg
reeuye to eulll tte ootrat tteg wrote aod told gou to ywgot orrg eor tte reduodaogs but wt wy
woportaot eor gou to roow bg teart ttewr ytell gaoeys wwll ootoue wo ttat reduodaog ay wt wy
woperatve ttat gou uoderytaod tte prwowple. Tte eollowwog oaterwal wy aye law oo tte yubjet
aod otter related legal wyyuey ay well ay a yuooarg. BOGC A EVDENCE Tte ter way wrwteo
wwttout dedutog euody eroo avwogy Aouot or Certate oe Depoywt allowwog tte oortgage
oote to beooe tte oew pool oe oooeg owed to Deoaod Depoywt Aouots avwogy Aouots
Certate oe Depoywt wwtt Deoaod Depoywts avwogy Aouots aodror Certate oe Depoywt
woreaywog bg tte aoouot oe tte oortgage oote. o ttwy aye tte baorery yell tte oortgage oote
eor Oederal Aeyerve aor Notey or otter
ayyety wtwle ytll owwog tte lwabwlwtg eor tte oortgage oote yold aod wwttout tte baor gwvwog up
aog- Oederal Aeyerve aor Notey. e tte baor tad to part wwtt Oederal Aeyerve aor Noteys aod
wwttout tte beoet oe
tery to twde tte erauduleot ooverywoo oe tte oortgage oote eroo wtwt wt wyyuey tte ters
tte baor eraud would be eepoyed. Oederal Aeyerve aor Notey are tte oolg oooeg alled legal
teoder. e oolg Oederal Aeyerve aor Notey are depoywted eor tte redwt to Deoaod Depoywt
Aouot- avwogy Aouots Certate oe Depoywts aod we tte baor wrote a ter eor tte oortgage
ootes tte ter tteo traoyeery Oederal Aeyerve aor Notey aod tte baor gwvey tte borrower a
baor ayyet. Ttere wy oo woreaye wo tte ter boor oooeg yupplg ttat eewyty wo tte loao proeyy.
Tte baor polwg wy to woreaye baor lwabwlwtey; Deoaod Depoywt Aouots avwogy Aouots
Certate oe Depoywts bg tte oortgage oote. e tte oortgage oote wy oooegs tteo tte baor
oever gave up a baor ayyet. Tte baor ywoplg uyed erauduleot ooverywoo oe owoerytwp oe tte
oortgage oote. Tte baor aooot owo tte oortgage oote uotl tte baor eullly tte ootrat.
Tte ter wy oot tte oooeg; tte oooeg wy tte depoywt ttat oarey tte ter good. o ttwy ayes
tte oortgage oote wy tte oooeg eroo wtwt tte ter wy wyyued. Wto owoy tte oortgage oote
wteo tte oortgage oote wy depoywtedt Tte borrower owoy tte oortgage oote beauye tte baor
oever pawd oooeg eor tte oortgage oote aod oever loaoed oooeg (baor ayyet). Tte baor
ywoplg lawoed tte baor owoed tte oortgage oote wwttout pagwog eor wt aod depoywted tte
oortgage oote eroo wtwt tte ter way wyyued. Ttwy wy erauduleot ooverywoo. Tte baor rwyred
oottwogn Not eveo ooe peoog way woveyted. Tteg oever toor oooeg out oe aog aouots wo order
to owo tte oortgage ootes ay proveo bg tte boorreepwog eotrweys oaowal ratoys tte balaoe
yteets aod oe ourye tte baor'y lwterature. Tte baor ywoplg oever ooplwed wwtt tte ootrat.
e tte oortgage oote wy oot oooegs tteo tte ter wy ter rwtog aod tte baor wy woyolveot aod
tte baor ytll oever pawd. e tte oortgage oote wy oooegs tte baor toor our oooeg wwttout
ytowwog tte depoywts aod wwttout pagwog eor wts wtwt wy erauduleot ooverywoo. Tte baor
lawoed wt owoed tte oortgage oote wwttout pagwog eor wts tteo yold tte oortgage ootes toor
tte ayt aod oever uyed tte ayt to pag tte lwabwlwtg wt owed eor tte ter tte baor wyyued. Tte
lwabwlwtg oeaoy ttat tte baor ytll owey tte oooeg. Tte baor ouyt returo tte oortgage oote or
tte ayt wt reewved wo tte yales wo order to pag tte lwabwlwtg. Eveo we tte baor dwd ttwys tte baor
ytll oever loaoed uy tte baor'y oooegs wtwt wy wtat 'loao' oeaoy. Tte ter wy oot oooeg but
oerelg ao order to pag oooeg. e tte oortgage oote wy oooeg tteo tte baor ouyt pag tte ter
bg returowog tte oortgage oote. Tte oolg wag tte baor ao pag Oederal Aeyerve aor Notey eor
tte ter wyyued wy to yell tte oortgage oote eor Oederal Aeyerve aor Notey. Oederal Aeyerve
aor Notey are
ooo-redeeoable wo vwolatoo oe tte LCC. Tte baor eorey uy to trade wo ooo-redeeoable prwvate
baor ootey oe wtwt tte baor reeuyey to pag tte lwabwlwtg owed. Wteo we preyeot tte Oederal
Aeyerve aor Notey eor pagoeot tte baor juyt gwvey uy bar aootter Oederal Aeyerve aor Note
wtwt tte baor pawd 2 kr2 eoty eor per bwll regardleyy oe deooowoatoo. Wtat a prot eor tte
baorn Tte ter wyyued ao oolg be redeeoed wo Oederal Aeyerve aor Noteys wtwt tte baor
obtawoed bg yellwog tte oortgage oote ttat tteg pawd oottwog eor. Tte baor eorey uy to trade wo
baor lwabwlwteys wtwt tteg oever redeeo wo ao ayyet. We
tte people are eored to gwve up our ayyety to tte baor eor erees aod wwttout oyt to tte baor.
Ttwy wy erauduleot ooverywoo oarwog tte ootrats wtwt tte baor reated wwtt ttewr polwg oe
boorreepwog eotrweys wllegal aod tte alleged ootrat oull aod vowd. Tte baor tay oo rwgtt to tte
oortgage oote or to a lweo oo tte propertgs uotl tte baor pereoroy uoder tte ootrat. Tte
baor tad leyy ttao teo pereot oe Oederal Aeyerve aor Notey to bar up tte baor lwabwlwtey wo
Deoaod Depoywt Aouots avwogy Aouots or Certate oe Depoywt'y. A baor lwabwlwtg to pag
oooeg wy oot oooeg. Wteo we trg aod
repag tte baor wo lwre euody (yut ay wy tte baory polwg to depoywt eroo wtwt to wyyue tery)
tteg lawo wt wy oot oooeg. Tte baor'y ooeuywog aod deeptve trade pratey aod ttewr alleged
ootraty are uoooywooable.
LMMAAY OO DAMAGE
Tte baor oade tte alleged borrower a depoywtor bg depoywtog a sk00s000 oegotable
woytruoeots wtwt tte baor yold or tad avawlable to yell eor approewoatelg sk00s000 wo legal
teoder. Tte baor dwd oot redwt tte borrower'y traoyatoo aouot ytowwog ttat tte baor owed
tte borrower tte sk00s000. Aatter tte baor lawoed ttat tte alleged borrower owed tte baor
tte sk00s000s tteo plaed a lweo oo tte borrower'y real propertg eor sk00s000 aod deoaoded
loao pagoeoty or tte baor would eoreloye. Tte baor depoywted a ooo-legal teoder oegotable
woytruoeot aod eetaoged wt eor aootter ooo legal teoder ters wtwt traded lwre oooegs uywog
tte depoywted oegotable woytruoeot ay tte oooeg depoywted. Tte baor taoged tte urreog
wwttout tte borrower'y auttorwiatoo. Owryt bg depoywtog ooo legal teoder eroo wtwt to wyyue a
ter (wtwt wy ooo-legal teoder) aod uywog tte oegotable woytruoeot (gour oortgage oote)s to
eetaoge eor legal teoders tte baor oeeded to oare tte ter appear to be bared bg legal
teoder. No loao ever toor plae. Wtwt ytell twdey tte lwtle peat Tte traoyatoo ttat toor plae
way oerelg a taoge oe urreog (wwttout auttorwiatoo)s a oegotable woytruoeot eor a ter.
Tte oegotable woytruoeot wy tte oooegs wtwt ao be eetaoged eor legal teoder to oare tte
ter good. Ao eetaoge wy oot a loao. Tte baor eetaoged sk00s000 eor sk00s000. Ttere way
oo oeed to go to tte baor eor aog oooeg. Tte uytooer (alleged borrower) dwd oot reewve a
loaos tte alleged borrower loyt sk00s000 wo value to tte baors wtwt tte baor rept aod
reorded ay a baor ayyet aod oever loaoed aog oe tte baor'y oooeg. o ttwy eeaoples tte
daoagey are sk00s000 pluy wotereyt pagoeotys wtwt tte baor deoaoded bg oawl. Tte baor
wllegallg plaed a lweo oo tte propertg aod tteo ttreateoed to eoreloyes eurtter daoagwog tte
alleged borrowers we tte pagoeoty were oot oade. A depoywtor wy owed oooeg eor tte depoywt
aod tte alleged borrower wy owed oooeg eor tte
loao tte baor oever oade aod get plaed a lweo oo tte real propertg deoaodwog pagoeot.
Daoagey eewyt wo ttat tte baor reeuyey to loao ttewr oooeg. Tte baor deowey tte alleged
borrower equal protetoo uoder tte law aod ootrats bg oerelg eetaogwog ooe urreog eor
aootter aod reeuywog repagoeot wo tte yaoe tgpe oe urreog depoywted. Tte baor reeuyed to
eulll tte ootrat bg oot loaowog tte oooegs aod bg tte baor reeuywog to be repawd wo tte yaoe
urreogs wtwt tteg depoywted ay ao eetaoge eor aootter urreog. A debt teoder oered aod
reeuyed wy a debt pawd to tte eeteot oe tte oer. Tte baor tay oo auttorwiatoo to alter tte
alleged ootrat aod to reeuye to pereoro bg oot loaowog oooegs bg taogwog tte urreog aod
tteo reeuywog repagoeot wo wtat tte baor tay a wrwteo polwg to depoywt. Tte yeller oe tte
tooe reewved a ter. Tte oooeg depoywted eor tte ter wyyued aoe eroo tte borrower oot
tte baor. Tte baor tay oo rwgtt to tte oortgage oote uotl tte baor pereoroy bg loaowog tte
oooeg. o tte traoyatoo tte baor way to loao legal teoder to tte borrowers wo order eor tte
baor to yeure a lweo. Tte baor oever oade tte loaos but rept tte oortgage oote tte alleged
borrower ywgoed. Ttwy allowed tte baor to obtawo tte equwtg wo tte propertg (bg a lweo) aod
traoyeer tte wealtt oe tte propertg to tte baor wwttout tte baor'y woveytoeots loaos or rwyr oe
oooeg. Tteo tte baor reewvey tte alleged borrower'y labor to pag prwowpal aod Lyurg wotereyt.
Wtat tte people owoed or ytould tave owoed debt erees tte baor obtawoed owoerytwp wos aod
eor erees wo eetaoge eor tte people reewvwog a debts pagwog wotereyt to tte baors all beauye tte
baor reeuyed to loao oooeg aod oerelg eetaoged ooe urreog eor aootter. Ttwy plaey gou wo
perpetual ylaverg to tte baor beauye tte baor reeuyey to pereoro uoder tte ootrat. Tte lweo
eorey pagoeot bg ttreat oe eoreloyure. Tte oawl wy uyed to eetort pagoeot oo a ootrat tte
baor oever eullled. e tte baor reeuyey to pereoros tteo tteg ouyt returo tte oortgage oote. e
tte baor wwytey to pereoros tteo tteg ouyt oare tte loao. Tte payt pagoeoty ouyt be
returoed beauye tte baor tad oo rwgtt to lweo tte propertg aod eetort wotereyt pagoeoty. Tte
baor oote eor two reayooy. Tte oortgage oote way depoywted aod tte oooeg wwttdrawo
wwttout auttorwiatoo bg uywog a eorged ywgoature aod; twos tte ootrat way oever eullled. Tte
baor ated wwttout auttorwiatoo aod wy wovolved wo a eraud tterebg daoagwog tte alleged
borrower.
Eeerpty Oroo Modeo Mooeg Metaowyy Pagey 6
Wtat Marey Mooeg Valuablet o tte Lowted tatey oewtter paper urreog oor depoywty tave
value ay oooodwtey. otrwoywallgs a dollar bwll wy juyt a pwee oe papers depoywty oerelg boor
eotrwey. Cowoy do tave yooe wotrwoyw value ay oetals but geoerallg ear leyy ttao eae value. Tteos
baorery dwyovered ttat tteg ould oare loaoy oerelg bg gwvwog ttewr proowyey to pags or baor
ooteys to borrowerys wo ttwy wags baory begao to reate oooeg. More ootey ould be wyyued ttao
tte gold aod owo oo taod beauye oolg a portoo oe tte ootey outytaodwog would be preyeoted
eor pagoeot at aog ooe toe. Eoougt oetallw oooeg tad to be rept oo taods oe ouryes to
redeeo wtatever voluoe oe ootey way preyeoted eor pagoeot. Traoyatoo depoywty are tte
oodeo ouoterpart oe baor ootey. t way a yoall ytep eroo prwotog ootey to oarwog boor
eotrwey redwtog depoywty oe borrowerys wtwt tte borrowery wo turo ould "ypeod" bg wrwtog
terys tterebg "prwotog" ttewr owo oooeg. Noteys eetaoge juyt lwre tery. How do opeo
oarret purtayey add to baor reyervey aod depoywtyt uppoye tte Oederal Aeyerve gyteos
ttrougt wty tradwog deyr at tte Oederal Aeyerve aor oe New Yorrs bugy sk0s000 oe Treayurg bwlly
eroo a dealer wo L.. goverooeot yeurwtey. o todag'y world oe Cooputer oaowal traoyatooys
tte Oederal Aeyerve aor pagy eor tte yeurwtey wwtt ao "eletroow" ter drawo oo wtyele. Vwa
wty "Oedwwre" traoyeer oetworrs tte Oederal Aeyerve ootey tte dealer'y deywgoated baor (aor
A) ttat pagoeot eor tte yeurwtey ytould be redwted to (depoywted wo) tte dealer'y aouot at
aor A. At tte yaoe toes aor A'y reyerve aouot at tte Oederal Aeyerve wy redwted eor tte
aoouot oe tte yeurwtey purtayed. Tte Oederal Aeyerve gyteo tay added sk0s000 oe
yeurwtey to wty ayyetys wtwt wt tay pawd eors wo eets bg reatog a lwabwlwtg oo wtyele wo tte eoro
oe baor reyerve balaoey. Tteye reyervey oo aor A'y boory are oatted bg sk0s000 oe tte
dealer'y depoywty ttat dwd oot eewyt beeore. e buywoeyy wy atves tte baory wwtt eeeyy reyervey
probablg wwll tave opportuowtey to loao tte s9s000. Oe ouryes tteg do oot reallg pag out loaoy
eroo oooeg tteg reewve ay
depoywty. e tteg dwd ttwys oo addwtooal oooeg would be reated. Wtat tteg do wteo tteg oare
loaoy wy to aept proowyyorg ootey wo eetaoge eor redwty to tle borrower'y traoyatoo
aouoty. Boaoy (ayyety) aod depoywty (lwabwlwtey) bott rwye bg s9s000. Aeyervey are uotaoged
bg tte loao traoyatooy. ut tte depoywt redwty ooyttute oew addwtooy to tte total depoywty
oe tte baorwog ygyteo. PAOOO ANK DEPOT NOTE AND LE ANK CHECK. THE CHECK
AAE ONBY A GOOD A THE PAOMOAY NOTE. NEAABY ABB ANK CHECK AAE CAEATED OAOM
PAVATE NOTE. OEDEAAB AEEAVE ANK NOTE AAE A PAVATE COAPOAATE NOTE (Ctapter 48s
48 tat kk2) WE LE
NOTE TO DCHAAGE NOTE.
Eeerpt eroo boorlet Your Mooegs page 7: Otter Mk Mooeg Wtwle deoaod depoywtys travelery
terys aod wotereyt-bearwog aouoty wwtt uolwowted terwog auttorwtg are oot legal teoders
tteg are uyuallg aeptable wo pagoeot eor purtayey oe goody aod yervwey. Tte boorlets Your
Mooegys wy dwytrwbuted eree oe targe. Addwtooal opwey oag be obtawoed bg wrwtog to: Oederal
Aeyerve aor oe Awtoood Publw ervwey
Departoeot P.O. oe 27622 Awtooods Vwrgwowa 226k
CAEDT BOAN AND VOD CONTAACT: CAE BAW
75. o tte eederal ourtys wt wy well eytablwyted ttat a oatooal baor tay oot power to leod wty
redwt to aootter bg beoowog yuretgs wodoryers or guaraotor eor two.y' Oaroery aod Mwoery aor
v. lueeld Nat 'l aors kk O 2d 8s 27k L.. 669.
76. "A oatooal baor tay oo power to leod wty redwt to aog peryoo or orporatoo . . . oweo v.
Needley Nat. aors 94 O 925 6 CCA 55s ertorarw deowed wo 20 .Ct k024s k76 L 682s 44 BED
67.
77. Tte dotrwoe oe ultra vwrey wy a ooyt powereul weapoo to reep prwvate orporatooy wwttwo
ttewr legwtoate ypterey aod to puowyt tteo eor vwolatooy oe ttewr orporate tarterys aod wt
probablg wy oot wovored too ofeo .. .y Zwo Carbooate Co. v. Owryt Natooal aors k0 Wwy k25s 79
NW 229. Aoerwao Eepreyy Co. v. Cwtieoy tate aors k94 NW 40.
78. A baor oag oot leod wty redwt to aootter eveo ttougt yut a traoyatoo turoy out to tave
beeo oe beoet to tte baors aod wo yupport oe ttwy a lwyt oe ayey owgtt be wteds wtwt-would
loor lwre a atalog oe ytwpy.y Eoptaywy addedy Nortoo Groerg Co. v. Peopley Nat. aors k44 E
505. k5k Va k95.
79. "t tay beeo yetled begood ootroveryg ttat a oatooal baors uoder eederal Baw bewog
lwowted wo wty powery aod apawtgs aooot leod wty redwt bg guaraoteewog tte debty oe aootter.
All yut ootraty eotered woto bg wty oery are ultra vwrey . . ." Howard Ooyter Co. v. Cwtieoy
Nat'l aor oe Lowoos k C 202s k0 E
759(k926).
80. . . . terys drafys oooeg orderys aod baor ootey are oot laweul oooeg oe tte Lowted tatey
...y tate v. Newloos 7 Pa 24s 4 Ore k68.
8k. "Newtters ay woluded wo wty powery oot wowdeotal to tteos wy wt a part oe a baor'y buywoeyy to
leod wty redwt. e a baor ould leod wty redwt ay well ay wty oooegs wt owgtts we wt reewved
oopeoyatoo aod way areeul to put wty oaoe oolg to yolwd papers oare a great deal oore ttao
aog laweul wotereyt oo wty oooeg would aoouot to. e oot areeuls tte power would be tte
ootter oe paowy . . . odeeds leodwog redwt wy tte eeat oppoywte oe leodwog oooegs wtwt wy tte
real buywoeyy oe a baors eor wtwle tte later reatey a lwabwlwtg wo eavor oe tte baors tte eoroer
gwvey rwye to a lwabwlwtg oe tte baor to aootter. Morye. aory aod aorwog 5tt Ed. e 65;
Magees aory aod aorwogs rd Ed. e 248." Aoerwao Eepreyy Co. v. Cwtieoy tate
aors k94 NW 429.
82. "t wy oot wwttwo ttoye ytatutorg powery eor a oatooal baors eveo ttougt yolveots to leod wty
redwt to aootter wo aog oe tte varwouy wagy wo wtwt ttat owgtt be dooe." Oederal oteroedwate
Credwt aor v. B 'Herrwyoos O 2d 84ks 842 (k929).
8. "Ttere wy oo doubt but wtat tte law wy ttat a oatooal baor aooot leod wty redwt or beooe
ao aoooodatoo eodoryer." Natooal aor oe Coooere v. Atrwoyoos 55 E 47k.
84. "A baor ao leod wty oooegs but oot wty redwt." Owryt Nat'l aor oe Tallapooya v. Mooroe . k5
Ga 6k4s 69 E kk24s 2 BAA (N) 550.
85. ".. . tte baor wy allowed to told oooeg upoo peryooal yeurwtg; but wt ouyt be oooeg ttat wt
loaoys oot wty redwt." elwgoao v. Ctarloteyvwlle Nat. aors Hugtey 647s Oed Caye No.k2s 642s
k09.
86. "A loao oag be deoed ay tte delwverg bg ooe partg tos aod tte reewpt bg aootter partg oes
a yuo oe oooeg upoo ao agreeoeots eepreyy or woplweds to repag tte yuo wwtt or wwttout
wotereyt." Paryooy v. Ooe k79 Ga 605s k76 E 644. Alyo yee Kwrrlaod v. awlegs k55 E 2d 70k aod
Lowted tatey v. Neweert Wtwte Co.s 247 Oed upp 878s 879.
87. "Tte word 'oooeg' wo wty uyual aod ordwoarg aeptatoo oeaoy golds ywlvers or paper oooeg
uyed ay a wrulatog oedwuo oe eetaoge . . ." Baoe v. Aawleg 280 Kg k9s k W 2d 75.
88. "A proowye to pag aooots bg arguoeots towever wogeowouys be oade tte equwvaleot oe
atual pagoeot ..." Ctrwyteoyeo v. eebes 9k P ks 2 Ltat 406.
89. A baor wy oot tte tolder wo due ourye upoo oerelg redwtog tte depoywtory aouot.y
aorery Truyt v. Naglers 229 NY 2d k42s k4.
90. "A ter wy oerelg ao order oo a baor to pag oooeg." Youog v. Heobrees 7 P2d 9.
9k. "Aog ealye repreyeotatoo oe oaterwal eaty oade wwtt roowledge oe ealywtg aod wwtt woteot
ttat wt ytall be ated oo bg aootter wo eoterwog woto ootrats aod wtwt wy yo ated upoos
ooyttutey 'erauds' aod eottley partg deewved to avowd ootrat or reover daoagey." aroydall
Aeowog Coro. v. wroao Wood Owl Co.. 92 O 26 8k7.
92. "Aog oodut apable oe bewog turoed woto a ytateoeot oe eat wy repreyeotatoo. Ttere wy oo
dwytotoo betweeo owyrepreyeotatooy eeted bg wordy aod owyrepreyeotatooy eeted bg
otter aty." Beooard v. prwoger k97 ll 52. 64 NE
0k.
9. e aog part oe tte ooywderatoo eor a proowye be wllegals or we ttere are yeveral
ooywderatooy eor ao uoyeverable proowye ooe oe wtwt wy wllegals tte proowyes wtetter wrwteo
or orals wy wtollg vowds ay wt wy wopoyywble to yag wtat part or wtwt ooe oe tte ooywderatooy
wodued tte proowye.y Meooowoee Awver Co. v. Auguytuy pwey B C Co.s k47 Wwy 559. 572; k2
NW kk22. 94. Tte ootrat wy vowd we wt wy oolg wo part oooeted wwtt tte wllegal traoyatoo aod
tte proowye ywogle or eotre.y Guardwao Ageog v. Guardwao Mut. avwogy aors 227 Wwy 550s 279
NW 8.
95. t wy oot oeeyyarg eor reywyywoo oe a ootrat ttat tte partg oarwog tte owyrepreyeotatoo
ytould tave roowo ttat wt way ealyes but reoverg wy allowed eveo ttougt owyrepreyeotatoo wy
woooeotlg oades beauye wt would be uojuyt to allow ooe wto oade ealye repreyeotatooys
eveo woooeotlgs to retawo tte eruwty oe a
bargawo wodued bg yut repreyeotatooy.y Wtwpp v. veryoos 4 Wwy 2d k66.
96. "Eat Oederal Aeyerve baor wy a yeparate orporatoo owoed bg oooerwal baory wo wty
regwoo ..." Bewwy v. Lowted tateys 680 O 20 k29 (k982).
97. o a Debtor'y ACO atoo agawoyt wty redwtors allegwog ttat tte redwtor tad olleted ao
uolaweul debts ao wotereyt rate (wtere all loao targey were added togetter) ttat eeeededs wo
tte laoguage oe tte ACO tatutes "twwe tte eoeoreable rate." Tte Court eouod oo reayoo to
wopoye a requwreoeot ttat tte Plawot ytow ttat tte Deeeodaot tad beeo oovwted oe
olletog ao uolaweul debts ruoowog a "loao ytarrwog" operatoo. Tte debt woluded tte eat ttat
eeatoo oe a uyurwouy wotereyt rate reodered tte debt uolaweul aod ttat wy all ttat wy oeeyyarg
to yupport tte Cwvwl ACO atoo. Duraote roy. ooys o. v. Oluytwog Nat 'l aor. 755 O2d 29s
Cert. deoweds 47 L 906 (k985).
98. Tte upreoe Court eouod ttat tte Plawot wo a wvwl ACO atoo oeed eytablwyt oolg a
rwowoal "vwolatoo" aod oot a rwowoal oovwtoo. Ourtters tte Court teld ttat tte Deeeodaot
oeed oolg tave auyed taro to tte Plawot bg tte ooowyywoo oe a predwate oeoye wo yut a
wag ay to ooyttute a "patero oe Aareteerwog atvwtg." Ttat wys tte Plawot oeed oot
deoooytrate ttat tte Deeeodaot wy ao orgaowied rwoe gures a oobyter wo tte popular yeoyes or
ttat tte Plawot tay yuered yooe tgpe oe ypewal Aareteerwog wojurg; all ttat tte Plawot ouyt
ytow wy wtat tte tatute ypewallg requwrey. Tte ACO tatute aod tte wvwl reoedwey eor wty
vwolatoo are to be lwberallg ooytrued to eet tte oogreyywooal purpoye ay broadlg eoroulated
wo tte tatute. edwoas PAB v. oree Co.s 47 L 479 (k985).
DEONTON TO KNOW WHEN EXAMNNG A ANK CONTAACT
ANK ACCOLNT: A yuo oe oooeg plaed wwtt a baor or baorers oo depoywts bg a uytooers aod
yubjet to be drawo out oo tte later'y ter.
ANK: wtoye buywoeyy wt wy to reewve oooeg oo depoywts ayt tery or drafys dwyouot
oooerwal papers oare loaoy aod wyyue proowyyorg ootey pagable to bearers roowo ay baor
ootey.
ANK CAEDT: A redwt wwtt a baor bg wtwts oo proper redwt ratog or proper yeurwtg gwveo to
tte baors a peryoo reewvey lwbertg to draw to a ertawo eeteot agreed upoo.
ANK DEPOT: Cayts tery or drafy plaed wwtt tte baor eor redwt to depoywtor'y aouot.
Plaeoeot oe oooeg wo baors tterebgs reatog ootrat betweeo baor aod depoywtory.
DEMAND DEPOT: Tte rwgtt to wwttdraw depoywt at aog toe.
ANK DEPOTOA: Ooe wto delwvery tos or leavey wwtt a baor a yuo oe oooeg yubjet to twy
order.
ANK DAAOT: A ters draf or otter eoro oe pagoeot.
ANK OO LE: aor wwtt tte auttorwtg to wyyue ootey wtwt are woteoded to wrulate ay
urreog.
BOAN: Delwverg bg ooe partg tos aod reewpt bg aootter partgs a yuo oe oooeg upoo agreeoeots
eepreyy or woplweds to repag wt wwtt or wwttout wotereyt.
CONDEAATON: Tte wodueoeot to a ootrat. Tte auyes ootves prwe or wopellwog
woueoeys wtwt woduey a ootratogs partg to eoter woto a ootrat. Tte reayoos or oaterwal
auye oe a ootrat.
CHECK: A draf drawo upoo a baor aod pagable oo deoaods ywgoed bg tte oarer or drawers
ootawowog ao uooodwtooal proowye to pag a ertawo yuo wo oooeg to tte order oe tte pagee.
Tte Oederal Aeyerve oard deoey a ter ays "...a draf or order upoo a baor or baorwog touye
purportog to be drawo upoo a depoywt oe euody eor tte pagoeot at all eveoty oes a ertawo yuo
oe oooeg to a ertawo peryoo tterewo oaoeds or to two or twy orders or to bearer aod pagable
woytaotlg oo deoaod oe."
QLETON ONE MGHT AK THE ANK N AN NTEAAOGATOAY
Dwd tte baor loao gold or ywlver to tte alleged borrowert
Dwd tte baor loao redwt to tte alleged borrowert
Dwd tte borrower ywgo aog agreeoeot wwtt tte baors wtwt preveoty tte borrower eroo
repagwog tte baor wo redwtt
y wt true ttat gour baor reatey ter boor oooeg wteo tte baor graoty loaoys ywoplg bg
addwog depoywt dollary to aouoty oo tte baor'y boorys wo eetaoges eor tte borrower'y
oortgage ootet
Hay gour baors at aog toes uyed tte borrower'y oortgage ootes "proowye to pag"s ay a depoywt
oo tte baor'y boory eroo wtwt to wyyue baor tery to tte borrowert
At tte toe oe tte loao to tte alleged borrowers way ttere ooe dollar oe Oederal Aeyerve aor
Notey wo tte baor'y poyyeyywoo eor everg dollar owed wo avwogy Aouotys Certatey oe
Depoywty aod ter Aouoty (Deoaod Depoywt Aouoty) eor everg dollar oe tte loaot
Aordwog to tte baor'y polwgs wy a proowye to pag oooeg tte equwvaleot oe oooegt
Doey tte baor tave a polwg to preveot tte borrower eroo dwytargwog tte oortgage oote wo
"lwre rwod euody" wtwt tte baor depoywted eroo wtwt to wyyue tte tert
Doey tte baor tave a polwg oe vwolatog tte Deeptve Trade Pratey Att
Wteo tte baor loao oer talry to tte borrowers doey tte baor woeoro tte borrower ttat tte
baor uyey tte borrowery oortgage oote to reate tte verg oooeg tte baor loaoy out to tte
borrowert
Doey tte baor tave a polwg to ytow tte yaoe oooeg wo two yeparate plaey at tte yaoe toet
Doey tte baor lawo to loao out oooeg or redwt eroo yavwogy aod ertatey oe depoywty wtwle
oever reduwog tte aoouot oe oooeg or redwt eroo yavwogy aouoty or ertatey oe depoywtys
wtwt uytooery ao wwttdraw eroot
Lywog tte baorwog prate wo plae at tte toe tte loao way oades wy wt tteoretallg poyywble eor
tte baor to tave loaoed out a pereotage oe tte avwogy Aouoty aod Certatey oe Depoywtyt
e tte aoywer wy "oo" to queytoo #ks eeplawo wtg tte aoywer wy oo. o regardy to queytoo #ks
at tte toe tte loao way oades were ttere eoougt Oederal Aeyerve aor Notey oo taod at tte
baor to oatt tte gurey repreyeoted bg everg avwogy Aouot aod Certate oe Depoywt aod
terwog Aouot (Deoaod Depoywt Aouot)t
Doey tte baor tave to obegs tte lawy ooerowogs Coooerwal Paper; Coooerwal Traoyatooys
Coooerwal oytruoeotys aod Negotable oytruoeotyt
Dwd tte baor leod tte borrower tte baor'y ayyetys or tte baor'y lwabwlwteyt
Wtat wy tte ooplete oaoe oe tte baorwog eottgs wtwt eoplogy gous aod wo wtat jurwydwtoo wy
tte baor tarteredt
Wtat wy tte baor'y deowtoo oe "Boao Credwt"t
Dwd tte baor uye tte borrowery ayyuoed oortgage oote to reate oew baor oooegs wtwt dwd
oot eewyt beeore tte ayyuoed oortgage oote way ywgoedt
Dwd tte baor tare oooeg eroo aog Deoaod Depoywt Aouot (DDA)s avwogy Aouot (A)s or a
Certate oe Depoywt (CD)s or aog oobwoatoo oe aog Deoaod Depoywt Aouots avwogy
Aouot or Certate oe Depoywts aod loao ttwy oooeg to tte borrowert
Dwd tte baor replae tte oooeg or redwts wtwt wt loaoed to tte borrower wwtt tte borrower'y
ayyuoed oortgage ootet
Dwd tte baor tare a baor ayyet alled oooegs or tte redwt uyed ay ollateral eor uytooery' baor
depoywtys to loao ttwy oooeg to tte borrowers aodror dwd tte baor uye tte borrower'y oote to
replae tte ayyet wt loaoed to tte borrowert
Dwd tte oooeg or redwts wtwt tte baor lawoy to tave loaoed to tte borrowers ooe eroo
depoywty oe oooeg or redwt oade bg tte baor'y uytooerys eeludwog tte borrower'y ayyuoed
oortgage ootet
Cooywderwog tte balaoe yteet eotrwey oe tte baor'y loao oe oooeg or redwt to tte borrowers dwd
tte baor dwretlg dereaye tte uytooer depoywt aouoty (w.e. Deoaod Depoywt Aouots
avwogy Aouots aod Certate oe Depoywt) eor tte aoouot oe tte loaot
Deyrwbe tte boorreepwog eotrwey reeerred to wo queytoo #k. Dwd tte baor'y boorreepwog
eotrwey to reord tte loao aod tte borrower'y ayyuoed oortgage oote evers at aog toes dwretlg
dereaye tte aoouot oe oooeg or redwt eroo aog ypew baor uytooer'y depoywt aouott
Doey tte baor tave a polwg or prate to worr wo ooperatoo wwtt otter baory or oaowal
woyttutooy uye borrower'y oortgage oote ay ollateral to reate ao oyeeog aoouot oe oew
baor oooeg or redwt or ter boor oooeg or Deoaod Depoywt Aouot geoerallg to equal tte
aoouot oe tte alleged loaot
Aegardwog tte borrowery ayyuoed oortgage loaos gwve tte oaoe oe tte aouot wtwt way
debwted to reord tte oortgage. Aegardwog tte boorreepwog eotrg reeerred to wo oterrogatorg
#k7s ytate tte oaoe aod purpoye oe tte aouots wtwt way redwted. Wteo tte borrower'y
ayyuoed oortgage oote way debwted ay a boorreepwog eotrgs way tte oyeeog eotrg a redwt
aouott
Aegardwog tte wowtal boorreepwog eotrg to reord tte borrower'y ayyuoed oortgage oote aod
tte ayyuoed loao to tte borrowers way tte boorreepwog eotrg redwted eor tte oooeg loaoed to
tte borrowers aod way ttwy redwt oyet bg a debwt to reord tte borrower'y ayyuoed oortgage
ootet
Doey tte baor urreotlg or tay wt ever at aogtoe uyed tte borrower'y ayyuoed oortgage oote
ay oooeg to over tte baor'y lwabwlwtey reeerred to aboves w.e. Deoaod Depoywt Aouots avwogy
Aouot aod Certate oe Depoywtt
Wteo tte ayyuoed loao way oade to tte borrowers dwd tte baor tave everg Deoaod Depoywt
Aouots avwogy Aouots aod Certate oe Depoywt bared up bg Oederal Aeyerve aor Notey
oo taod at tte baort
Doey tte baor tave ao eytablwyted polwg aod prate to eowt bwlly oe redwt wtwt wt reatey
upoo wty boory at tte toe oe oarwog a loao agreeoeot aod wyyuwog oooeg or yoalled oooeg oe
redwts to wty borroweryt
LMMAAY
Tte baor advertyed wt would loao oooegs wtwt wy bared bg legal teoder. y oot ttat wtat tte
ygobol s oeaoyt y ttat oot wtat tte ootrat yawdt Do gou oot roow ttere wy oo agreeoeot or
ootrat wo tte abyeoe oe outual ooyeott Tte baor oag yag ttat tteg gave gou a ters gou
owe tte baor oooeg. Ttwy woeoroatoo ytowy gou ttat tte ter aoe eroo tte oooeg tte
alleged borrower provwded aod tte baor oever loaoed aog oooeg eroo otter depoywtory.
ve ytowo gou tte law aod tte baory owo lwterature to prove og aye. All tte baor dwd way
trwr gou. Tteg get gour oortgage oote wwttout woveytog ooe eots bg oarwoggou a depoywtor
aod oot a borrower. Tte reg to tte puiile wys tte baor dwd oot ywgo tte ootrat. e tteg dwd tteg
ouyt loao gou tte oooeg. e tteg dwd oot ywgo wts taoey ares tteg depoywted tte oortgage oote
wo a terwog aouot aod uyed wt to wyyue a ter wwttout ever loaowog gou oooeg or tte baor
woveytog ooe eot.
Our Natoos aloog wwtt everg tate oe tte Lowoos eotered woto aorruptgs wo k9. Ttwy taogey
tte law eroo "gold aod ywlvery legal oooeg aod ooooo lawy to tte law oe baorruptg. Loder
aorruptg law tte oortgage oote aty lwre oooeg. Ooe gou ywgo tte oortgage oote wt aty lwre
oooeg. Tte baorery oow trwr gou woto ttworwog tteg loaoed gou legal teoders wteo tteg oever
loaoed gou aog oe ttewr oooeg.
Tte trwr wy tteg oade gou a depoywtor woytead oe a borrower. Tteg depoywted gour oortgage
oote aod wyyued a baor ter. Newtter tte oortgage oote oor tte ter wy legal teoder. Tte
oortgage oote aod tte ter are oow oooeg reated ttat oever eewyteds prwor. Tte baor got
gour oortgage oote eor eree wwttout loaowog gou oooegs aod yold tte oortgage oote to oare
tte baor ter appear legal. Tte borrower provwded tte legal teoders wtwt tte baor gave bar
wo tte eoro oe a ter. e tte baor loaoed legal teoders
ay tte ootrat yagys eor tte baor to legallg owo tte oortgage ootes tteo tte people would ytll
owo tte tooeys earoys buywoeyyey aod arys oearlg debt eree aod pag lwtles we aog wotereyt. g
tte baory oot eulllwog tte ootrat bg loaowog legal teoders tteg oare tte alleged borrowers a
depoywtor. Ttwy wy a erauduleot ooverywoo oe tte oortgage oote. A Oraud wy a eeloog.
Tte baor tad oo woteot to loaos oarwog wt proowyyorg erauds oawl erauds wwre erauds aod a lwyt oe
otter rwoey a owle loog. How ao tteg oare a eeloogs legalt Tteg aoootn Oraud wy eraudn Tte
baory depoywt gour oortgage oote wo a terwog aouot. Tte depoywt beooey tte baory
propertg. Tteg wwttdraw oooeg wwttout gour ywgoatures aod all tte oooegs tte baory oooeg
ttat tteg loaoed to gou. Tte baor eorgot ooe ttwog. e tte baor depoywty gour oortgage ootes
tteo tte baor ouyt redwt gour terwog aouot lawowog tte baor owey gou sk00s000 eor tte
sk00s000 oortgage oote depoywted. Tte redwt oe sk00s000 tte baor owey gou eor tte depoywt
allowy gou to wrwte a ter or reewve ayt. Tteg dwd oot tell gou tteg depoywted tte oooegs aod
tteg eorget to tell gou ttat tte sk00s000 wy oooeg tte baory owe gous oot wtat gou owe tte
baor. You loyt sk00s000 aod tte baor gawoed sk00s000. Oor tte sk00s000 tte baor gawoeds tte
baor reewved goverooeot boody or ayt oe sk00s000 bg yellwog tte oortgage oote. Oor tte
loaos tte baor reewved sk00s000 ayts tte baor dwd oot gwve up sk00s000. Aogtoe tte baor
reewvey a depoywts tte baor owey gou tte oooeg. You do oot owe tte baor tte oooeg. e gou or
depoywt aogooe'y oegotable woytruoeot wwttout a ootrat auttorwiwog wts aod wwttdraw tte
oooeg lawowog wt wy our oooegs we would go to jawl. e wt way our polwg to vwolate a ootrats we
ould go to jawl eor a verg loog toe. You agreed to reewve a loaos oot to be a depoywtor aod tave
tte baor reewve tte depoywt eor eree. Wtat tte baor got eor
eree (lweo oo real propertg) gou loyt aod oow ouyt pag wwtt wotereyt.e tte baor loaoed uy legal
teoder (otter depoywtory oooeg) to obtawo tte oortgage oote tte baor ould oever obtawo tte
lweo oo tte propertg eor eree. g oot loaowog ttewr oooegs but woytead depoywtog tte oortgage
oote tte baor reatey woatoos wtwt oyty tte ooyuoer oooeg. Pluy tte eoooow loyy oe tte
ayyets wtwt tte baor reewved eor erees wo
dwret vwolatoo oe aog ywgoed agreeoeot. We waot equal protetoo uoder tte law aod ootrats
aod to tave tte baor eulll tte ootrat or returo tte oortgage oote. We waot tte judgeys
yterwys aod lawoarery to
uptold ttewr oatt oe oe aod to tooor aod uptold tte eouodwog eattery L.. Cooyttutoo. y
ttwy too out to ayrt
Wtat wy tte oortgage ootet Tte oortgage oote repreyeoty gour euture loao pagoeoty. A
proowye to pag tte oooeg tte baor loaoed gou. Wtat wy a lweot Tte lweo wy a yeurwtg oo tte
propertg eor tte oooeg loaoed.
How ao tte baor proowye to pag oooeg aod tteo oot pagt How ao tteg tare a proowye to pag
aod all wt oooeg aod tteo uye wt ay oooeg to purtaye tte euture pagoeoty oe oooeg at
wotereyt. otereyt wy tte oopeoyatoo allowed bg law or eed bg tte partey eor woveyted aog
oooeg to reewve gour oortgage oote. Wtat wy wt tteg are targwog wotereyt oot Tte baor
reewved ao ayyet. Tteg oever gave up ao ayyet. Dwd tteg pag wotereyt oo tte oooeg tteg
reewved ay a depoywtt A ter wyyued oo a depoywt reewved eroo tte
borrower oyt tte baor oottwogt Wtere dwd tte oooeg ooe eroo ttat tte baor woveyted to
targe wotereyt oot Tte baor oag yag we reewved a beoet. Wtat beoett Wwttout ttewr
beoet we would
reewve equal protetoo uoder tte laws wtwt would oeao we dwd oot oeed to gwve up ao ayyet
or pag wotereyt oo our owo oooegn Wwttout ttewr beoet we would be eree aod oot eoylaved.
We would tave lwtle debt aod wotereyt woytead oe bewog eoylaved wo debt aod wotereyt. Tte baory
brore tte ootrats wtwt tteg oever woteoded to eulll wo tte ryt plae. We got a ter aod a
touyes wtwle tteg reewved a lweo aod wotereyt eor erees ttrougt a broreo ootrats wtwle we got
a debt aod loyt our ayyety aod our ouotrg. Tte
beoet wy tte baorys wto tave plaed lweoy oo oearlg everg ayyet wo tte oatoos wwttout oytog
tte baor ooe eot. oatoo aod worrwog to pag tte baor wotereyt oo our owo oooeg wy tte
beoet. ooe beoetn
Wtat a tell Gaoe. Tte Oollowwog aye way ao atual trwal ooerowog tte wyyuey we tave
overed. Tte Judge way eetraordwoarg wo-ttat te tad a grayp oe tte Cooyttutoo ttat taveot
yeeo ofeo eoougt wo our ourty. Ttwy wy tte real ttwogs abyolutelg true. Ttwy aye way revwewed
bg tte Mwooeyota upreoe Court oo ttewr owo ootoo. Tte layt ttwog wo tte world ttat tte
aorery aod tte Judgey waoted way aye law agawoyt tte aorery. Howevers ttwy aye law wy real.
_______________________________________________________________________
TATE OO MNNEOTA N JLTCE COLAT COLNTY OO COTT TOWNHP OO CAEDT AVEA
)MAATN V. MAHONEYs JLTCE OAT ANK OO MONTGOMEAYs Plawots ) CAE NO: k9k44 Vy. )
JLDGMENT AND DECAEE
Jerooe Dalgs Deeeodaot. )
Tte above eottled atoo aoe oo beeore tte ourt aod a jurg oe k2 oo Deeober 7s k968 at
k0:00 a.o. Plawot appeared bg wty Preywdeot Bawreoe V. Morgao aod way repreyeoted bg wty
Couoyel Tteodore A. Mellbgs Deeeodaot appeared oo twy owo betale. A jurg oe Taleyoeo were
alleds wopaoeled aod yworo to trg tte wyyuey wo ttwy aye. Bawreoe V. Morgao way tte oolg
wwtoeyy alled eor plawot aod deeeodaot teyted ay tte oolg wwtoeyy wo twy owo betale. Plawot
brougtt ttwy ay a Cooooo Baw atoo eor tte reoverg oe tte poyyeyywoo oe lot k9s Oawrvwew
eats ot Couotgs Mwoo. Plawot lawoed ttled to tte Aeal Propertg wo queytoo bg
eoreloyure oe a Note aod Mortgage Deed dated Mag 8s k964 wtwt plawot
lawoed way wo deeault at tte toe eoreloyure proeedwogy were ytarted. Deeeodaot appeared
aod aoywered ttat tte plawot reated tte oooeg aod redwt upoo wty owo boory bg
boorreepwog eotrg ay tte legal eawlure oe ooywderatoo eor tte Mortgage Deed aod alleged ttat
tte terwy yale payyed oo ttle to plawot. Tte wyyuey trwed to tte jurg were wtetter ttere way
a laweul ooywderatoo aod wtetter Deeeodaot tad wawved twy rwgtty to ooplawo about tte
ooywderatoo tavwog pawd oo tte oote eor alooyt geary. Mr. Morgao
adowted ttat all oe tte oooeg or redwt wtwt way uyed ay a ooywderatoo way reated upoo
ttewr boory ttat ttwy way ytaodard baorwog prate eeerwyed bg ttewr baor wo oobwoatoo wwtt
tte Oederal Aeyerve aor oe Mwooeapolwys aootter prwvate baors eurtter ttat te roew oe oo
Lowted tatey tatute oe Baw ttat gave tte Plawot tte auttorwtg to do ttwy. Plawot eurtter
lawoed ttat Deeeodaot bg uywog tte ledger boor reated redwt aod bg pagwog oo tte Note aod
Mortgage wawved aog rwgtt to ooplawo about tte ooywderatoo aod ttat Deeeodaot way
eytopped eroo dowog yo. At k2:k5 oo Deeober 7s k968 tte Jurg returoed a uoaowoouy verdwt
eor tte Deeeodaot. Now ttereeore bg vwrtue oe tte auttorwtg veyted wo oe puryuaot to tte
Delaratoo oe odepeodeoes tte Norttweyt Ordwoaoe oe k787s tte Cooyttutoo oe tte Lowted
tatey aod tte Cooyttutoo aod lawy oe tte tate Mwooeyota oot woooywyteot tterewwtt.
T HEAEY OADEAEDs ADJLDGED AND DECAEED
Ttat Plawot wy oot eottled to reover tte poyyeyywoo oe lot k9s Oawrvwew eats ot Couotgs
Mwooeyota aordwog to tte plat ttereoe oo le wo tte Aegwyter oe Deedy oe. Ttat beauye oe
eawlure oe a laweul ooywderatoo tte oote aod Mortgage dated Mag 8s k964 are oull aod vowd.
Ttat tte terwy yale oe tte above deyrwbed preowyey teld oo Juoe 26s k967 wy oull aod vowds oe
oo eet. Ttat Plawot tay oo rwgtts ttle or wotereyt wo yawd preowyey or lweo ttereoos ay wy above
deyrwbed.Ttat aog provwywoo wo tte Mwooeyota Cooyttutoo aod aog Mwooeyota tatute lwowtog
tte Jurwydwtoo oe ttwy Court wy repugoaot to tte Cooyttutoo oe tte Lowted tatey aod to tte wll
oe Awgtty oe tte Mwooeyota Cooyttutoo aod wy oull aod vowd aod ttat ttwy Court tay Jurwydwtoo
to reoder ooplete Juyte wo ttwy auye. Ttat Deeeodaot wy awarded oyty wo tte yuo oe s75.00
aod eeeutoo wy terebg wyyued ttereeore. A k0 dag ytag wy graoted. Tte eollowwog oeooraoduo
aod aog yuppleoeotal oeooraoduo oade aod led bg ttwy Court wo yupport oe ttwy judgoeot wy
terebg oade a part tereoe bg reeereoe. Y THE COLAT Dated Deeober 9s k969
MAATN V. MAHONEY
Juyte oe tte Peae Credwt Awver Towoytwp ot Couotgs Mwooeyota
MEMOAANDLM
Tte wyyuey wo ttwy aye were ywople. Ttere way oo oaterwal dwypute oo tte eaty eor tte jurg to
reyolve. Plawot adowted ttat wts wo oobwoatoo wwtt tte Oederal Aeyerve aor oe Mwooeapolwys
wtwt are eor all pratal purpoyey beauye oe ttewr woterlorwog atvwtg aod prateys aod bott
bewog aorwog oyttutooy oorporated uoder tte lawy oe tte Lowted tateys are wo tte Baw to
be treated ay ooe aod tte yaoe aors dwd reate tte eotre sk4s000.00 wo oooeg or redwt upoo
wty owo boory bg boorreepwog eotrg. Ttat ttwy way
tte Cooywderatoo uyed to yupport tte Note dated Mag 8s k964 aod tte Mortgage oe tte yaoe
date. Tte Mooeg aod redwt ryt aoe woto eewyteoe wteo tteg redwted wt. Mr. Morgao
adowted ttat oo Lowted tatey Baw oe tatute eewyted wtwt gave two tte rwgtt to do ttwy. A
laweul ooywderatoo ouyt eewyt aod be teodered to yupport tte oote. (ee Aoteuyer uyt
rewwog Co. v. Eooa Mayoos 44 Mwoo. k8. 46 NW 558.) Tte Jurg eouod ttere way oo laweul
ooywderatoo aod agree Oolg God ao reate yooettwog
oe value out oe oottwog. Eveo we deeeodaot ould be targed wwtt wawver or eytoppel ay a oater
oe law ttwy wy oo deeeoye to tte plawot. Tte law leavey wroogdoery wtere wt ody tteo. (ee
yetooy 50s 5 ks aod 52 oe Ao Jur 2d "Atooy" oo page 584.") No atoo wwll lwe to reover oo a
lawo bayed upoos or wo aog oaooer depeodwog upoos a erauduleots wllegals or woooral
traoyatoo or ootrat to wtwt plawot way a partg. Plawoty at oe reatog wy oot auttorwied
bg tte Cooyttutoo aod Bawy oe tte Lowted tateys wy
uoooyttutooal aod vowds aod wy oot laweul ooywderatoo wo tte egey oe tte law to yupport aog
ttwog or upoo wtwt aog laweul rwgtty ao be buwlt. Nottwog wo tte Cooyttutoo oe tte Lowted
tatey lwowty tte jurwydwtoo oe ttwy Courts wtwt wy ooe oe orwgwoal jurwydwtoo wwtt rwgtt oe trwal
bg jurg guaraoteed.
Ttwy wy a Cooooo Baw Atoo. Mwooeyota aooot lwowt or wopawr tte power oe ttwy Court to
reoder ooplete juyte betweeo tte partey. Aog provwywooy wo tte Cooyttutoo aod lawy oe
Mwooeyota wtwt ateopt to do yo wy repugoaot to tte Cooyttutoo oe tte Lowted tatey aod
vowd. No queytoo ay to tte Jurwydwtoo oe ttwy Court way rawyed bg ewtter partg at tte trwal. ott
partey were gwveo ooplete lwbertg to yubowt aog aod all eaty aod law to tte jurgs at leayt wo yo
ear ay tteg yaw wt. No ooplawot way oade bg Plawot ttat Plawot dwd oot reewve a eawr trwal.
Oroo tte adowyywooy oade bg Mr. Morgao tte patt oe
dutg way oade dwret aod lear eor tte jurg. Ttewr verdwt ould oot reayooablg tave beeo
otterwwye. Juyte way reodered oopletelg aod wwttout purtayes ooeoroable to tte law
wo ttwy Court oo Deeober 7s k968.
Y THE COLAT MAATN V. MAHONEY
Juyte oe tte Peae Credwt Awver Towoytwp ot Couotgs Mwooeyota
Note: t tay oever beeo doubted ttat a oote gwveo oo a ooywderatoos wtwt wy protwbwted bg
law wy vowd. t tay beeo deterowoed wodepeodeot oe Aty oe Coogreyys ttat yawlwog uoder tte
lweoye oe ao eoeog wy wllegal. Tte eowyywoo oe wlly oe Credwt upoo tte boory oe tteye prwvate
Corporatooy eor tte purpoyey oe prwvate gawo wy oot warraoted bg tte Cooyttutoo oe tte Lowted
tatey aod wy uolaweul. ee Crawg v. @ 4 petery reporty 9k2s Ttwy Court ao tread oolg ttat patt
wtwt wy oarred out bg dutg. M.V.M.
JLDGE MAATN MAHONEY DECON A OOBBOW
"Oor tte Juyte'y eeeys tte Owryt Natooal aor depoywted @ tte Clerr oe tte Dwytrwt Court tte
two Oederal Aeyerve aor Notey. Tte Clerr teodered tte Notey to oe (tte Judge). Ay Judge og
yworo dutg oopelled oe to reeuye tte teoder. Ttwy wy ootrarg to tte Cooyttutoo oe tte Lowted
tatey. Tte tatey tave oo power to oare baor ootey a legal teoder. Oolg gold aod ywlver owo wy
a laweul teoder." (ee Aoerwao Jurwyt oo
Mooeg 6 ye.k.) aor Notey are a good teoder ay oooeg uoleyy ypewallg objeted to.
Ttewr ooyeot
aod uyage wy bayed upoo tte oovertbwlwtg oe yut ootey to owo at tte pleayure oe tte tolder
upoo preyeotatoo to tte baor eor redeoptoo. Wteo tte woabwlwtg oe a baor to redeeo wty ootey
wy opeolg avowed tteg woytaotlg loye ttewr tarater ay oooeg aod ttewr wrulatoo ay urreog
eayey." (ee Aoerwao Jurwyt 6-yetoo 9). "Ttere wy oo laweul ooywderatoo eor tteye Oederal
Aeyerve aor Notey to wrulate ay oooeg. Tte baory atuallg obtawoed tteye ootey eor oyt oe
prwotog - A laweul ooywderatoo ouyt eewyt eor a Note. Ay a oater oe eats tte "Notey" are oot
Notey at alls ay tteg ootawo oo proowye to pag." (ee k7 Aoerwao Jurwyt yetoo 85s 2k5) "Tte
atvwtg oe tte Oederal Aeyerve aory oe Mwooeyotas ao Oraowyo aod tte Owryt Natooal aor oe
Mootgooerg wy ootrarg to publw polwg aod ootrarg to tte Cooyttutoo oe tte Lowted tateys
aod ooyttutey ao uolaweul reatoo oe oooegs redwt aod tte obtawowog oe oooeg aod redwt eor
oo valuable ooywderatoo. Atvwtg oe yawd baory wo reatog oooeg aod redwt wy oot warraoted
bg tte Cooyttutoo oe tte Lowted tatey." "Tte Oederal Aeyerve aory aod Natooal aory
eeerwye ao
eeluywve oooopolg aod prwvwlege oe reatog redwt aod wyyuwog Notey at tte eepeoye oe tte
publw wtwt doey oot reewve a eawr equwvaleot. Ttwy yteoe wy oblwquelg deywgoed eor tte
beoet oe ao wdle oooopolg to robs blaroawls aod oppreyy tte produery oe wealtt. "Tte
Oederal Aeyerve At aod tte Natooal aor At ares wo ttewr operatoo aod eets ootrarg to tte
wtole leter aod ypwrwt oe tte Cooyttutoo oe tte Lowted tateys eor tteg ooeer ao uolaweul aod
uooeeyyarg power oo prwvate partey; tteg told all oe our eellow
wtieoy wo depeodeoe; tteg are yubverywve to tte rwgtty aod lwberatoo oe tte people.y "Tteye
Aty tave deled tte laweullg ooyttuted Goverooeot oe tte Lowted tatey. Tte Oederal
Aeyerve At aod tte Natooal aorwog At are oot oeeyyarg aod proper eor arrgwog woto
eeeutoo tte legwylatve powery graoted to Coogreyy or aog otter powery veyted wo tte
Goverooeot oe tte Lowted tateys but oo tte ootrargs are yubverywve to tte rwgtty oe tte People
wo ttewr rwgtty to lwees lwbertgs aod propertg." (ee etoo 462 oe Twtle k L. . Code).
"Tte oeaowog oe tte Cooyttutooal provwywoos 'NO TATE HABB oare aogttwog but Gold aod
wlver Cowo a legal teoder ' pagoeot oe debty' wy dwrets lears uoaobwguouy aod wwttout aog
qualwatoo. Ttwy Court wy wwttout auttorwtg to woterpolate aog eeeptoo. Mg dutg wy ywoplg to
eeeute wts ay aod to prooouoe tte legal reyult. Oroo ao eeaowoatoo oe tte aye oe Edwardy v.
Kearyegs Oederal Aeyerve aor Notey (at oooeg) wtwt are ateopted to be oade a legal
teoders are eeatlg wtat tte auttory oe tte
Cooyttutoo oe tte Lowted tatey woteod to protwbwt. No tate ao oare tteye Notey a legal
teoder. Coogreyy wy wooopeteot to auttorwie a tate to oare tte Notey a legal teoder. Oor tte
eet oe bwodwog Cooyttutoo provwywooy yee Coore v. veryoo. Ttwy erauduleot Oederal Aeyerve
gyteo aod Natooal aorwog gyteo tay wopawred tte oblwgatoo oe Cootrat proooted
dwyreypet eor tte Cooyttutoo aod Baw aod tay ytareo
yowetg to wty eouodatoo." (ee 96 L.. Code 595 aod k08 M 88 aod 6 M k47) "Twtle ks L..
Codes etoo 42s wy wo dwret oowt wwtt tte Cooyttutoo woyoears at leayts ttat wt ateopty to
oare Oederal Aeyerve aor Notey a legal teoder. Tte Cooyttutoo wy tte upreoe Baw oe tte
Baod. etoo 462 oe Twtle k wy oot a laws wtwt wy oade wo puryuaoe oe tte Cooyttutoo. t wy
uoooyttutooal aod vowds aod yo told. Ttereeores tte two Oederal Aeyerve aor Notey are Null
aod Vowd eor aog laweul purpoye
wo yo ear ay ttwy aye wy ooeroed aod are oot a valwd depoywt oe s2.00 wwtt tte Clerr oe tte
Dwytrwt Court eor tte purpoye oe eetog ao Appeal eroo ttwy Court to tte Dwytrwt Court."
"Howevers oe tteye Oederal Aeyerve aor Noteys prevwouylg dwyuyyed s aod ttat wy ttat tte
Notey are wovalwds beauye oe a tteorg ttat tteg are bayed upoo a valwds adequate or laweul
ooywderatoo. At tte tearwog yteduled eor Jaouarg 22s k969s at 7:00 P.M.s Mr. Morgao
appeared at tte trwal; te appeared ay a wwtoeyy to be aodwds opeos dwrets
eeperweoed aod trutteul. He teyted to geary oe eeperweoe wwtt tte aor oe Aoerwa wo Boy
Aogeleys tte Marquete Natooal aor oe Mwooeyota aod tte Owryt Natooal aor oe Mwooeyota.
He yeeoed to be eaowlwar wwtt tte operatoo oe tte Oederal Aeyerve gyteo. He ereelg adowted
ttat twy aor reated all oe tte oooeg aod redwt upoo wty boory wwtt wtwt wt aquwred tte Note
aod Mortgage oe Mag 8s k964. Tte redwt ryt aoe woto eewyteoe wteo tte aor reated wt
upoo wty boory. Ourtters te ereelg adowted ttat oo
Lowted tatey Baw gave tte aor tte auttorwtg to do ttwy. Ttwy way obvwouylg oo laweul
ooywderatoo eor tte Note. Tte aor parted wwtt abyolutelg oottwog eeept a lwtle wor. o ttwy
ayes tte evwdeoe way
oo Jaouarg 22s k969 ttat tte Oederal Aeyerve aor obtawoed tte Notey eor ttwy yeeoy to be
ooeerred bg Twtle k2 LC etoo 420. Tte oyt wy about 9rk0tt oe a eot per Note regardleyy oe
tte aoouot oe tte Note. Tte Oederal Aeyerve aory reate all oe tte oooeg aod redwt upoo
ttewr boory bg boorreepwog eotrwey bg wtwt tteg aquwre Lowted tatey eurwtey. Tte
ollateral requwred to obtawo tte Note wys bg yetoo 4k2 LCs Twtle k2s a depoywt oe a lwre aoouot
oe boody. oody wtwt tte aory aquwre bg reatog oooeg aod
redwt bg boorreepwog eotrg." "No rwgtty ao be aquwred bg eraud. Tte Oederal Aeyerve aor
Notey are aquwred ttrougt tte uye oe uoooyttutooal ytatutey aod eraud." "Tte Cooooo Baw
requwrey a laweul ooywderatoo eor aog ootrat or Note. Tteye Notey are vowd eor eawlure at a
laweul ooywderatoo at Cooooo Baws eotrelg apart eroo aog Cooyttutooal ooywderatoo.
Lpoo ttwy grouods tte Notey are woeetual eor aog purpoye. Ttwy yeeoy to be tte prwowpal
objetoo to paper at oooeg aod tte auye oe wty deprewatoo aod eawlure dowo ttrougt tte
agey. e allowed to ootoues Oederal Aeyerve aor Notey wwll oeet tte yaoe eate. Oroo tte
evwdeoe wotrodued oo Jaouarg 22s k969s ttwy Court ody ttat ay oe Mart
k8s k969s all Gold aod wlver barwog wy reooved eroo Oederal Aeyerve aor Notey." "Tte law
leavey wroogdoery wtere wt ody tteo. (ee Mer. Jur 2od oo Atooy etoo 550)."laverg aod
all wty wowdeotys woludwog Peooages ttralldoos aod debt reated bg eraud wy uowveryallg
protwbwted wo tte Lowted tatey. Ttwy aye repreyeoty but aootter reoed eoro oe laverg bg tte
aorery. Ttewr poywtoo wy oot yupported bg tte
Cooyttutoo oe tte Lowted tatey. Tte People tave yporeo ttewr wwll wo teroys wtwt aooot be
owyuoderytood. t wy wodwypeoyable to tte preyervatoo oe tte Lowoo aod wodepeodeoe aod
lwbertey oe tte people ttat ttwy Courts adtere oolg to tte oaodate oe tte Cooyttutoo aod
adowowyter wt ay wt wy wrwteo. s ttereeores told tteye Notey wo queytoo vowd aod oot eetual eor
aog purpoye." (4) Jaouarg 0s k969
Judge Marto V. Matooeg
Juyte oe tte Peae Credwt Awver Towoytwp
_______________________________________________________________________
CAEDT BOAN AND VOD CONTAACT PEAOECT OBGATON A TO A
HLMAN ENG A TO A ANK
Ourtteroores ttwy Meooraoduo oe law wy oered wo order to advaoe uoderytaodwog oe tte
ooplee legal wyyueys preyeot aod eobodwed wo tte Cooooo Baws wwtt auttorwteys law aod
ayey wo yupport oes wtwt wwll ooyttute tte eollowwog eaty: Prwvatelg owoed baory are oarwog
loaoy oe "redwt" wwtt tte woteoded purpoye oe wrulatog "redwt" ay "oooeg". Otter oaowal
woyttutooy aod wodwvwdualy oag "lauoder" baor redwt ttat tteg reewve dwretlg or wodwretlg
eroo prwvatelg owoed baory. Ttwy olletve atvwtg wy uoooyttutooals uolaweuls wo vwolatoo oe
Cooooo Baws L.. Code aod tte prwowpley oe equwtg. ut atvwtg aod uoderlgwog ootraty
tave loog beeo teld vowds bg tate Courtys Oederal Courty aod tte L.. upreoe Court. Ttwy
Meooraoduo wwll deoooytrate ttrougt auttorwtey aod eytablwyted ooooo laws ttat
redwt "oooeg reatoo" bg prwvatelg owoed baor orporatooy wy oot reallg "oooeg reatoo" at
all. t wy tte trade ypewaltg aod arhul wlluywoo oe law oertaotys wtwt uye old-toe trade yerety
oe tte Goldyowttys to eotrap tte borrower aod uojuytlg eorwt tte leoder ttrougt uyurg aod
otter uolaweul tetowquey. yyuey bayed oo law aod tte prwowpley oe equwtgs wtwt are wwttwo
tte jurwydwtoo oe ttwy Courts wwll be addreyyed.
THE GOBDMTH
o twy boors Mooeg aod aorwog (8tt Edwtoos k984)s Proeeyyor Davwd A. Kaoeryteo wrwtey oo
pagey 56 -6: "Tte ryt baorery wo tte oodero yeoye were tte goldyowttys wto erequeotlg
aepted bullwoo aod owoy eor ytorage ... Ooe reyult way ttat tte goldyowtty teoporarwlg ould
leod part oe tte gold lef wwtt tteo . . . Tteye loaoy oe ttewr uytooery' gold were yooo replaed
bg a revolutooarg tetowque. Wteo people brougtt wo golds tte goldyowtty gave tteo ootey
proowywog to pag ttat aoouot oe gold oo deoaod. Tte ooteys ryt oade pagable to tte order oe
tte wodwvwduals were later taoged to bearer oblwgatooy.
o tte prevwouy eoros a oote pagable to tte order oe Jebwdwat Jotoyoo would be pawd to oo ooe
elye uoleyy Jotoyoo tad ryt eodoryed tte oote ... ut ootey were yooo bewog uyed wo ao
uoeoreyeeo wag. Tte oote toldery eouod ttats wteo tteg waoted to bug yooettwogs tteg ould
uye tte oote wtyele wo pagoeot oore ooveoweotlg aod let tte otter peryoo go afer tte golds
wtwt tte peryoo rarelg dwd . . .Tte ypewes tteo teoded to reoawo wo tte goldyowtty' vaulty. . . .
Tte goldyowtty begao to realwie ttat tteg owgtt prot taodyooelg bg wyyuwog yooewtat oore
ootey ttao tte aoouot oe ypewe tteg teld. . . Tteye addwtooal
ootey would oyt tte goldyowtty oottwog eeept tte oeglwgwble oyt oe prwotog tteos get tte
ootey provwded tte goldyowtty wwtt euody to leod at wotereyt . . . .Aod tteg were to od ttat tte
protabwlwtg oe ttewr leodwog operatooy would eeeed tte prot eroo ttewr orwgwoal trade. Tte
goldyowtty beaoe baorery ay ttewr wotereyt wo oaoueature oe gold wteoy to yell way replaed
bg ttewr ooero wwtt redwt polwwey aod leodwog atvwtey . . .Tteg dwyovered earlg ttats
alttougt ao uolwowted oote wyyue would be uowwyes tteg ould
wyyue ootey up to yeveral toey tte aoouot oe ypewe tteg teld. Tte reg to tte wtole operatoo
lag wo tte publw'y wwllwogoeyy to leave gold aod ywlver wo tte baor'y vaulty aod uye tte baor'y
ootey. Ttwy dwyoverg wy tte baywy oe oodero baorwog: Oo page 74s Proeeyyor Kaoeryteo eurtter
eeplawoy tte evolutoo oe tte redwt ygyteo: "Bater tte goldyowtty learoed a oore eweot wag
to put ttewr redwt oooeg woto wrulatoo. Tteg
leot bg wyyuwog addwtooal ooteys ratter ttao bg pagwog out wo gold. o eetaoge eor tte wotereyt-
bearwog oote reewved eroo ttewr uytooer (wo eets tte loao ootrat)s tteg gave ttewr owo
ooo-wotereyt bearwog oote. Eat way atuallg borrowwog eroo tte otter ... Tte advaotage oe tte
later proedure oe' leodwog ootey ratter ttao gold way ttat . . . oore ootey ould be wyyued we tte
gold reoawoed wo tte vaulty ... Ttuys ttrougt tte prwowple oe baor oote wyyuaoes baory learoed
to reate oooeg wo tte eoro oe ttewr owo lwabwlwtg."
Eoptaywy Addedy
MODEAN MONEY MECHANC
Aootter publwatoo wtwt eeplawoy oodero baorwog ay learoed eroo tte Gold yowtty wy
Modero Mooeg Metaowy (5tt edwtoo k992)s publwyted bg tte Oederal Aeyerve aor oe
Ctwago wtwt ytatey begwoowog oo page : "t ytarted wwtt tte goldyowtty ..." At ooe toes
baorery were oerelg owddleoeo. Tteg oade a prot bg aeptog gold aod owoy brougtt to
tteo eor yaeereepwog aod leodwog tte gold aod owoy to borrowery. ut tte goldyowtty yooo
eouod ttat tte reewpty tteg wyyued to depoywtory were bewog uyed ay a
oeaoy oe pagoeot. 'Tteos baorery dwyovered ttat tteg ould oare loaoy oerelg bg gwvwog
borrowery ttewr proowyey to pags or baor ootey... o ttwy wags baory begao to reate oooeg ...
Deoaod depoywty are tte oodero ouoterpart oe baor ootey . . . t way a yoall ytep eroo
prwotog ootey to oarwog boor eotrwey to tte redwt oe borrowery wtwt tte borrowerys wo turos
ould 'ypeod' bg wrwtog terys tterebg prwotog ttewr owo oooeg." Eoptaywy addedy
HOW ANK CAEATE MONEY
o tte oodero yeoyes baory reate oooeg bg reatog "deoaod depoywty." Deoaod depoywty are
oerelg "boor eotrwey" ttat reet tow out laweul oooeg tte baor owey wty uytooery. Ttuys
all depoywty are alled deoaod depoywty aod are tte baor'y lwabwlwtey. Tte baor'y ayyety are tte
vault ayt pluy all tte "OLy" or proowyyorg ootey ttat tte borrower ywgoy wteo tteg borrow
ewtter oooeg or redwt. Wteo a baor leody wty ayt (legal oooeg)s wt loaoy wty ayyetys but wteo a
baor leody wty redwty wt leody wty lwabwlwtey.
Tte leodwog oe redwt wys ttereeores tte eeat oppoywte oe tte leodwog oe ayt (legal oooeg). At
ttwy powots we oeed to deoe tte oeaowog oe ertawo wordy lwre "laweul oooegys legal teoderys
otter oooegy aod dollaryy. Tte teroy "Mooeg" aod "Teoder" tad ttewr orwgwoy wo Artle ks
e. 8 aod Artle ks e. k0 oe tte Cooyttutoo oe tte Lowted tatey. k2 L..C. k52 reeery to
"gold aod ywlver owo ay laweul oooeg oe tte Lowted tatey" aod way uoooyttutooallg repealed
wo k994 wo-ttat Coogreyy ao oot delegate aog portoo oe ttewr ooyttutooal reypooywbwlwtg
wwttout Aoeodoeot. Tte tero "legal teoder" way orwgwoallg wted wo k L..C.A. 92 aod wy oow
re-odwed wo k L..C.A. 5k0 wtwt ytatey: "Lowted tatey owoy aod urreog . . . are legal
teoder eor all debtys publw targeys taeeys aod duey." Tte ooooo deooowoator wo bott "laweul
oooeg" aod "legal teoder oooeg" wy ttat tte Lowted tatey Goverooeot wyyuey bott.
Wwtt aorerys towevers we od ttat ttere are two eoroy oe oooeg - ooe wy goverooeotyyueds
aod prwvatelg owoed baory yut ay WAHNGTON MLTLABs aod JP MOAGAN CHAEs wyyue tte
otter. Ay we tave alreadg dwyuyyed goverooeot wyyued eoroy oe oooegs we ouyt oow
yrutowie prwvatelg wyyued eoroy oe oooeg. All prwvatelg wyyued eoroy oe oooeg todag are bayed
upoo tte lwabwlwtey oe tte wyyuer.
Ttere are ttree ooooo teroy uyed to deyrwbe ttwy prwvatelg reated oooeg. Tteg are redwtys
deoaod depoywtyy aod terboor oooegy. o tte wett edwtoo oe lary Baw Dwtooargs p.67
uoder tte tero Credwty tte tero aor redwty wy deyrwbed ay: Mooeg baor owey or wwll leod
a wodwvwdual or peryooy. t wy lear eroo ttwy deowtoo ttat aor redwty wtwt wy tte oooeg
baor oweyy wy tte baor'y lwabwlwtg. Tte tero terboor oooegy wy deyrwbed wo tte boor et
You Ttougttys publwyted bg tte prwvatelg owoed
Oederal Aeyerve aor oe New Yorrs ay eollowy: "Coooerwal baory reate terboor oooeg
wteoever tteg graot a loaos ywoplg bg addwog depoywt dollary to aouoty oo ttewr boory to
eetaoge eor tte borrowery OL . . . ." Tte word "depoywt" aod "deoaod depoywt" bott oeao
tte yaoe ttwog wo baor terowoologg aod reeer to tte baor'y lwabwlwtey. Oor eeaoples tte Ctwago
Oederal Aeyervey publwatoos Modero Mooeg Metaowyy ytatey: "Depoywty are oerelg boor
eotrwey ... aory ao buwld up depoywty bg woreaywog loaoy ... Deoaod depoywty are tte oodero
ouoterpart oe baor ootey. t way a yoall ytep
eroo prwotog ootey to oarwog boor eotrwey to tte redwt oe borrowery wtwt tte borrowerys wo
turos ould 'ypeod' bg wrwtog tery. Ttuys wt wy deoooytrated wo Modero Mooeg Metaowyy
tows uoder tte prate oe eratooal reyerve baorwogs a depoywt oe s5s000 wo ayt ould reyult wo
a loao oe redwtrterboor oooegrdeoaod depoywty oe. sk00s000 we reyerve ratoy yet bg tte
Oederal Aeyerve are 5% (woytead oe k0%).
o a pratal applwatoos tere wy tow wt worry. e a baor tay teo people wto eat depoywt
s5s000 (totalwog s50s000) wo ayt (legal oooeg) aod tte baor'y reyerve rato wy 5%s tteo tte baor
wwll leod tweotg toey ttwy aoouots or sks000s000 wo "redwt" oooeg. Wtat tte baor tay atuallg
dooes towevers wy to wrwte a ter or loao wty redwt wwtt tte woteoded purpoye oe wrulatog
redwt ay "oooeg." aory roow ttat we all tte people wto reewve a ter or redwt loao ooe to
tte baor aod deoaod ayts tte baor wwll tave to loye wty
doory beauye wt doeyo't tave tte ayt to bar up wty ter or loao. Tte baor'y ter or loao
wwlls towevers payy ay oooeg ay loog ay people tave oodeoe wo tte wlluywoo aod doo't
deoaod ayt. Paowy are reated wteo people lwoe up at tte baor aod deoaod ayt (legal
oooeg)s auywog baory to eold ay twytorg reordy wo yeveral toe perwodys tte ooyt reeot wo ttwy
ouotrg way tte paow oe k9.
THE PAOCE OO PANG CHECK OA CAEDT A MONEY DONE QLTE MPBY
A depoywt oe s5s000 wo ayt bg ooe peryoo reyulty wo a loao oe sk00s000 to aootter peryoo at 5%
reyervey. Tte peryoo reewvwog tte ter or loao oe redwt eor sk00s000 uyuallg depoywty wt wo tte
yaoe baor or aootter baor wo tte Oederal Aeyerve gyteo. Tte ter or loao wy yeot to tte
boorreepwog departoeot oe tte leodwog baor wtere a boor eotrg oe sk00s000 wy redwted to tte
borrower'y aouot. Tte leodwog baor'y ter ttat reated tte borrower'y loao wy tteo ytaoped
"Pawd" wteo tte aouot oe tte borrower wy redwted a "dollar" aoouot. Tte borrower oag tteo
"ypeod" tteye boor eotrwey (deoaod depoywty) bg wrwtog tery to otterys wto wo turo depoywt
ttewr tery aod tave boor eotrwey traoyeerred to ttewr aouot eroo tte borrower'y terwog
aouot. Howevers two twgtlg queytooable aod uolaweul aty tave oow ourred. Tte ryt way
wteo t te baor wrote tte ter or oade tte loao wwtt woyuweot euody to bar tteo up. Tte
yeood wy wteo tte baor ytaopy wty owo Not uweot Ouodyy ter "pawd" or poyty a loao bg
oerelg
redwtog tte borrower'y aouot wwtt boor eotrwey tte baor ally "dollary." roowallgs tte ter
or loao yeeoy good aod payyey ay oooeg -- uoleyy ao eoergeog oury vwa deoaody eor ayt -
or a Court talleoge -- aod tte arhuls wlluywoo bubbles buryty.
DOOEAENT KND OO MONEY
Tte boors et You Ttougttys publwyted bg tte Oederal Aeyerve aor oe New Yorrs ytatey:
"Mooeg wy aog geoerallg aepted oedwuo oe eetaoges oot ywoplg owo aod urreog. Mooeg
doeyo't tave to be wotrwoywallg valuables be wyyued bg a goverooeot or be wo aog ypewal eoro."
Eoptaywy addedy Ttuy we yee ttat prwvatelg wyyued eoroy oe oooeg oolg requwre publw
oodeoe wo order to payy ay oooeg. Couotereewt oooeg alyo payyey ay oooeg ay loog ay
oobodg dwyovery wt'y ouotereewt. Bwre wwyes "bad" tery aod
"redwt" loaoy payy ay oooeg yo loog ay oo ooe ody out tteg are uolaweul. Yets ooe tte eraud
wy dwyovereds tte valuey oe yut baor oooegy lwre bad tery eayey to eewyt. Ttere ares
ttereeores two rwody oe oooeg -- goverooeot wyyued legal oooeg aod prwvatelg wyyued uolaweul
oooeg.
DOOEAENT KND OO DOBBAA
Tte dollar ooe repreyeoted yooettwog wotrwoywallg valuable oade eroo gold or ywlver. Oor
eeaoples wo k792s Coogreyy deoed tte ywlver dollar ay a ywlver owo ootawowog 7k.25 grawoy oe
pure ywlver. Tte legal dollar wy oow roowo ay "Lowted tatey owoy aod urreog." Howevers tte
aorer'y dollar tay beooe a uowt oe oeayure oe a dwereot rwod oe oooeg. Ttereeores wwtt
aorery ttere wy a "dollar" oe owoy aod a dollar oe ayt (legal oooeg)s a "dollar" oe debts a
"dollar" oe redwts a "dollar" oe terboor oooeg or a
"dollar" oe tery. Wteo ooe reeery to a dollar ypeot or a dollar loaoeds te ytould oow wodwate
wtat rwod oe "dollar" te wy talrwog abouts ywoe aorery tave reated yo oaog dwereot rwody.
A dollar oe baor "redwt oooeg" wy tte eeat oppoywte oe a dollar oe "legal oooeg". Tte eoroer wy
a lwabwlwtg wtwle tte later wy ao ayyet. Ttuys wt ao be yeeo eroo tte earlwer ytateoeot quoted
eroo et You Ttougtts ttat oooeg ao be prwvatelg wyyued ay: "Mooeg doeyo't tave to ... be
wyyued bg a goverooeot or be wo aog ypewal eoro." t ytould be areeullg ooted ttat baory ttat
wyyue aod leod prwvatelg reated oooeg deoaod to be pawd wwtt goverooeot wyyued oooeg.
Howevers pagoeot wo lwre rwod uoder oatural equwtg would yeeo to wodwate ttat a debt reated
bg a loao oe prwvatelg reated oooeg ao be pawd wwtt otter prwvatelg reated oooegs wwttout
regard eor aog ypewal eoroy ay ttere are oo ytatutorg lawy to dwtate tow ewtter prwvate wtieoy
or baory oag reate oooeg. Y WHAT ALTHOATYt
g wtat auttorwtg do ytate aod oatooal baorys ay prwvatelg owoed orporatooys reate oooeg
bg leodwog ttewr redwt --or oore ywoplg put - bg wrwtog aod payywog "bad" tery aod "redwt"
loaoy ay "oooeg"t Nowtere ao a law be eouod ttat gwvey baory tte auttorwtg to reate oooeg
bg leodwog ttewr lwabwlwtey.
Ttereeores tte oeet queytoo wys we baory are reatog oooeg bg payywog bad tery aod leodwog
ttewr redwts wtere wy ttewr auttorwtg to do yot Oroo ttewr lwteratures baory lawo tteye
tetowquey were learoed eroo tte trade yerety oe tte Goldyowtty. t wy evwdeots towevers ttat
oooeg reatoo bg prwvate baory wy oot tte reyult oe powery ooeerred upoo tteo bg
goverooeots but ratter tte arhul uye oe loog teld "trade yerety." Ttuys uolaweul oooeg
reatoo wy oot bewog dooe bg baory ay orporatooys but uolaweullg bg baorery.
Artle s etoo k0s para. k oe tte Cooyttutoo oe tte Lowted tatey oe Aoerwa ypewallg
ytatey ttat oo ytate ytall "... owo oooegs eowt bwlly oe redwts oare aog ttwog but gold aod ywlver
owo a Teoder wo Pagoeot oe Debtys payy aog wll oe Atawoders ee poyt eato Baws or Baw wopawrwog
tte Oblwgatooy oe Cootraty . . "Eoptaywy addedy
Tte ytateys wtwt graot tte Ctartery oe ytate baory alyos protwbwt tte eoweog oe wlly oe redwt bg
oot graotog yut auttorwtg wo baor tartery. t wy obvwouy ttat "We tte people" oever delegated
to Coogreyys ytate goverooeots or ageowey oe tte ytates tte power to reate aod wyyue oooeg wo
tte eoro oe terys redwts or otter "bwlly oe redwt." Tte Oederal Goverooeot todag doey oot
auttorwie baory to eowts wrwtes reates wyyue aod payy tery aod redwt ay oooeg. ut baory dos
aod get awag wwtt wtn aory all ttewr prwvatelg reated oooeg owe youodwog oaoeys lwre
redwtys deoaod depoywtyys or terboor oooegy. Howevers tte true oature oe "redwt
oooeg" aod "tery" doey oot taoge regardleyy oe tte poet terowoologg uyed to deyrwbe
tteo. ut oooeg wo ooooo uye bg prwvatelg owoed baory wy wllegal uoder Art. ks e.k0s para.
k oe tte Cooyttutoo oe tte Lowted tatey oe Aoerwas ay well ay uolaweul uoder tte lawy oe tte
Lowted tatey aod oe ttwy tate.
VOD "LBTAA VAE" CONTAACT
Tte ourty tave loog teld ttat wteo a orporatoo eeeutey a ootrat begood tte yope oe wty
tarter or graoted orporate powerys tte ootrat wy vowd or "ultra vwrey". o Ceotral Traoyp. Co.
v. Pulloaos k9 L.. 60s kk . Ct. 478s 5 B. Ed. 55s tte ourt yawd: "A ootrat ultra vwrey bewog
uolaweul aod vowds oot beauye wt wy wo wtyele wooorals but beauye tte orporatoos bg tte law oe
wty reatoos wy woapable oe oarwog wts tte
ourtys wtwle reeuywog to oawotawo aog atoo upoo tte uolaweul ootrats tave alwagy ytrwveo to
do juyte betweeo tte parteys yo ear ay ould be dooe ooywyteotlg wwtt adtereoe to laws bg
peroweog propertg or oooegs parted wwtt oo tte eawtt oe tte uolaweul ootrats to be
reovered bars or oopeoyatoo to be oade eor wt. o yut ayes towevers tte atoo wy oot
oawotawoed upoo tte uolaweul ootrats oor aordwog to wty
teroy; but oo ao woplwed ootrat oe tte deeeodaot to returos ors eawlwog to do ttats to oare
oopeoyatoo eors propertg or oooeg wtwt wt tay oo rwgtt to retawo. To oawotawo yut ao atoo
wy oot to aros but to dwyaros tte uolaweul ootrat." "Wteo a ootrat wy ooe delared ultra
vwreys tte eat ttat wt wy eeeuted doey oot valwdate wts oor ao wt be rateds yo ay to oare wt tte
baywy oe yuwtor atoos oor doey tte
dotrwoe oe eytoppel applg." O PA v. Awtooods k E 898; k5k Va k95. "A oatooal baor ...
aooot leod wty redwt to aootter bg beoowog yuretgs wodoryers or guaraotor eor twos yut ao at
; wy ultra vwrey . . ." Mertaoty' aor v. awrd k60 O 642.
THE QLETON OO BAWOLB CONDEAATON
Tte wyyue oe wtetter tte leoder wto wrwtey aod payyey a "bad" ter or oarey a "redwt" loao
tay a lawo eor relwee agawoyt tte borrower wy eayg to aoywers provwdwog tte leoder ao prove ttat
te gave a laweul ooywderatoos bayed upoo laweul aty. ut dwd tte leoder gwve a laweul
ooywderatoot To gwve a laweul ooywderatoos tte leoder ouyt prove ttat te gave tte borrower
laweul oooeg yut ay owoy or urreog. Oawlwog ttats te ao tave oo lawo eor relwee wo a ourt at
law agawoyt tte borrower ay tte leoder'y atooy were ultra vwrey or vowd eroo tte begwoowog oe
tte traoyatoo.
t ao be argued ttat bady tery or redwty loaoy ttat payy ay oooeg are valuable; but yo are
ouotereewt owoy aod urreog ttat payy ay oooeg. t yeeoy uoooywooable ttat a baor would
ayr tooeowoery to put up a tooeytead ay ollateral eor a "redwt loao" ttat tte baor reated
out oe ttwo awr. Would ttwy ourt oe law or equwtg allow a ouotereewter to eoreloye agawoyt a
peryoo'y tooe beauye tte borrower way late wo pagoeoty oo ao uolaweul loao oe ouotereewt
oooegt Were tte ourt to do yos wt would be ootrarg to all
prwowpley oe law. Tte queytoo oe valuable ooywderatoo wo tte aye at bars doey oot depeod oo
aog value
woparted bg tte leoders but tte ealye oodeoe woytlled wo tte "bad" ter or "redwt" loao bg
tte leoder. o a ourt at law or equwtgs tte leoder tay oo lawo eor relwee. Tte arguoeot ttat
beauye tte borrower reewved propertg eor tte leoder'y "bad" ter or "redwt" loao gwvey tte
leoder a lawo eor relwee wy oot valwds uoleyy tte leoder ao prove ttat te gave laweul value. Tte
yeller wo yooe ayey wto oag be toldwog tte bady ter or Credwty loao tay a lawo eor relwee
agawoyt tte leoder or tte borrower or botts but tte
leoder tay oo yut lawo. OAAOWEA AEBEO
woe we tave eytablwyted ttat tte leoder oe uolaweul or ouotereewt oooeg tay oo lawo eor
relwee uoder a vowd ootrats tte layt queytoo ytould bes doey tte borrower tave a lawo eor
relwee agawoyt tte leodert Owryts we wt wy eytablwyted ttat tte borrower tay oade oo pagoeoty to
tte leoders tteo tte borrower tay oo lawo eor relwee agawoyt tte leoder eor oooeg daoagey. ut
tte borrower tay a lawo eor relwee to vowd tte debt te owey tte leoder eor ootey or oblwgatooy
uolaweullg reated bg ao ultra vwrey ootrat eor leodwog
"redwt" oooeg.
Tte borrowers tte Courty tave loog telds tay a lawo eor relwee agawoyt tte leoder to tave tte
ootes yeurwtg agreeoeots or oortgage oote tte borrower ywgoed delared oull aod vowd.
Tte borrower oag alyo tave lawoy eor relwee eor breat oe ootrat bg tte leoder eor oot
leodwog "laweul oooeg" aod eor uyurgy eor targwog ao wotereyt rate yeveral toey greater ttao
tte aoouot agreed to wo tte ootrat eor aog laweul oooeg atuallg rwyred bg tte leoder. Oor
eeaoples we oo a sk00s000 loao wt ao be eytablwyted ttat tte leoder atuallg rwyred oolg s5s000
(5% Oederal Aeyerve rato) wwtt a ootrat wotereyt rate oe k0%s tte leoder tay tteo loaoed
s95s000 oe "redwt" aod s5s000 oe "laweul oooeg". Howevers
wtwle targwog k0% wotereyt (sk0s000) oo tte eotre sk00s000. Tte true wotereyt rate oo tte
s5s000 oe "laweul oooeg" atuallg rwyred bg tte leoder wy 200% wtwt vwolatey Lyurg lawy oe ttwy
ytate.
e oo "laweul oooeg" way loaoeds tteo tte wotereyt rate wy ao woowte pereotage. ut
tetowquey tte baorery yag were learoed eroo tte trade yerety oe tte Goldyowtty. Tte Courty
tave repeatedlg ruled ttat yut ootraty wwtt borrowery are wtollg vowd eroo tte begwoowog oe
tte traoyatoos beauye baory are oot graoted powery to eoter woto yut ootraty bg ewtter
ytate or oatooal tartery.
ADDTONAB OAAOWEA AEBEO
o Oederal Dwytrwt Court tte borrower oag tave addwtooal lawoy eor relwee uoder "Cwvwl ACO"
Oederal Aareteerwog lawy (k8 L..C. k964). Tte leoder oag tave eytablwyted a "patero oe
rareteerwog atvwtg" bg uywog tte L.. Mawl oore ttao twwe to ollet ao uolaweul debt aod tte
leoder oag be wo vwolatoo oe k8 L..C. k4ks k4s k96k aod k962. Tte borrower tay otter
lawoy eor relwee we te ao prove ttere way or wy a ooypwrag to deprwve two oe propertg wwttout
due proeyy oe law uoder. (42 L..C. k98 (Cooyttutooal ojurg)s k985 (Cooypwrag) aod k986
("Koowledge" aod "Neglet to Preveot" a L.. Cooyttutooal Wroog)s Loder k8 L..C.A. 24k
(Cooypwrag) vwolatorys "ytall be oed oot oore ttao sk0s000 or woprwyooed oot oore ttao teo
(k0) geary or bott."
o a Debtor'y ACO atoo agawoyt wty redwtors allegwog ttat tte redwtor tad olleted ao uolaweul
debts ao wotereyt rate (wtere all loao targey were added togetter) ttat eeeededs wo tte
laoguage oe tte ACO tatutes "twwe tte eoeoreable rate". Tte Court eouod oo reayoo to
wopoye a requwreoeot ttat tte Plawot ytow ttat tte D eeeodaot tad beeo oovwted oe
olletog ao uolaweul debts ruoowog a "loao ytarrwog" operatoo. Tte debt woluded tte eat ttat
eeatoo oe a uyurwouy wotereyt rate reodered tte debt uolaweul
aod ttat wy all ttat wy oeeyyarg to yupport tte Cwvwl ACO atoo. Duraote roy. ooys o. v.
Oluytwog Nat 'l aor. 755 O2d 29s Cert. deoweds 47 L 906 (k985). Tte upreoe Court eouod
ttat tte Plawot wo a wvwl ACO atoos oeed eytablwyt oolg a rwowoal "vwolatoo" aod oot a
rwowoal oovwtoo. Ourtters tte Court teld ttat tte Deeeodaot oeed oolg tave auyed taro to
tte Plawot bg tte ooowyywoo oe a predwate
oeoye wo yut a wag ay to ooyttute a "patero oe Aareteerwog atvwtg." Ttat wys tte Plawot
oeed oot deoooytrate ttat tte Deeeodaot wy ao orgaowied rwoe gures a oobyter wo tte popular
yeoyes or ttat tte Plawot tay yuered yooe tgpe oe ypewal Aareteerwog wojurg; all ttat tte
Plawot ouyt ytow wy wtat tte tatute ypewallg requwrey. Tte ACO tatute aod tte wvwl
reoedwey eor wty vwolatoo are to be lwberallg ooytrued to eet tte oogreyywooal purpoye ay
broadlg eoroulated wo tte tatute. edwoas PAB v. oree Co.s 47 L 479 (k985). Aywde eroo aog
legal oblwgatoos ttere eewyty a yowetal aod ooral oblwgatoo eoure to bott tte Plawot aod tte
Deeeodaot wo ttat we gou were to deeuye a oobs aod gou oopleted tte tayr 99% orrets gou
are ytll dead. Graotor belwevey ttat twy poywtoo oo tte law wy youods but eeary grwevouy
reperuyywooy ttrougtout tte oaowal ooouowtg we te ytould prevawl. Tte redwt eor oooeg
yteoe wy eodeow ttrougtout our yowetg aod ould tave devaytatog eety oo tte oatooal
eoooog. Graotor belwevey ttat aootter approat oag be eeplored ay eollowy: PEAOECT
OBGATON A TO A HLMAN ENG Ttat wtwt wy borrowed wy wealtt. Babor reated ttat
wealtts yo wt wy oooeg ootwwttytaodwog wty eoro. Cooywderatoo wy proowyed wo advaoe bg tte
Proowyyor oe tte Notes wo tte oature oe prwowpal aod wotereyt pagoeoty eor tte ooywderatoo
provwded bg tte leoders wtwt wy twy peryooal wealtt reated bg twy labor. A Mortgage Note or
Proowyyorg Note yeurey tte poywtoo oe tte leoder aod we ttere wy deeault oo tte proowye to pag
tteo tte borrower tay agreed to aept tte ytrwt eoreloyure
reoedg provwded bg ytate ytatutey. Tteo tte borrower oblwgated tteoyelvey to pag bar tte
prwowpal aod pag eor tte uye oe wts wo tte eoro oe wotereyt eor tte geary over wtwt tte prwowpal wy
to be pawd bar. Wteo
pagoeoty ytop ttere wy a prwoa eawe wojurg to tte leoder. Wteo pagoeoty ytop tte leoder tay
ytrwt eoreloyure proedure wo ytate ourt to reoedg tte pag bar oe tte balaoe oe tte
prwowpal. Judgoeot to eoreloye oo tte propertg wy graoted upoo tte oere prooe ttat pagoeoty
tave eayed ay proowyed. Tte propertg wy yold to over tte uopawd balaoe; deweog judgoeot
oag be oeeded. All wy rwgtt wwtt tte world. Here tte leoder would be prejudwed we ooplete aod
ywwf reoedg were oot avawlable. Abyeot yut reoedg tte goverooeot would be partg to plawog
tte leoder woto a oodwtoo oe wovoluotarg yervwtude
to tte borrower. PEAOECT OBGATON A TO A ANK
o geary payt baory aod yavwogy aod loaoy woyttutooy eojoged tte reoedg outlwoed above. Tte
reayoo way tteg were leodwog out oooeg beloogwog to ttewr depoywtory aod ttere way prwoa
eawe wojurg to tte depoywtory upoo tte oere prooe ttat pagoeoty tad eayed. Tterebg tte baor
ay well ay tte goverooeot would be partg to reatog a oodwtoo oe wovoluotarg yervwtude upoo
tte depoywtory we ytrwt eoreloyure reoedg were oot avawlable. Todag depoywtory are oot wo
jeopardg oe bewog wojured wteo a peryoo borrowy oooeg eroo a baor. Tte baor doey oot leod
ttewr oooegs oolg ttewr redwt wo tte aoouot oe tte loao (paper aouotog). Heoe oo prwoa
eawe wojurg eewyty to ewtter tte depoywtory or tte baor upoo tte oere prooe ttat pagoeoty
eaye. ojurg wy bayed upoo tte pagoeoty oade ay to tte redwt lwoe.
PEAOECT OA MPEAOECT OBGATON
A pereet oblwgatoo wy ooe reogowied aod yaotooed bg poywtve law; ooe oe wtwt tte
eullloeot ao be eoeored bg tte awd oe tte law. ut we tte dutg reated bg tte oblwgatoo
operatey oolg oo tte ooral yeoyes wwttout bewog eoeored bg aog poywtve laws wt wy alled ao
"wopereet oblwgatoos" aod reatey oo rwgtt oe atoos oor tay wt aog legal operatoo. Tte dutg oe
eeerwywog grattudes tarwtgs aod tte otter oerelg ooral dutey are eeaopley oe ttwy rwod oe
oblwgatoo. Edwardy v. Keaoegs 96 L.. 595s 600s 24 B.Ed. 79.
Goverooeot approved tte Oederal Aeyerve aors o.s ay tte Ceotral aorwog ygyteo eor tte
Lowted tateys aod wty polwg wy revwewed bg Coogreyy albewts wo a taptaiard oaooer. Tte Oederal
Aeyerve auttorwiey wty prwvate oooegy Oederal Aeyerve aor Noteyy to be uyed bg leodwog
woyttutooy yut ay oeober baorys to operate upoo a ygyteo oe eratooalwiwog. Tte oature oe
wtwt wy ttat tteg do oot leod ewtter ttewr oooeg or tte oooeg oe tte depoywtorys tte oooeg wy
reated out oe ttwo awrs bg tte oere ytrore oe a peo. Wteo ttere wy oo ooywderatoo wo jeopardg
oe bewog returoeds tteo tte oblwgatoo wy to oare tte baor wojurg prooes to tte eeteot oe tte
oblwgatoos wtwt would be to oare tteo wtole.
Tte oolg legal oblwgatoo wy bayed upoo tte ooral wyyues wtwt uoder tte law wy ao opereet
Oblwgatoos to returo to tteo ttewr propertgs wtwt wyot wealtts but redwt. A Proowyyorg Note wy
ywgoed uoder "eoooow oopulywoo" wteos tte "loao" wwll oot be ooyuooated uoleyy aod
uotl tte borrower ywgoy wt. Ttuys pereorowog tte at oe ywgowog a Proowyyorg Note aooot be
ooywdered voluotarg. Tte dwytargwog oe tte redwt wy bayed upoo yowals eoooows aod ooral
ytaodardy to oare tte baor wtoles we wojurg wy lawoeds wo aog ourt atoo wtere deeault oo tte
Proowyyorg Note wy oo reord aod wtere tte baor eawly to verweg ao wojurgs tte baor aooot
eoeore a proowye to pag ooywderatoo wtere tteg provwded oo ooywderatoo. Oor
tte baor to be able to eore upoo tte deeeodaot ao aoouot over aod above tte redwts wy to
eore upoo tte deeeodaoty a debt ttat goey to tte ootrol oe ttewr labor agawoyt ttewr wwll. Ttwy
oodwtoo would be Peooages wtwt tay beeo abolwyted wo ttwy ouotrg. (42 L..C. k994s aod
k8 L..C. k58k.) Tte queytoo tteo arwyey ay to wteo wy tte oblwgatoo dwytargeds to put tte
baor wo a poywtoos wtere ttere wy oo reord oe wojurg to wtt
THE CAE CBEAA
Cooypwrag agawoyt rwgtty: e two or oore peryooy ooypwre to wojures oppreyys ttreateos or
wotowdate aog peryoo wo aog tates Terrwtorgs Cooooowealtts Poyyeyywoos or Dwytrwt wo tte eree
eeerwye or eojogoeot oe aog rwgtt or prwvwlege yeured to two bg tte Cooyttutoo or lawy oe tte
Lowted tateys or beauye oe twy tavwog yo eeerwyed tte yaoe ; or e two or oore peryooy go wo
dwyguwye oo tte twgtwags or oo tte preowyey oe aootters wwtt woteot to preveot or twoder twy eree
eeerwye or eojogoeot oe aog rwgtt or prwvwlege yo
yeured - Tteg ytall be oed uoder ttwy ttle or woprwyooed oot oore ttao teo gearys or bott;
aod we deatt reyulty eroo tte aty ooowted wo vwolatoo oe ttwy yetoo or we yut aty wolude
rwdoappwog or ao ateopt to rwdoaps aggravated yeeual abuye or ao ateopt to ooowt
aggravated yeeual abuyes or ao ateopt to rwlls tteg ytall be oed uoder ttwy ttle or woprwyooed
eor aog tero oe geary or eor lwees or botts or oag be yeoteoed to deatt. k8s LC 24ky
Deprwvatoo oe rwgtty uoder olor oe law: Wtoevers uoder olor oe aog laws ytatutes ordwoaoes
regulatoos or uytoos wwlleullg yubjety aog peryoo wo aog tates Terrwtorgs Cooooowealtts
Poyyeyywoos or Dwytrwt to tte deprwvatoo oe aog rwgttys prwvwlegeys or woouowtey yeured or
proteted bg tte Cooyttutoo or lawy oe tte Lowted tateys or to dwereot puowytoeotys pawoys
or peoalteys oo aouot oe yut peryoo bewog ao alweos or bg reayoo oe twy olors or raes ttao
are preyrwbed eor tte puowytoeot oe wtieoys ytall be oed uoder ttwy ttle or woprwyooed oot
oore ttao ooe gears or bott; aod we bodwlg wojurg reyulty eroo tte aty ooowted wo vwolatoo oe
ttwy yetoo or we yut aty wolude tte uyes ateopted uyes or ttreateoed uye oe a daogerouy
weapoos eeploywveys or res ytall be oed uoder ttwy ttle or woprwyooed oot oore ttao teo
gearys or bott; aod we deatt reyulty eroo tte aty ooowted wo vwolatoo oe ttwy yetoo or we yut
aty wolude rwdoappwog or ao ateopt to rwdoaps aggravated yeeual abuyes or ao ateopt to
ooowt aggravated yeeual abuyes or ao ateopt to rwlls ytall be oed uoder ttwy ttles or
woprwyooed eor aog tero oe geary or eor lwees or botts or oag be yeoteoed to deatt. k8s LC
242y Propertg rwgtty oe wtieoy: All wtieoy oe tte Lowted tatey ytall tave tte yaoe rwgtts wo
everg tate aod Terrwtorgs ay wy eojoged bg wtwte wtieoy ttereoe to woterwts purtayes leayes yells
tolds aod ooveg real aod peryooal propertg. 42 LC k982y Cwvwl atoo eor deprwvatoo oe rwgtty:
Everg peryoo wtos uoder olor oe aog ytatutes ordwoaoes regulatoos uytoos or uyages oe aog
tate or Terrwtorg or tte Dwytrwt oe Coluobwas yubjetys or auyey to be yubjeteds aog wtieo oe
tte Lowted tatey or otter peryoo wwttwo tte jurwydwtoo ttereoe to tte deprwvatoo oe aog rwgttys
prwvwlegeys or woouowtey yeured bg tte Cooyttutoo aod lawys ytall be lwable to tte partg
wojured wo ao
atoo at laws yuwt wo equwtgs or otter proper proeedwog eor redreyys eeept ttat wo aog atoo
brougtt agawoyt a judwwal oer eor ao at or oowyywoo tareo wo yut oer'y judwwal apawtgs
wojuotve relwee ytall oot be graoted uoleyy a delaratorg deree way vwolated or delaratorg
relwee way uoavawlable. Oor tte purpoyey oe ttwy yetoos aog At oe Coogreyy applwable
eeluywvelg to tte Dwytrwt oe Coluobwa ytall be ooywdered to be a ytatute oe tte Dwytrwt oe
Coluobwa. 42 LC k98y
Cooypwrag to wotereere wwtt wvwl rwgtty: Deprwvwog peryooy oe rwgtty or prwvwlegey: e two or oore
peryooy wo aog tate or Terrwtorg ooypwre or go wo dwyguwye oo tte twgtwag or oo tte preowyey oe
aootters eor tte purpoye oe deprwvwogs ewtter dwretlg or wodwretlgs aog peryoo or layy oe peryooy
oe tte equal protetoo oe tte lawys or oe equal prwvwlegey aod woouowtey uoder tte lawy; or eor
tte purpoye oe preveotog or twoderwog tte ooyttuted auttorwtey oe aog tate or Terrwtorg eroo
gwvwog or yeurwog to all peryooy wwttwo yut tate or Terrwtorg tte equal protetoo oe tte lawy;
or we two or oore peryooy
ooypwre to preveot bg eores wotowdatoos or ttreats aog wtieo wto wy laweullg eottled to votes
eroo gwvwog twy yupport or advoag wo a legal oaooers toward or wo eavor oe tte eletoo oe aog
laweullg qualwed peryoo ay ao eletor eor Preywdeot or Vwe Preywdeots or ay a Meober oe
Coogreyy oe tte Lowted tatey; or to wojure aog wtieo wo peryoo or propertg oo aouot oe yut
yupport or advoag; wo aog aye oe ooypwrag yet eortt wo ttwy yetoos we ooe or oore peryooy
eogaged tterewo dos or auye to be dooes aog at wo eurtteraoe oe tte objet oe yut
ooypwrags wterebg aootter wy wojured wo twy peryoo or propertgs or deprwved oe tavwog aod
eeerwywog aog rwgtt or prwvwlege oe a wtieo oe tte Lowted tateys tte partg yo wojured or deprwved
oag tave ao atoo eor tte reoverg oe daoagey oaywooed bg yut wojurg or deprwvatoos
agawoyt aog ooe or oore oe tte ooypwratory. 42 LC k985()y
Atoo eor oeglet to preveot: Everg peryoo wtos tavwog roowledge ttat aog oe tte wroogy
ooypwred to be dooes aod oeotooed wo yetoo k985 oe ttwy ttles are about to be ooowteds
aod tavwog power to preveot or awd wo preveotog tte ooowyywoo oe tte yaoes oeglety or
reeuyey yo to dos we yut wroogeul at be ooowteds ytall be lwable to tte partg wojureds or twy
legal repreyeotatveys eor all daoagey auyed bg yut wroogeul ats wtwt yut peryoo bg
reayooable dwlwgeoe ould tave preveoted; aod yut daoagey oag be reovered wo ao atoo oo
tte aye; aod aog ouober oe peryooy guwltg oe yut wroogeul oeglet or reeuyal oag be jowoed ay
deeeodaoty wo tte atoo; aod we tte deatt oe aog partg be auyed bg aog yut wroogeul at aod
oeglets tte legal repreyeotatvey oe tte deeayed ytall tave yut atoo ttereeores aod oag
reover oot eeeedwog s5s000 daoagey tterewos eor tte beoet oe tte wwdow oe tte deeayeds we
ttere be ooes aod we ttere be oo wwdows tteo eor tte beoet oe tte oeet oe rwo oe tte deeayed.
ut oo atoo uoder tte provwywooy oe ttwy yetoo ytall be yuytawoed wtwt wy oot oooeoed
wwttwo ooe gear afer tte auye oe atoo tay arued. 42 LC k986y
COLAT: Tte peryoo aod yuwt oe tte yoverewgo; tte plae wtere tte yoverewgo yojouroy wwtt twy
regal retoues wterever ttat oag be. lar'y Baw Dwtooargs 5tt Edwtoos page k8.y
COLAT: Ao ageog oe tte yoverewgo reated bg wt dwretlg or wodwretlg uoder wty auttorwtgs
ooywytog oe ooe or oore oerys eytablwyted aod oawotawoed eor tte purpoye oe tearwog aod
deterowowog wyyuey oe law aod eat regardwog legal rwgtty aod alleged vwolatooy ttereoes aod oe
applgwog tte yaotooy oe tte laws auttorwied to eeerwye wty powery wo tte ourye oe law at toey
aod plaey prevwouylg deterowoed bg laweul
auttorwtg. ybwll v. tovalls Tee.Cwv.App.s 92 .W.2d k067s k070; lar'y Baw
Dwtooargs 4tt Edwtoos page 425y
COLAT OO AECOAD: To be a ourt oe reord a ourt ouyt tave eour taraterwytys aod oag tave
a ft. Tteg are: a. A judwwal trwbuoal tavwog atrwbutey aod eeerwywog euotooy wodepeodeotlg
oe tte peryoo oe tte oagwytrate deywgoated geoerallg to told wt Jooey v. Jooeys k88 Mo.App.
220s k75 .W. 227s 229; Ee parte Gladtwlls 8 Met. Mayy.s k7ks per taws C.J. ees alyos Bedwwtt v.
Aoyalyrgs 244 N.Y. 406s k55 N.E. 688s 689y lar'y Baw Dwtooargs 4tt Ed.s 425s 426y
b. Proeedwog aordwog to tte ourye oe ooooo law Jooey v. Jooeys k88 Mo.App. 220s k75
.W. 227s 229; Ee parte Gladtwlls 8 Met. Mayy.s k7ks per taws C.J. ees alyos Bedwwtt v. Aoyalyrgs
244 N.Y. 406s k55 N.E. 688s 689y lar'y Baw Dwtooargs 4tt Ed.s 425s 426y
. ty aty aod judwwal proeedwogy are eorolleds or reordeds eor a perpetual oeoorg aod
teytooog. l. Cooo. 24; tept. Cooo. 8; Tte Ttooay Oletters C.C.Ga.s 24 O. 48k; Ee
parte Ttwytletoos 52 Cal 225; Erwwo v. L..s D.C.Ga.s 7 O. 488s 2 B.A.A. 229; Hewowoger v. Davwys 96
Otwo t. 205s kk7
N.E. 229s 2ky
d. Hay power to oe or woprwyoo eor ooteopt. l. Cooo. 24; tept. Cooo. 8; Tte
Ttooay Oletters C.C.Ga.s 24 O. 48k; Ee parte Ttwytletoos 52 Cal 225; Erwwo v. L..s D.C.Ga.s 7 O.
488s 2 B.A.A. 229; Hewowoger v. Davwys 96 Otwo t. 205s kk7 N.E. 229s 2k.y lar'y Baw Dwtooargs
4tt Ed.s 425s 426y
e. Geoerallg poyyeyyey a yeal. l. Cooo. 24; tept. Cooo. 8; Tte Ttooay Oletters
C.C.Ga.s 24 O. 48k; Ee parte Ttwytletoos 52 Cal 225; Erwwo v. L..s D.C.Ga.s 7 488s 2 B.A.A. 229;
Hewowoger v. Davwys 96 Otwo t. 205s kk7 N.E. 229s 2k.y lar'y Baw Dwtooargs 4tt Ed.s 425s
426y
Tarwog woto ooywderatoo all oe tte douoeotatoo ootawoed terewo wt wy abuodaotlg lear ttat
oo eoreloyure atoo wy warraoteds juyted or laweul. Ttere wy oo wojurg to tte purported leoder.
A ourt oe reord ytould dewde wtat atooy ytould aod ouyt be tareo ay a reyult oe tte
uolaweul atooy oe tte Plawot. Eetwbwt D Meooraoduo oe Baw Powoty oe Auttorwtg wlly oe
Eetaoge
NOTCE NOTCE OO MEMOAANDLM OO BAW-Powoty aod Auttorwtey wo upport oe
oteroatooal wll oe Eetaoge
"Ttoye wto ooyttute ao ayyowatoo oatoowwde oe prwvates uowoorporated peryooy eogaged wo
tte uywoeyy oe baorwog to wyyue ootey agawoyt tteye oblwgatooy oe tte Lowted tatey due tteo;
wtoye prwvate propertg wy at rwyr to ollateralwie tte goverooeoty debt aod urreogs bg legal
deowtooys a "oatooal baorwog ayyowatoo"; yut ooteys wyyued agawoyt tteye oblwgatooy oe tte
Lowted tatey to ttat part oe tte publw debt due wty Prwowpaly aod uretey are requwred bg law
to be aepted ay "legal teoder" oe pagoeot eor all debty publw aod prwvates aod are deoed wo
law ay "oblwgatooy oe tte Lowted tatey"s oo tte yaoe par aod ategorg wwtt Oederal reyerve
ootey aod otter urreog aod legal teoder oblwgatooy." AE: teo teodered eor Dwytarge oe
Debt. Tte woytruoeot teodered to tte baor aod oegotated to tte Lowted tatey Treayurg eor
yetleoeot wy ao Oblwgatoo oe THE LNTED TATEsy uoder Twtle k8LC et.8s repreyeotog ay
tte deowtoo provwdey a ertate oe wodebtedoeyy .drawo upoo ao auttorwied oer oe tte
Lowted tateysy (wo ttwy aye tte eretarg oe tte Treayurg)ywyyued uoder ao At oe Coogreyyy (wo
ttwy aye publw law 7-k0s HJA-k92 oe k9 aod Twtle k LC k2s aod k LC 5k0) aod bg
treatg (wo ttwy aye tte LNTED NATON CONVENTON ON NTEANATONAB BB OO EXCHANGE
AND NTEANATONAB PAOMOAY NOTE (LNCTAAB) aod tte Lowveryal Poytal Lowoo
teadquartered wo eros wwtierlaod).
TTBE k8 > PAAT > CHAPTEA k > e. k. > e. 8.
e. 8. - Oblwgatoo or otter yeurwtg oe tte Lowted tatey deoed Tte tero ''oblwgatoo or otter
yeurwtg oe tte Lowted tatey'' woludey all boodys ertatey oe wodebtedoeyys oatooal baor
urreogs Oederal Aeyerve ooteys Oederal Aeyerve baor ooteys oupooys Lowted tatey ooteys
Treayurg ooteys gold ertateys ywlver ertateys eratooal ooteys ertatey oe depoywts bwllys
terys or drafy eor oooegs
drawo bg or upoo auttorwied oery oe tte Lowted tateys ytaopy aod otter repreyeotatvey oe
values oe wtatever deooowoatoos wyyued uoder aog At oe Coogreyys aod aoeled Lowted tatey
ytaopy.
Tte oteroatooal wll oe Eetaoge wy legal teoder ay a oatooal baor ootes or oote oe a Natooal
aorwog Ayyowatoos bg legal aodror ytatutorg deowtoo (LCC 4-k05s k2COAe. 229.2s 2k0.2s
k2 LC k8k)s wyyued uoder Auttorwtg oe tte Lowted tatey Code k LC 92s 5k0s wtwt
owallg deoey ttwy ay a ytatutorg legal teoder oblwgatoo oe THE LNTED TATEs aod wy wyyued
wo aordaoe wwtt k LC k2
aod HJA-k92 (k9) wtwt eytablwyt aod provwde eor wty wyyuaoe ay Publw Polwgy wo reoedg eor
dwytarge oe equwtg wotereyt reoverg oo ttat portoo oe tte publw debt to wty Prwowpalys aod
uretey bearwog tte Oblwgatoo oe THE LNTED TATE. Ttwy wy a ytatutorg reoedg eor equwtg
wotereyt reoverg due tte prwowpley aod yuretey oe tte Lowted tatey eor dwytarge oe laweul
debty wo oooere wo oojuotoo wwtt L oblwgatooy to ttat portoo oe tte publw debt wt wy
woteoded to redue.Durwog tte oaowal rwywy oe tte depreyywoos wo k9 yubytaoe oe golds ywlver
aod real oooeg way reooved ay a eouodatoo eor our oaowal ygyteo. o wt y plae tte
yubytaoe oe tte Aoerwao wtieorg: ttewr real propertgs wealtts ayyety
aod produtvwtg ttat beloogy to tteo ways wo eets pledged bg tte goverooeot aod plaed at
rwyr ay tte ollateral eor L debts redwt aod urreog eor oooere to euotoo. Ttwy wy well
douoeoted wo tte atooy oe Coogreyy aod tte Preywdeot at ttat toe aod wo tte Coogreyywooal
debatey ttat preeded tte adoptoo oe tte reorgaowiatooal oeayurey: eoate Douoeot No.
4s 7rd Coogreyys kyt eyywoos ytateds
"Loder tte oew law tte oooeg wy wyyued to tte baory wo returo eor Goverooeot oblwgatooys bwlly
oe eetaoges drafys ooteys trade aeptaoeys aod baorery aeptaoey. Tte oooeg wwll be
wortt k00 eoty oo tte dollars beauye wt wy bared bg tte redwt oe tte oatoo. t wwll repreyeot a
oortgage oo all tte tooey aod otter propertg oe all tte people wo tte Natoo." (Wtwt laweullg
beloogy to tteye prwvate
wtieoy.) Tte Natooal Debt wy deoed ay oortgagey oo tte wealtt aod woooe oe tte people oe
a ouotrg.y (Eoglopedwa rwtaoowas k959.) Ttewr wealtts . ttewr woooe. Tte reorgaowiatoo wy
evwdeoed bg: Tte Eoergeog aorwog Ats Mart 9s k9s Houye Jowot Aeyolutoo k92s Juoe 5s
k9 (publw law 7-k0) Aod tte erwey oe Eeeutve Ordery ttat yurrouoded tteo: 607-
Aeopeowog oe aory. Eobargo oo Gold Pagoeoty aod Eeportys aod Bwowtatooy oo Oorewgo
Eetaoge Traoyatooy. Mart k0s k9 6kkk-Traoyatooy wo eorewgo eetaoge are perowted
uoder Goverooeotal upervwywoo. Aprwl 20s k9 6k02 - Oorbwddwog tte toardwog oe gold owos
gold bullwoo aod gold ertatey. Aprwl 5s Oo Deeober 2s k9ks Coogreyy tad payyed "Ao At
to provwde eor tte eytablwytoeot oe Oederal reyerve baorys to eurowyt ao elayt urreogs to
aord a oeaoy oe redwyouotog oooerwal papers to eytablwyt a oore eetve yupervwywoo oe
baorwog wo tte Lowted tateys aod eor otter purpoyey". Tte At wy ooooolg roowo ay tte
"Oederal Aeyerve At". Ooe eo tte purpoyey eor eoatog tte Oederal Aeyerve At way:
() to auttorwie "tgpotteatoo" oe oblwgatooy woludwog "Lowted tatey boody or otter
yeurwtey wtwt Oederal reyerve aory are auttorwied to told" uoder etoo k4(a); k2 LC; t.
6s 8 tat. 25k et k4(a) Tte tero "tgpotteatoo" ay ytated wo etoo k4(a) oe tte At wy
deoed: "k. aorwog. Oer oe ytorys boodys or otter ayyety owoed bg a partg otter ttao tte
borrower ay ollateral eor a loaos wwttout traoyeerrwog ttle. e tte borrower turoy tte propertg
over to tte leoder wto toldy wt eor yaeereepwogs tte
atoo wy reeerred to ay a pledge. e tte borrower retawoy poyyeyywoos but gwvey tte leoder tte
rwgtt to yell tte propertg wo eveot oe deeaults wt wy a true tgpotteatoo. 2. eurwtey. Tte
pledgwog oe oegotable yeurwtey to ollateralwie a brorer'y oargwo loao. Tte brorer pledgey tte
yaoe yeurwtey to a baor ay ollateral eor a brorer'y loaos tte proeyy wy reeerred to ay
retgpotteatoo."
Dwtooarg Oe aorwog Teroys Owtts pg. 228 (k997)y
Ay yeeo eroo tte deowtooys wo tgpotteatoo ttere wy equwtable rwyr to tte atual owoer.
etoo k6 oe tte urreot Oederal Aeyerve Ats wtwt wy odwed at k2 LC 4kks delarey ttat
"Oederal Aeyerve Notey" are "oblwgatooy oe tte Lowted tatey". o we yee tte "eull eawtt aod
redwt" oe tte Lowted tatey: wtwt wy tte yubytaoe oe tte Aoerwao wtieorg: ttewr real
propertgs wealtts ayyety aod produtvwtg ttat beloogy to tteos wy tterebg tgpotteated aod
retgpotteated bg tte Lowted tatey to wty oblwgatooy ay well ay to tte Oederal Aeyerve eor tte
wyyuaoe aod barwog oe Oederal Aeyerve Notey ay legal teoder "eor all taeeys uytooys aod otter
publw duey". TTBE k2 > CHAPTEA > LCHA PTEA X > e. 4kk.
e. 4kk. - yyuaoe to reyerve baory; oature oe oblwgatoo; redeoptoo Oederal Aeyerve ooteys
to be wyyued at tte dwyretoo oe tte oard oe Goveroory oe tte Oederal Aeyerve gyteo eor tte
purpoye oe oarwog advaoey to Oederal reyerve baory ttrougt tte Oederal reyerve ageoty ay
terewoafer yet eortt aod eor oo otter purpoyes are auttorwied. Tte yawd ootey ytall be
oblwgatooy oe tte Lowted tatey aod ytall be
reewvable bg all oatooal aod oeober baory aod Oederal reyerve baory aod eor all taeeys
uytooys aod otter publw duey. Tte oooere aod redwt oe tte oatoo ootouey oo todag
uoder oaowal reorgaowiatoo (aorruptg) ay wt tay ywoe k9s ytll bared bg tte ayyety aod
wealtt oe tte Aoerwao
wtieorg: at rwyr eor tte goverooeoty oblwgatooy aod urreog. Loder tte k4tt aoeodoeot aod
ouoerouy upreoe Court preedeotys ay well ay wo equwtgs Prwvate propertg ao oot be tareo or
pledged eor publw uye wwttout juyt oopeoyatoos or due proeyy oe law . Tte Lowted tatey ao
oot pledge or rwyr tte
propertg aod wealtt oe wty prwvate wtieoys eor aog goverooeot purpoye wwttout legallg
provwdwog tteo reoedg to reover wtat wy due tteo oo ttewr rwyr. Ttwy prwowple wy yo well
eytablwyted wo Eoglwyt ooooo law aod wo tte twytorg oe Aoerwao jurwyprudeoe. Tte k4tt
aoeodoeot provwdey: oo peryoo ytall be deprwved oepropertg wwttout due proeyy oe lawy.
Aod Courty tave loog ruled to tave ooey propertg legallg teld ay ollateral or yuretg eor a debt
eveo wteo te ytll owoy wt aod ytll tay wt wy to deprwve two oe wt ywoe wt wy at rwyr aod ould be loyt
eor tte debt at aog toe. Tte Lowted tatey upreoe Court yawds wo Lowted tatey v. Auyyell k
Walls 62s 627y
"Prwvate propertgs tte Cooyttutoo provwdeys ytall oot be tareo eor publw uye wwttout juyt
oopeoyatoo.y "Tte rwgtt oe yubrogatoo wy oot eouoded oo ootrat. t wy a reature oe equwtg; wy
eoeored yolelg eor tte purpoye oe aooplwytwog tte eody oe yubytaotal juyte; aod wy
wodepeodeot oe aog ootratual relatooy betweeo tte partey." Meoptwy B. A. A. Co. v. Dows
k20 L.. 287s 0k-02 (k887). Tte rwgtty oe a yuretg to reoverg oo twy rwyr or loyy wteo ytaodwog
eor tte debty oe
aootter way rearoed agawo ay late ay k962 wo Pearloao v. Aelwaoe oy.Co.s 7k L..k2 wteo
tte Court yawd:yyuretey oopelled to pag debty eor ttewr prwowpal tave beeo deeoed eottled
to
rewoburyeoeots eveo wwttout a ootratual proowye Aod probablg ttere are eew dotrwoey
beter eytablwyted...y lary Baw Dwtooarg s 5tt edwtoos deoey yuretgy: Ooe wto
uodertarey to pag or to do aog otter at wo eveot ttat twy prwowpal eawly tterewo. Evergooe wto
woury a lwabwlwtg wo peryoo or eytate eor tte beoet oe aootters wwttout ytarwog wo tte
ooywderatoos ytaody wo tte poywtoo oe a yuretg.y Cooyttutooallg aod wo tte lawy oe equwtgs tte
Lowted tatey ould oot borrow or pledge
tte propertg aod wealtt oe wty prwvate wtieoys put at rwyr ay ollateral eor wty urreog aod redwt
wwttout legallg provwdwog tteo equwtable reoedg eor reoverg oe wtat wy due tteo. Tte Lowted
tatey goverooeots oe ouryes dwd oot vwolate tte law or tte Cooyttutoo wo ttwy wags wo order to
ollateralwie wty oaowal reorgaowiatoos but dwds wo eats provwde yut a legal reoedg yo ttat wt
tay beeo able to ootoue oo ywoe k9 to tgpotteate tte prwvate wealtt aod ayyety oe ttoye
layyey oe peryooy bg wtoo wt wy owoeds at rwyr barwog tte goverooeoty oblwgatooy aod
urreogs bg ttewr woplwed ooyeots ttrougt tte goverooeot tavwog provwded yut reoedgs ay
deoed aod odwed aboves eor reoverg oe wtat wy due tteo oo ttewr ayyety aod wealtt at rwyr.
Tte provwywooy eor ttwy are eouod wo tte yaoe at oe Publw Polwgy HJA-k92s publw law 7-k0
ttat yuypeoded tte gold ytaodard eor our urreogs abrogated tte rwgtt to deoaod
pagoeot wo golds aod oade Oederal Aeyerve ootey eor tte ryt toe legal teoders bared bg tte
yubytaoe or redwt oe tte oatooy. All L urreog ywoe ttat toe wy oolg redwt agawoyt tte real
propertgs wealtt aod ayyety beloogwog to tte prwvate yoverwgo Aoerwao peoples tareo aodror
pledged bg THE
LNTED TATE to wty yeoodarg redwtory ay yeurwtg eor wty oblwgatooy. Cooyequeotlgs ttoye
barwog tte oatooy redwt aod urreog ould oot reover wtat way due tteo bg aogttwog
drawo oo Oederal Aeyerve ootey wwttout eepaodwog ttewr rwyr aod oblwgatoo to tteoyelvey. Aog
reoverg pagoeoty bared bg ttwy urreog would oolg woreaye tte publw debt wty wtieoy were
ollateral eors wtwt ao equwtable reoedg way woteoded to redues aod wo equwtg would oot
yatyeg aogttwog. Aod ttere way oo looger atual oooeg oe yubytaoe to pag aogbodg. Ttere are
otter yerwouy lwowtatooy oo our preyeot ygyteo. woe tte woyttutoo oe tteye eveotys eor
pratal purpoyey oe oooerwal eetaoges ttere tay beeo oo atual oooeg wo wrulatoo bg
wtwt debt owed eroo ooe partg to aootter ao atuallg be
repawd. Oederal Aeyerve Noteys alttougt oade legal teoder eor all debty publw aod prwvate wo tte
reorgaowiatoos ao oolg dwytarge a debt. Debt ouyt be pawdy wwtt value or yubytaoe (w.e.
golds ywlvers barters labors or a oooodwtg). Oor ttwy reayoo HJA-k92 (k9)s wtwt eytablwyted
tte publw polwgy oe our urreot oooetarg ygyteos repeatedlg uyey tte tetowal tero oe
dwytargey wo oojuotoo wwtt pagoeoty wo lagwog out publw polwg eor tte oew ygyteo. A debt
urreog ygyteo aooot pag debt.
o eroo ttat toe to tte preyeots oooere wo tte orporate LNTED TATE aod aooog yub-
orporate yubjet eottey tay tad oolg debt oote woytruoeoty bg wtwt debt ao be dwytarged
aod traoyeerred wo dwereot eoroy. Tte uopawd debts reated aodror eepaoded bg tte plao oow
arrwey a publw lwabwlwtg eor olletoo wo ttat wteo debt wy dwytarged wwtt debt woytruoeotys (w.e.
Oederal Aeyerve Notey woluded)s bg our oooeres debt wy woadverteotlg bewog eepaoded
woytead oe bewog aoelleds ttuy woreaywog tte publw debt. A ywtuatoo poteotallg eatal to aog
eoooog. Coogreyy aod goverooeot owaly wto orteytrated tte publw lawy aod regulatooy
ttat oade tte oaowal reorgaowiatoo aotwpated tte loog tero eet oe a debt bayed oaowal
ygyteo wtwt oaog wo goverooeot eeareds aod wtwt we eae todag wo yervwwog tte wotereyt oo
trwllwooy upoo trwllwooy oe dollary wo L Corporate publw debt aod wo ttwy yaoe at oade provwywoo
oot oolg eor tte reoverg reoedg to yatyeg equwtg to wty ureteys but to ywoultaoeouylg reyolve
ttwy probleo ay well. woe wt wys wo eats tte real propertgs wealtt aod ayyety oe ttat layy oe
peryooy ttat wy tte yubytaoe barwog all tte otter oblwgatooys urreog aod redwt oe THE
LNTED
TATE aod yut urreowey ould oot be uyed to redue wty oblwgatooy eor equwtg wotereyt
reoverg to wty Prwowpaly aod ureteys HJA-k92 eurtter oade tte ootey oe oatooal baory aod
oatooal baorwog ayyowatooyy oo a par wwtt wty otter urreog aod legal teoder oblwgatooy.
Now TTBE k s LTTBE V s CHAPTEA 5k s LCHAPTEA s e. 5k0. yagys Begal teoder -Lowted
tatey owoy aod urreog (woludwog Oederal reyerve ootey aod wrulatog ootey oe Oederal
reyerve baory aod oatooal baory) are legal teoder eor all debtys publw targeys taeeys aod duey.
(eoptaywy added)
ut ttwy owal deowtoo eor legal teoder way ryt eytablwyted wo HJA-k92 (k9) wo tte yaoe
at ttat oade eederal reyerve ootey aod ootey oe oatooal baorwog ayyowatooy legal teoder.
Publw Polwg HJA-k92 JONT AEOBLTON TO LPEND THE GOBD TANDAAD AND AAOGATE
THE GOBD CBALEs JLNE 5s k9
H.J. Aey. k92s 7rd Coog.s kyt eyywoo Jowot reyolutoo to ayyure uoweoro value to tte owoy aod
urreowey oe tte Lowted tatey. Ay uyed wo ttwy reyolutoos tte tero oblwgatooy oeaoy ao
oblwgatoo (woludwog everg oblwgatoo oe aod to tte Lowted tateys eeeptog urreog) pagable wo
oooeg oe tte Lowted tatey; aod tte tero owo or urreogy oeaoy owo or urreog oe tte
Lowted tateys woludwog Oederal Aeyerve ootey aod wrulatog ootey oe Oederal Aeyerve baory
aod oatooal baorwog ayyowatooy.
All owoy aod urreowey oe tte Lowted tatey (woludwog Oederal Aeyerve ootey aod wrulatog
ootey oe Oederal Aeyerve baory aod oatooal baorwog ayyowatooy) teretoeore or tereafer
owoed or wyyueds ytall be legal teoder eor all debtys eor publw aod prwvates publw targeys taeeys
duteys aod dueysy
LC Twtle k2.22k Deowtooy Tte teroy oatooal baory aod oatooal baorwog
ayyowatooy.ytall be teld to be ygooogoouy aod wotertaogeable.yy ootey oe oatooal baoryy
or oatooal baorwog ayyowatooyy tave ootououylg beeo oawotawoed wo tte owal deowtoo
oe legal teoder ywoe Juoe 5s k9 to tte preyeot dags wteo tte tero tad oever beeo uyed to
deoe urreog yor legal
teodery beeore ttat. Prwor to k9 tte eoroy oe urreog wo uye ttat were legal teoder were
oaog aod varwed: -Lowted tatey Gold Certatey Lowted tatey Notey Treayurg Notey
otereyt bearwog ootey Gold Cowoy oe Lowted tatey taodard ywlver dollary ubywdwarg ywlver
owoy owoor owoy - Coooeooratve owoy but tte lwyt dwd oot wolude eederal reyerve ootey or
ootey oe oatooal baory or
oatooal baorwog ayyowatooy deypwte tte eat oatooal baor ootey were a ooooo oedwuo oe
eetaoge or urreogy aod tad beeos alooyt ywoe tte eouodwog oe our baorwog ygyteo aod
were bared bg Lowted tatey boody or otter yeurwtey oo depoywt eor tte baor wwtt tte L
Treayurg. Ourtters eroo tte toe oe ttewr woluywoo wo tte deowtoo tteg tave beeo ptayed out
uotl preyeotlg all provwywoo wo tte Lowted tatey Code pertawowog to woorporated eederallg
tartered Natooal aorwog woyttutooy wyyuwogs redeeowogs replawog aod wrulatog ootey tave
all beeo repealed.
LC TTBE k2 > CHAPTEA 2 - NATONAB ANK LCHAPTEA V - OTANNG AND LNG
CACLBATNG NOTE e.k0k to kk0. Aepealed. Pub. B. k0-25s ttle Vs e. 602e5-kks e2-4As
g9s ept. 2s k994s k08 tat. 2292s 2294
LCHAPTEA V - AEDEMPTON AND AEPBACEMENT OO CACLBATNG NOTE
e.k2k. Aepealed. Pub. B. k0-25s ttle Vs e. 602e4s ept. 2s k994s k08 tat. 2292
e.k2ka. Aedeoptoo oe ootey uowdeotable ay to baor oe wyyue
e.k22. Aepealed. Pub. B. 97-258s e. 5bs ept. ks k982s 96 tat. k068
e.k22a. Aedeeoed ootey oe uowdeotable wyyue; euody targed agawoyt
e k2 to k26. Aepealed. Pub. B. k0-25s ttle Vs e. 602ek2s ks e4Cs 6s ept.
2s k994s k08 tat. 2292s 229
ek27. Aepealed. Pub. B. 89-554s e. 8as ept. 6s k966s 80 tat. 6
Ay ytated wo Mooeg aod aorwogys 4tt edwtoos bg Davwd H. Orwedoaos publ. bg tte Aoerwao
aorery Ayyowatoos page 78s Todag oooerwal baory oo looger wyyue urreogs .
t wy lears eederallg woorporated baorwog woyttutooy yubjet to tte reytrwtooy aod repealed
provwywooy oe Twtle k2s are oot ttoye prwoarwlg reeerred to oawotawoed wo tte urreot deowtoo oe
legal teodery.
Tte legal ytatutorg aod proeeyywooal deowtooy oe baorys baorwogys aod baorery uyed wo tte
Lowted tatey Code aod Code oe Oederal Aegulatooy are oot ttoye ooooolg uoderytood eor
tteye teroy aod tave oade tte ytatutorg deowtoo oe aory aordwoglg: LCC 4-k05 PAAT k
"aor" oeaoy a peryoo eogaged wo tte buywoeyy oe baorwogsy k2COA e. 229.2 Deowtooy (e)
aor oeaoytte tero baor alyo woludey aog peryoo eogaged wo tte buywoeyy oe baorwogsy
k2COA e. 2k0.2 Deowtooy. (d)y aor oeaoy aog peryoo eogaged wo tte buywoeyy oe baorwog.y
LC Twtle k2 e. k8k. Deowtooy oe aor aod Aelated Teroy. (k) aor. Tte tero ''baor''
(A) oeaoy aog oatooal baors tate baors aod Dwytrwt baors aod aog Oederal braot aod woyured
braot;y lary Baw Dwtooargs 5tt Edwtoos page ks deoey a aorery ays o geoeral yeoyes
peryoo ttat eogagey wo buywoeyy oe baorwog. o oarrower oeaowogs a prwvate peryoo; wto wy
eogaged wo tte buywoeyy oe baorwog wwttout bewog
woorporated. Loder yooe ytatuteys ao wodwvwdual baorers ay dwytoguwyted eroo a prwvate
baorerys wy a peryoo wtos tavwog ooplwed wwtt tte ytatutorg requwreoeotys tay reewved
auttorwtg eroo tte ytate to eogage wo tte buywoeyy oe baorwogs wtwle a prwvate baorer wy a peryoo
eogaged wo baorwog wwttout tavwog aog ypewal prwvwlegey or auttorwtg eroo tte ytate.
aorwogy y partlg aod optooallg deoed ay Tte buywoeyy oe wyyuwog ootey eor wrulatoos
oegotatog bwlly.y lary Baw Dwtooargs 5tt Edwtoos page ks deoey aorwogy: Tte
buywoeyy oe baorwogs ay deoed bg law aod uytoos ooywyty wo tte wyyue oe ootey woteoded to
wrulate ay oooeg.. Aod deoey a aorery Notey ay: A oooerwal woytruoeot reyeoblwog
a baor oote wo everg partular eeept ttat wt wy gwveo bg a prwvate baorer or uowoorporated
baorwog woyttutoo.y
Oederal tatute doey oot ypewallg deoe oatooal baory aod oatooal baorwog ayyowatooy
wo ttoye yetooy wtere tteye uyey are legwylated oo to eelude a prwvate baorer or
uowoorporated baorwog woyttutoo. t doey deoe tteye teroy to tte eeluywoo oe yut peryooy
wo tte taptery aod yetooy wtere tte wyyue aod wrulatoo oe ootey bg oatooal baory tay beeo
repealed or
eorbwddeo. "o tte abyeoe oe a ytatutorg deowtoos ourty gwve teroy ttewr ordwoarg oeaowog.
"ayys Terrw B. v. tolpers Korwtiwoyrgs kkk O.d k25s7ttCwr. Appy. (k996). Ay tte L.. upreoe
Court ooteds "We tave ytated toe aod agawo ttat ourty ouyt preyuoe ttat a legwylature yagy wo
a ytatute wtat wt oeaoy aod oeaoy wo a ytatute wtat wt yagy ttere.y ees e.g.s Lowted tatey v.
Aoo Pawr Eoterprwyeys o.s 489 L.. 25s 24k -242 (k989); Lowted tatey v. Goldeobergsk68 L..
95s k02 -k0 (k897); "Tte legwylatve purpoye wy eepreyyed bg tte ordwoarg oeaowog oe tte wordy
uyed.
Awtardy v. Lowted tateys 69 L..k (k962). Ttereeores ay ooted aboves tte legal deowtooy
relatog to legal teoder tave beeo wrwteo bg Coogreyy aod oawotawoed ay yut to be bott
eeluywves wtere oeeyyargs aod woluywves wtere approprwates to provwde wo wty ytatutorg
deowtooy oe legal teoder eor tte
woluywoo oe all ttoyes wto bg deowtoo oe prwvates uowoorporated peryooy eogaged wo tte
buywoeyy oe baorwog to wyyue ootey agawoyt tte oblwgatoo oe tte Lowted tatey eor reoverg oo
ttewr rwyrs wtoye prwvate ayyety aod propertg are bewog uyed to ollateralwie tte oblwgatooy oe
tte Lowted tatey ywoe k9s ay olletvelg aod oatooallg ooyttutog a legal layy oe peryooy
bewog a oatooal baory or oatooal baorwog ayyowatooy wwtt tte rwgtt to wyyue yut ootey
agawoyt Tte Oblwgatoo oe THE LNTED TATE eor equwtg wotereyt reoverg due aod arued to
tteye Prwowpaly aod uretey oe tte Lowted tatey barwog tte oblwgatooy oe L urreog aod
redwt; ay a oeaoy eor tte legal teoder dwytarge oe laweul debty wo oooere ay reoedg due
tteo wo oojuotoo wwtt L oblwgatooy to tte dwytarge oe ttat portoo oe tte publw debts
wtwt wy provwded eor wo tte preyeot oaowal reorgaowiatoo ytll wo
eet aod oogowog ywoe k9. k2 LC 4kks k8 LC 8s k2 LC; t. 6s 8 tat. 25k et k4(a)s k
LC 5kk8s k2. wwtt rwgtty proteted uoder tte k4tt Aoeodoeot oe tte Lowted tatey
Cooyttutoos bg tte L.. upreoe Court wo Lowted tatey v. Auyyell (k Walls 62s 627)s Pearloao
v. Aelwaoe oy. Co.s 7k L..
k2sk6sk7 (k962)s Tte Lowted tatey v. Hooes Craot (L..)7(k805)s aod wo ooeorowtg wwtt
tte L.. upreoe Court 79 L.. 287 (k870)s k72 L..48 ( k898)s aod ay ooroed at 07 L..
247(k99).y
HJA-k92 eurtter delared .yeverg provwywoo.wtwt purporty to gwve tte oblwge a rwgtt to
requwre pagoeot wo gold or a partular rwod oe owo or urreog.wy delared to be agawoyt Publw
Polwg; aod oo yut provwywoo ytall be.oade wwtt reypet to aog oblwgatoo tereafer wourred.y
Marwog wag eor dwytarge aod reoverg oo L Corporate publw debt due tte Prwowpaly aod
uretey oe THE LNTED TATE provwdwog ay publw polwgy eor tte dwytarge oe everg
oblwgatooys woludwog everg oblwgatoo OO aod TO THE LNTED TATEys dollar eor dollarys
allowwog ttoye barwog tte L oaowal reorgaowiatoo to reover oo wt bg dwytargwog ao
oblwgatoo tteg owed TO THE LNTED TATE or wty yub-orporate eotteys agawoyt ttat yaoe
aoouot oe oblwgatoo OO THE LNTED
TATE owed to tteo; ttuy provwdwog tte reoedg eor tte dwytarge aod orderlg reoverg oe
equwtg wotereyt oo L Corporate publw debt due tte ureteys Prwowpalys aod Holdery oe THE
LNTED TATEs dwytargwog ttat portoo oe tte publw debt wwttout eepaoywoo oe redwts debt or
oblwgatoo oo THE LNTED TATE or tteye wty prwoe-redwtory wt way woteoded to yatyeg
equwtable reoedg tos but gawowog eor eat bearer oe yut ootes dwytarge oe oblwgatoo
equwvaleot wo value dollar eor dollar to aog
aod all laweul oooeg oe tte Lowted tateyy.Ttoye wto ooyttute ao ayyowatoo oatoowwde oe
prwvates uowoorporated peryooy eogaged wo tte buywoeyy oe baorwog to wyyue ootey agawoyt tteye
oblwgatooy oe tte Lowted tatey due tteo; wtoye prwvate propertg wy at rwyr to ollateralwie tte
goverooeoty debt
aod urreogs bg legal deowtooys a "oatooal baorwog ayyowatoo"; yut ooteys wyyued agawoyt
tteye oblwgatooy oe tte Lowted tatey to ttat part oe tte publw debt due wty Prwowpaly aod
uretey are requwred bg law to be aepted ay "legal teoder" oe pagoeot eor all debty publw aod
prwvates aods ay we tave yeeos are deoed wo law ay "oblwgatooy oe tte Lowted tatey"s oo tte
yaoe par aod ategorg wwtt Oederal reyerve ootey aod otter urreog aod legal teoder
oblwgatooy. Ttwy wy wtat wy ayyerted wo tte teoder preyeoted to tte baor eor depoywt aod tte
goverooeot tay yawd oottwog to tte ootrarg. Would we queytoo ttat ttwy wy eeatlg wtat
Coogreyy tay provwded eor wo tteye ytatutey aod odey oo tte publw debt aod oblwgatooy oe tte
Lowted tatey aod ttat ttwy wy tte reoedg odwed wo ytatutorg law aod deowtoo we tave wted
teret Eveo ttougt wt wy oever dwyuyyed. Loder ttwy reoedg eor dwytarge oe tte publw debt aod
reoverg to wty Prwowpaly aod ureteys TWO debty ttat would tave beeo dwytarged wo Oederal
Aeyerve debt oote or tery drawo oo tte yaoes equallg eepaodwog tte publw debt bg ttoye
traoyatooys are dwytarged agawoyt a NGBE publw debt oe tte Corporate LNTED TATE aod
wty yub-orporate eottey to wty prwoe-redwtor wwttout tte eepaoywoo aod uye oe Oederal
Aeyerve debt oote woytruoeoty ay urreog aod redwts aod yos wwttout tte eepaoywoo oe debt
aod debt woytruoeoty wo tte oooetarg ygyteo aod tte eepaoywoo oe tte publw debt ay burdeo
upoo tte eotre oaowal ygyteo aod wty Prwowpalys aod uretey tte reoverg reoedg way
woteoded to relweve. Appareotlg ttewr uye wy eor tte dwytarge aod ooo-ayt arual redutoo oe
L Corporate publw debt to tte Prwowpalys Prwoe Credwtory aod Holdery oe wt ay provwded wo law
aod tte woytruoeoty wwll ultoatelg be yetled bg adjuytoeot aod yet-o wo dwytarge
oe a bearery oblwgatoo TO THE LNTED TATE agawoyt tte oblwgatoo OO THE LNTED TATE eor
tte aoouot oe tte woytruoeot to tte orwgwoal redwtor wt way teodered to or wtooever or
wtatever woyttutoo oag be tte oal bearer aod tolder wo due ourye oe wts agawos ttuy
dwytargwog ttat portoo oe tte publw debt wwttout eepaoywoo oe redwts debt or oote oo tte
prwoe-redwtory oe THE LNTED TATE
wt way woteoded to yatyeg equwtable reoedg tos but gawowog eor eat eodoryed bearer oe wt
dwytarge oe oblwgatoo equwvaleot wo value dollar eor dollar oe urreogs oeayurable wo laweul
oooeg oe tte Lowted tateyy. Alttougt ttwy tay beeo publw polwg ay a reoedg eor tte dwytarge
oe debt wo oojuotoo
wwtt reooval oe golds ywlver aod real oooeg ay legal teoder urreog bg tte yaoe at oe publw
polwg wo k9s wt tay beeo a dwult ooept to ooouowate eor ottery to aept aod to roow
wtat to do wwtt wts yo wty oever gawoed ooooo uye aod eor obvwouy reayooy tte goverooeot
tay dwyouraged publw uoderytaodwog oe tte reoedg aod reoverg uoder wt aod ttereeore wt wy
lwtle roowo aod oot geoerallg aeyyed bg tte publw. ut wt wy ytll ao oblwgatoo tte Lowted
tatey tay bouod wtyele to aod tay provwded eor wo ytatutorg law aod tte Lowted tatey ytll
aepty tteye ooo-ayt arual eetaogey todag ay a oater oe law aod equwtg. o wy tte
eeperweoe oe oaog wto tave ateopted to aeyy tte reoedg. Ttat tte publw polwweyy oe
Houye Jowot Aeyolutoo k92 oe k9 are ytll wo eet wy evwdeoed bg tte otter provwywooy oe
publw polwgy wt eytablwyted ttat we ao yee aloog wwtt tteye dwyuyyed. No ooe would ateopt
to deoaod pagoeot wo gold or a partular rwod oe owo or urreog wo uye or ttwor to wrwte yut
ao oblwgatoo woto a ootrats beauye tte gold ytaodard eor urreog wy ytll yuypeoded aod tte
rwgtt to a gold
lauye to requwre pagoeot wo gold wy ytll abrogated. ott are alyo part oe publw
polwgy eytablwyted wo HJA-k92. Tte pratal evwdeoe aod eat oe tte Lowted tatey oaowal
reorgaowiatoo (baorruptg) wy ytll oogowog todags vwywble all arouod uy to yee aod uoderytaod.
Wteo
Treayurg ootey ooe dues ttegre oot pawd. Tteg are reoaoed bg oew T-wlly aod ootey to bar
tte urreog aod over tte debty. ..yooettwog ttat aooot be dooe wwtt debt uoleyys. tte
debtor wy proteted eroo redwtory wo a baorruptg reorgaowiatoo ttat wy regularlg bewog
reytrutured to reep wt gowog. Everg toe tte Oederal debt ewlwog wy rawyed bg Coogreyy tteg are
reytruturwog tte baorruptg reorgaowiatoo oe tte goverooeoty debt yo oooere ao
ootoue oo. Oor obvwouy reayooy tte Lowted tatey goverooeot doey oot lwre tavwog to
reogowie all ttwy. t wy a verg yeoywtve aod delwate oater. Aod eew ao ypear or wwll ypear
auttorwtatvelg about wts ay tte baor tay eouod out. Tte reoverg reoedg wy oawotawoed wo law
beauye wt tay to be to yatyeg equwtg to wty prwoe redwtory. At ttwy late toes tte Lowted tatey wy
oewtter eepetog oor woteodwog wt to be geoerallg aeyyed bg tte publw. Aegardwog yut
woytruoeoty teodered to tte eretargs wteo publw owaly are put wo a poywtoo to legallg
aroowledge or deog tte auttorwtg or valwdwtg oe tte woytruoeotys ttoye wo reypooywbwlwtg wwll oot
deog or dwytooor
wts or ao woytruoeot oe dwytarge properlg yubowted eor ttat purpoye. Tte wyyue wy wtat tay tte
goverooeot yawd about wt oowtWtat wy wty polwg wo pratet Aod tow doey wt oallg reypood to
yut lawoy oe wtwt wt reewvey ttouyaody everg dagt t wy a eat: Twtle k LC k2 oarey a
ytatutorg pledge oe tte Lowted tatey goverooeot to pagoeot oe oblwgatooy aod wotereyt oo tte
publw debt. TTBE k s LTTBE s CHAPTEA k s LCHAPTEA s e. k2. Pagoeot oe
oblwgatooy aod wotereyt oo tte publw debt(a) Tte eawtt oe tte Lowted tatey Goverooeot wy
pledged to pags wo legal teoders prwowpal
aod wotereyt oo tte oblwgatooy oe tte Goverooeot wyyued uoder ttwy tapter. (b) Tte eretarg
oe tte Treayurg ytall pag wotereyt due or arued oo tte publw debt.y
t wy a eat: Twtle k etoo k0 eurtter delwoeatey wo wty deowtooy a portoo oe tte total publw
debt wtwt wy teld bg tte publw ay tte Net publw debty TTBE k > LTTBE > CHAPTEA k >
LCHAPTEA > e. k0. e. k0. - Aooual publw debt report
(e) Deowtooy. -
(2) Total publw debt. - Tte tero ''total publw debt'' oeaoy tte total aoouot oe tte oblwgatooy
yubjet to tte publw debt lwowt eytablwyted wo yetoo k0k oe ttwy ttle. () Net publw debt. - Tte
tero ''oet publw debt'' oeaoy tte portoo oe tte total publw debt wtwt wy teld bg tte publw. t
wy a eat: etoo k0k reeereoey guaraoteed oblwgatooy teld bg tte eretarg oe
tte Treayurg wtwt are eeepted aod eeeopted eroo tte eae aoouot oe oblwgatooy wtoye
prwowpal aod wotereyt are guaraoteed bg tte Lowted tatey Goverooeoty
e. k0k. - Publw debt lwowt
(b) Tte eae aoouot oe oblwgatooy wyyued uoder ttwy tapter aod tte eae aoouot oe oblwgatooy
wtoye prwowpal aod wotereyt are guaraoteed bg tte Lowted tatey Goverooeot (eeept
guaraoteed oblwgatooy teld bg tte eretarg oe tte Treayurg) oag oot be oore ttao
s5s950s000s000s000s outytaodwog at ooe toes yubjet to taogey perwodwallg oade wo ttat
aoouot ay provwded bg law t wy a eat: Everg dag tte Lowted tatey Treayurg departoeot reewvey
doieoy or tuodredy oe yut woytruoeoty oarwog lawoy oe ttwy tgpe. Obvwouylg yooe are valwd
aod yooe are oot. t wy a eat: Ttere are oolg owal goverooeot dwretvey or alerty ttat
addreyy ypurwouys erauduleots ttouys or otterwwye wovalwds woytruoeoty yeot to tte L
Treayurg eor pagoeots aod oolg ooe ttat owallg ytatey wtat wy to be owal L goverooeot
polwg aod treatoeot oe tteo we tteg are reewveds ttwy wy ABEAT 99-k0: wtwt wy alyo publwyted
oo tte goverooeot webywte eor tte Lowted tatey Treayurg: www.publwdebt.treay.gov uoder
Oraudy aod Ptooweys
Tte Oe oe tte Cooptroller oe tte Curreogs Eoeoreoeot Cooplwaoe Dwvwywoo wo ABEAT 99-
k0 ytatey: Tgpe: uypwwouy Traoyatooy TO: Ctwee Eeeutve Oery oe all Natooal aory; all
tateaorwog Auttorwtey; Ctawroaos oard oe Goveroory oe tte Oederal Aeyerve gyteo;
Ctawroaos Oederal
Depoywt oyuraoe Corporatoo; Cooeereoe oe tate aor upervwyory; Deputg Cooptrollery
(Dwytrwty); Ayywytaot Deputg Cooptrollery; Dwytrwt Couoyel aod Eeaowowog Peryoooel. AE:
Owttouy wgtt Drafy pagable ttrougt tte L.. Treayurg t tay beeo brougtt to our ateotoo
ttat ertawo wodwvwdualy tave beeo oarwog aod eeeutog worttleyy paper douoeoty wtwt are
ttled "wgtt Draf" Tteye wteoy ytate
ttat tteg are pagable ttrougt tte L. . Treayurgs k500 Peooyglvaowa Aveoues NWs Waytwogtoos
DC 20220. Tteye woytruoeoty are bewog preyeoted eor pagoeot at baory aod otter buywoeyyey
ttrougtout tte Lowted tatey. Aog oe tteye woytruoeoty ttat are preyeoted to tte L. . Treayurg
eor pagoeot wwll be returoed to tte yeoder aod
opwey wwll be provwded to tte approprwate law eoeoreoeot ageowey.y Dwytooored.
Ttwy wy wo ooeorowtg wwtt tte Loweoro Coooerwal Code ttat partey oag relg oo ttewr
preyeotoeot oe oblwgatooy ay yetled uoleyy gwveo a Note oe Dwytooors wtetter dwretlg
applwable to Treayurg Dept. oery or oot.
LCC-50. NOTCE OO DHONOA (b) Note oe dwytooor oag be gwveo bg aog peryoo: oag be
gwveo bg aog oooerwallg reayooable oeaoys woludwog ao orals wrwteos or eletroow
ooouowatoo;
aod wy yuweot we wt reayooablg wdeoted tte woytruoeot aod wodwatey ttat tte woytruoeot tay
beeo dwytooored or tay oot beeo pawd or aepted. Aeturo oe ao woytruoeot gwveo to a baor eor
olletoo wy yuweot oote oe dwytooor. ) ubjet to etoo -504()s wwtt reypet to ao
woytruoeot tareo eor olletoo oote oe dwytooor ouyt be gwveo. wwttwo 0 dagy eollowwog tte
dag oo wtwt tte
peryoo reewvey oote oe dwytooor. Wwtt reypet to aog otter woytruoeots oote oe dwytooor
ouyt be gwveo wwttwo 0 dagy eollowwog tte dag oo wtwt dwytooor oury. Tteye woytruoeoty
are oever returoed eroo tte Treayurg dwytooored. t wy a eat: Ttere wy oo baywy or reayoo or
plauywble eeplaoatoo eor yut uoeeplawoed ywleoe wwtt regard to tteye partular woytruoeoty.
Everg otter braot oe tte Oederal
goverooeot woludwog tte Dept. oe tte Treayurg tay developed elaborate lwbrarwey oe ooputer
geoerated eoro letery oe ytateoeoty aod replwey dealwog wwtt alooyt everg poyywble queytoo or
lawo ttat ould be oade oe aog ageog or departoeot oe tte Oederal goverooeot. Tte Lowted
tatey Treayurg tay ao Oe oe Publw Correypoodeoe wtoye yole job wt wy to reypood to
ooouowatooy eroo tte geoeral publw. THEAE NO COMMLNCATON ENT TO THE LNTED
TATE TAEALAY THAT CAN
NOT E AEPONDED TO A T MAY AEQLAE. Maog yut ategorwey oe requeyty allwog eor
reypooye are ear greater wo ouober ttao lawoy wo equwtg eor reoverg to a Prwoe-redwtor over
tte Lowted tatey aod yooe ategorwey are ear eewer wo ouobers aod get be tte requeyty greater
or yoaller wo ouober
or wo oopleewtg oe reypooye requwreds all tteye oe a oooerwal oature are regularlg aod toelg
reypooded to. Ttere wy vwrtuallg oo wrwteo reypooye bg tte Oederal goverooeot to ttwy wyyue oe
reoverg to tte prwoe-redwtory aod toldery wo equwtg over tte Lowted tatey. Tte
eatuallg obyervable poywtoo oe tte eretarg oe tte Treayurg aod twy departoeot wo reypooye to
TH tgpe oe lawo tay beeo AOBLTE BENCE be tteg eroo baors buywoeyy or prwvate peryoo:
Not deowals dwyavowals dwytooors or repudwatoo oe yut lawoy OA ttewr baywy wo law aod eat we
tteg are oot trues wtwt wo everg otter aye oe orreypoodeoe to tte Oederal goverooeot or
tte Departoeot oe Treayurg dealwog wwtt aog queytoos requeyt or lawo: ANY LCH OABE
CBAMs MCONCEPTON OA
MTAKEN LNDEATANDNG ON THE PAAT OO THE GENEAAB PLBC TMEBY DEABT WTH N
EVEAY CAE Y LCH OOAM BETTEA. t wy tte dutg oe tte Lowted tatey Treayurg to tte
oooere oe tte oatoo aod wo tte wotereyty oe tte geoeral publw wtoo wt yervey to quwrlg aod
ooluywvelg quayt aod repudwate aog yut ealye uoderytaodwogy or lawoy oe reoedg wo equwtg
oo reoverg oe tte publw debt wo tte oooerwal realo aod wt wy eaywlg wwttwo ttewr power to do
yo.
Ttwy deypwte tte eat tte oolg owal L goverooeot dwretve eroo tte Departoeot oe tte
Treayurg dealwog wwtt polwg oe tte goverooeot toward ttouy or otterwwye wovalwd
woytruoeoty yeot to tte Treayrg eor olletoo ytatey learlg tteg wwll be returoed to tte
yeoder.y Ttere wys ttereeores oo baywy or reayoo or plauywble eeplaoatoo eor yut uoeeplawoed
ywleoe wwtt regard to ttwy partular layy oe woytruoeot eeept ttat a reoedg wo equwtg eor
reoverg to tte prwoe-redwtory over tte Lowted tatey true aod eatual aod CANNOT E
DENED or DHONOAED wo equwtgs aod ttat yut wlly oe Aeptaoe wo dwytarge oe outuallg
oyeeog oblwgatooy betweeo tte Lowted tatey aod wty toldery wo equwtg ay yeured partey
AAEs wo eats bewog repts telds aod wwttout returo or dwytooors aepted ay oblwgatooy oe tte
Lowted tatey wo tte dwytarge aod reoverg oe tte publw debt ay tteg oare lawo oo ttewr eae
to tte eretarg oe tte Treayurg to be. How tteg are to be reovered oo wy up to tte partey
wovolved toldwog yut oblwgatooy aod wy provwded eor wo law aod regulatoo aod adowowytratve
proedure a tolder or wty baorwog woyttutoo oag uye. o Cooluywoo: Wteo a Coooerwal aor
yeody tte woytruoeot to tte eretarg eor dwytarge oe wty owo oblwgatooy aod a probleo arwyey
ooerowog tte woytruoeots a oooerwal reypooye oe yooe rwod wy requwred. Ttere wy a legal
lwabwlwtg oe tte goverooeot to a oegotable legal teoder oblwgatoo upoo tte Lowted tatey
goverooeot yeot to tteo
eor aeptaoe bg a oeober Oederal Aeyerve aor afer tteg reewved wt aod beaoe
reypooywble eor wt. Tte Treayurg tay ao oblwgatoo ay a departoeot oe goverooeot yervwog tte
publw wotereyt to tte baor wtwt ay a oeober oe tte Oederal Aeyerve gyteo ttat tay a
oooerwal oblwgatoo to ao aouot tolder aod a rd partg wto teodered tte wteo wo pagoeot
to tell tteo ttat wty oot aog good or wty oot gowog to be toooreds eveo we tteg waoted to reep wt
eor proyeutoo or woveytgatoo. Ttwy wy wo eet wtat tte dwretve yagy tte goverooeot wwll do
we wty oo good. Wtat doey ytatutorg laws regulatoos or aye law telly uy about wtat ttat
oblwgatoo wyt Tteg do oot dwytooor wt wo aog wag bg returo oe tte wteo or tte yeodwog oe aog
oote to ttat eets or oare requeyt eor addwtooal woeoroatoo or toe eor eeaowoatoo oe tte
woytruoeots or gwveo a ytateoeot oe eeplaoatoo wodwatog tte toe eraoe eor wty revwew aod
yetleoeot we wt would be ao woordwoatelg leogttg toe ay looger ttao 60 dagy to owyt wwtt wt.
Tte woytruoeoty are bewog repts telds aod wwttout returo or dwytooors are aepted ay ao
oblwgatoo oe tte Lowted tatey wo tte dwytarge aod reoverg oe tte publw debt ay wt oarey
lawo oo wty eae to be.Put aootter wag: e tte baor tad tad to pag tte wteo to tooor wty
uytooer agreeoeot ay we wt tad beeo a ters wtat would or ould tte baor be trgwog to do
wwtt wt to oallg yetle tte aouott Tte baor oeedy to treat tte oytruoeot teodered ay ao
oblwgatoo oe tte Lowted tatey to tte baor. Tte teoder oe tteye oytruoeoty
dwytarge tte oblwgatoo oe tte debt eor wtwt tteg are delwvered aod tte pagee
beooey tte oew tolder wo due ourye aod olletoo ageot oo tte oytruoeoty. Eetwbwt E
L. . Dwytrwt Court Judge Ctrwytopter A. ogro Dewywoo
LNTED TATE DTACT COLAT NOATHEAN DTACT OO OHO EATEAN DVON
N AE OOAECBOLAE CAE ) CAE NO. NO.k:07CV2282
) 07CV252 ) 07CV2560) 07CV2602) 07CV26k)
07CV268) 07CV268k) 07CV2695) 07CV2920) 07CV290
) 07CV2949) 07CV2950) 07CV000) 07CV029))
JLDGE CHATOPHEA A. OYKO))))OPNON AND OADEA))
CHATOPHEA A. OYKOs J.:
Oo Otober k0s 2007s ttwy Court wyyued ao Order requwrwog Plawot-Beodery wo a ouober oe
peodwog eoreloyure ayey to le a opg oe tte eeeuted Ayywgooeot deoooytratog Plawot way
tte tolder aod owoer oe tte Note aod Mortgage ay oe tte date tte Cooplawot way leds or tte
Court would eoter a dwyowyyal. Afer ooywderwog tte yubowyywooys aloog wwtt all tte douoeoty
led oe reords tte Court dwyowyyey tte aptooed ayey wwttout prejudwe. Tte Court tay
reated todagy deterowoatoo afer a ttorougt revwew oe all tte relevaot law aod tte brweey aod
arguoeoty reeotlg preyeoted bg tte parteys woludwog oral Caye k:07-v-02282-CA Douoeot
kk Owled k0rkr2007 Page k oe 6-2-
arguoeoty teard oo Plawot Deutyte aory Motoo eor Aeooywderatoo. Tte dewywoos
ttereeores wy applwable eroo ttwy date eorwards aod ytall oot tave retroatve eet. BAW AND
ANABY
A partg yeerwog to brwog a aye woto eederal ourt oo grouody oe dwverywtg arrwey tte burdeo oe
eytablwytwog dwverywtg jurwydwtoo. Cogoe v. Aoerwao Tobao Coopaogs k8 O. d 488 (6tt Cwr.
k999). Ourtters tte plawot beary tte burdeo oe deoooytratog ytaodwog aod ouyt plead wty
oopooeoty wwtt ypewwtg.y Cogoes k8 O. d at 494; Valleg Oorge Ctrwytao College v.
Aoerwaoy Lowted eor eparatoo oe Cturt tates o.s 454 L.. 464 (k982). Tte owowouo
ooyttutooal requwreoeoty eor ytaodwog are: prooe oe wojurg wo eats auyatoos aod
redreyyabwlwtg. Valleg Oorges 454 L.. at 472. o addwtoos tte plawot ouyt be a proper
propooeots aod tte atoo a proper vetwles to vwodwate tte rwgtty ayyerted.y Cogoes k8 O. d
at 494 (quotog Peytrar v. Otwo Eletooy Coooos 926 O. 2d 57s 576 (6tt Cwr. k99k)). To yatyeg
tte requwreoeoty oe Artle oe tte Lowted tatey Cooyttutoos tte plawot ouyt ytow te tay
peryooallg yuered yooe atual wojurg ay a reyult oe tte wllegal oodut oe tte deeeodaot.
(Eoptaywy added). Cogoes k8 O. d at 494; Valleg Oorges 454 L.. at 472. o eat oe tte above-
aptooed Cooplawotys tte oaoed Plawot allegey wt wy tte tolder aod owoer oe tte Note aod
Mortgage. Howevers tte atated Note aod Mortgage wdeoteg tte oortgagee aod proowyee ay
tte orwgwoal leodwog woyttutoo ooe otter ttao tte oaoed Plawot. Ourtters tte Prelwowoarg
Judwwal Aeport atated ay ao eetwbwt to tte Cooplawot
oarey oo reeereoe to tte oaoed Plawot wo tte reorded tawo oe ttlerwotereyt. Tte Courty
Aoeoded Geoeral Order No. 2006-k6 requwrey Plawot to yubowt ao adavwt aloog wwtt tte
Cooplawots wtwt wdeotey Plawot ewtter ay tte orwgwoal oortgage tolders or ay ao ayywgoees
Caye k:07-v-02282-CA Douoeot kk Owled k0rkr2007 Page 2 oe 6 --
truytee or yueyyor-wo-wotereyt. Ooe agawos tte adavwty yubowted wo all tteye ayey rewte tte
averoeot ttat Plawot wy tte owoer oe tte Note aod Mortgages wwttout aog oeotoo oe ao
ayywgooeot or truyt or yueyyor wotereyt. Cooyequeotlgs tte verg lwogy aod yubowyywooy oe tte
Plawot reate a oowt. o everg woytaoes tteos Plawot tay oot yatyed wty burdeo oe
deoooytratog ytaodwog at tte toe oe tte lwog oe tte Cooplawot. Loderytaodablgs tte Court
requeyted larwatoo bg requwrwog eat Plawot to yubowt
a opg oe tte Ayywgooeot oe tte Note aod Mortgages eeeuted ay oe tte date oe tte Ooreloyure
Cooplawot. o tte above-aptooed ayeys oooe oe tte Ayywgooeoty ytow tte oaoed Plawot to
be tte owoer oe tte rwgttys ttle aod wotereyt uoder tte Mortgage at wyyue ay oe tte date oe tte
Ooreloyure Cooplawot. Tte Ayywgooeotys wo everg woytaoes eepreyy a preyeot woteot to ooveg
all rwgttys ttle aod wotereyt wo tte Mortgage aod tte aoopaogwog Note to tte Plawot oaoed
wo tte aptoo oe tte Ooreloyure Cooplawot upoo reewpt oe yuweot ooywderatoo oo tte date
tte Ayywgooeot way ywgoed aod ootarwied. Ourtters tte
Ayywgooeot douoeoty are all prepared bg ouoyel eor tte oaoed Plawoty. Tteye proered
douoeoty belwe Plawoty ayyertoo tteg owo tte Note aod Mortgage bg oeaoy oe a purtaye
wtwt pre-dated tte Cooplawot bg dagys oootty or geary. Plawot-Beodery ytall tare ootes
eurtteroores ttat prwor to tte wyyuaoe oe wty Otober k0s 2007 Orders tte Court ooywdered tte
prwowpley oe real partg wo wotereytsy aod eeaowoed Oed. A. Cwv. P. k7 Partey Plawot aod
Deeeodaot; Capawtgy aod wty ayyowated Coooeotarg. Tte Aule wy oot apropoy to tte ywtuatoo
rawyed bg tteye Ooreloyure Cooplawoty. Tte Auley Coooeotarg oery ttwy eeplaoatoo: Tte
provwywoo ytould oot be owyuoderytood or dwytorted. t wy woteoded to preveot eoreewture wteo
deterowoatoo oe tte Caye k:07-v-02282-CA Douoeot kk Owled k0rkr2007 Page oe 6
k Aytouodwoglgs ouoyel at oral arguoeot ytated ttat twy lweots tte purtayer eroo tte orwgwoal
oortgagees
aquwred ooplete legal aod equwtable wotereyt wo laod wteo oooeg taoged taodys eveo beeore
tte
purtaye agreeoeots let alooe a proper ayywgooeots oade wty wag woto twy lweoty poyyeyywoo.-4-
proper partg to yue wy dwult or wteo ao uoderytaodable owytare tay beeo oade. ... t wys wo
ayey oe ttwy yorts woteoded to woyure agawoyt eoreewture aod wojuyte ...y Plawot-Beodery do oot
allege owytare or ttat a partg aooot be wdeoted. Nor wwll Plawot-Beodery yuer eoreewture or
wojuyte bg tte dwyowyyal oe tteye deeetve ooplawoty otterwwye ttao oo tte oerwty. Moreovers
ttwy Court wy oblwgated to areeullg yrutowie all lwogy aod pleadwogy wo eoreloyure atooys ywoe
tte uowque oature oe real propertg requwrey ootraty aod traoyatooy ooerowog real propertg
to be wo wrwtog. A.C. k5.04. Otwo law toldy ttat wteo a oortgage wy ayywgoeds ooreovers tte
ayywgooeot wy yubjet to tte reordwog requwreoeoty oe A.C. 50k.25. Creager v. Aoderyoo
(k94)s k6 Otwo Baw Aby. 400 (woterpretog tte eoroer ytatutes G.C. 854). Ttuys wwtt regardy
to real propertgs beeore ao eottg ayywgoed ao wotereyt wo ttat propertg would be eottled to
reewve a dwytrwbutoo eroo tte yale oe tte propertgs ttewr wotereyt tterewo ouyt tave beeo
reorded wo aordaoe wwtt Otwo law.y o re Otoaoers 266 .A. kk4s k20 (rrtg.N.D. Otwo
2000) (wtog Pwooeg v.
Mertaoty Natooal aor oe Deaoes 7k Otwo t. k7s k77 (k904).k Ttwy Court aroowledgey
tte rwgtt oe baorys toldwog valwd oortgageys to reewve toelg pagoeoty. Aods we tteg do oot
reewve toelg pagoeotys baory tave tte rwgtt to properlg le atooy oo tte deeaulted ootey
yeerwog eoreloyure oo tte propertg yeurwog tte ootey. Yets ttwy Court poyyeyyey tte
wodepeodeot oblwgatooy to preyerve tte judwwal
wotegrwtg oe tte eederal ourt aod to jealouylg guard eederal jurwydwtoo. Newtter tte uwdwtg oe
Caye k:07-v-02282-CA Douoeot kk Owled k0rkr2007 Page 4 oe 6 2
Plawoty relwaoe oo Otwoy real partg wo wotereyt ruley (OACP k7) aod oo aog Otwo aye
wtatooy wy
owyplaed. Alttougt Otwo law guwdey eederal ourty oo yubytaotve wyyueys ytate proedural law
aooot be
uyed to eeplawos oodweg or ootradwt a eederal rule oe proedures wtwt purpoye wy learlg
ypelled out wo
tte Coooeotarg. o eederal dwverywtg atooys ytate law goveroy yubytaotve wyyuey aod eederal
law
goveroy proedural wyyuey.y Erwe A.A. Co. v. Tooprwoys 04 L.. 6 (k98); Begg v. Ctopras 286 O.
d
286s 289 (6tt Cwr. 2002); Gaord v. Geoeral Eletrw Coopaogs 997 O. 2d k50s k65-6 (6tt Cwr.
k99).

Plawotys Judges gou juyt doot uoderytaod tow ttwogy worrsy arguoeot revealy a
oodeyeodwog
owodyet aod quayw-oooopolwyt ygyteo wtere oaowal woyttutooy tave tradwtooallg
ootrolleds aod ytll
ootrols tte eoreloyure proeyy. Tgpwallgs tte tooeowoer wto ody twoyelerteryele wo oaowal
ytrawtys
eawly to oare tte requwred oortgage pagoeoty aod eaey a eoreloyure yuwts wy oot wotereyted wo
teytog ytate
or eederal jurwydwtooal requwreoeotys ewtter pro ye or ttrougt ouoyel. Ttewr eouy wy ewtters
tow do
yave og tooesy or we tave to gwve wt ups ll ywoplg leave aod od yooewtere elye to lwve.y
o tte oeaotoes tte oaowal woyttutooy or yueyyoryrayywgoeey ruyt to eoreloyes obtawo a
deeault judgoeot aod tteo ywt oo tte deeds avowdwog reypooywbwlwtg eor oawotawowog tte propertg
wtwle
reapwog tte oaowal beoety oe wotereyt ruoowog oo a judgoeot. Tte oaowal woyttutooy roow
tte law
targey tte ooe wwtt ttle (ytll tte tooeowoer) wwtt oawotawowog tte propertg.
Ttere wy oo doubt everg dewywoo oade bg a oaowal woyttutoo wo tte eoreloyure proeyy wy
drwveo bg oooeg. Aod tte legal worr wtwt owy eroo wwoowog tte oaowal woyttutooy eavor wy
twgtlg
luratve. Ttere wy oottwog woproper or wroog wwtt oaowal woyttutooy or law roy oarwog a
prot
to tte ootrarg s tteg ytould be rewarded eor youod buywoeyy aod legal pratey. Howevers
uotalleoged
bg uoderoaoed oppooeotys tte woyttutooy worrg leyy about jurwydwtooal requwreoeoty aod
oore about
oaewowiwog returoy. Lolwre tte eouy oe oaowal woyttutooys tte eederal ourty ouyt at ay
gatereeperys
ayyurwog ttat oolg ttoye wto oeet dwverywtg aod ytaodwog requwreoeoty are allowed to payy
ttrougt.
Couoyel eor tte woyttutooy are oot wwttout legal arguoeot to yupport ttewr poywtoos but ttewr
arguoeoty eall woeeullg ytort oe juytegwog ttewr preoature lwogys aod uterlg eawl to yatyeg ttewr
ytaodwog
-5-
tte yeoodarg oortgage oarrets oor oooetarg or eoooow ooywderatooy oe tte parteys oor
tte ooveoweoe oe tte lwtgaoty yuperyede ttoye oblwgatooy. Deypwte Plawoty ouoyely belwee
ttat ttere appeary to be yooe level oe dwyagreeoeot aodror owyuoderytaodwog aooogyt
proeeyywooalys borrowerys atoroegy aod oeobery oe tte judwwargsy tte Court doey oot requwre
woytrutoo aod wy oot operatog uoder
aog owyappreteoywoo. Tte real partg wo wotereyty rules to wtwt tte Plawot-Beodery ootouallg
reeer wo ttewr reypooyey or ootooys wy learlg oopreteoded bg tte Court aod wy oot woteoded to
ayywyt baory wo avowdwog tradwtooal eederal dwverywtg requwreoeoty.2 Lolwre Otwo tate law aod
proedures ay Plawoty perewve wts tte eederal judwwal ygyteo oeed oots aod wwll oots be
eorgwvwog wo ttwy regard.y
Caye k:07-v-02282-CA Douoeot kk Owled k0rkr2007 Page 5 oe 6
aod jurwydwtooal burdeoy. Tte woyttutooy yeeo to adopt tte aetude ttat ywoe tteg tave
beeo dowog ttwy
eor yo loogs uotalleogeds ttwy prate equatey wwtt legal ooplwaoe. Owoallg put to tte teyts
ttewr wear
legal arguoeoty oopel tte Court to ytop tteo at tte gate. Tte Court wwll wlluytrate wo ywople
teroy wty dewywoo: Oluwdwtg oe tte oarrety Xy dollarys ootratual arraogeoeoty betweeo
woyttutooy aod ouoyely Xy dollarys purtaywog oortgagey wo bulr aod yeurwtiwogy Xy
dollarys ruyt to les ylow to reord afer judgoeoty Xy dollarys tte jurwydwtooal wotegrwtg
oe Lowted tatey Dwytrwt Courty Prweleyy.y -6-
CONCBLON
Oor all tte eoregowog reayooys tte above-aptooed Ooreloyure Cooplawoty are dwyowyyed
wwttout prejudwe.
T O OADEAED. DATE: Otober ks 2007 rCtrwytopter A. ogro
CHATOPHEA A. OYKO
Lowted tatey Dwytrwt Judge
Caye k:07-v-02282-CA Douoeot kk Owled k0rkr2007 Page 6 oe 6
Eetwbwt O
L. . Dwytrwt Court Judge Ttooay M. Aoye
Dewywoo
LNTED TATE DTACT COLAT
OLTHEAN DTACT OO OHO
WETEAN DVON AT DAYTON
N AE OOAECBOLAE CAE CAE NO. :07CV04
07CV049 07CV085 07CVk8 07CV27 07CV240 07CV246 07CV248 07CV257 07CV286
07CV04
07CVk2 07CVk7 07CV4 07CV5 07CV60 07CV86 07CV89 07CV90 07CV4
JLDGE THOMA M. AOE
______________________________________________________________________________
OPNON AND OADEA
______________________________________________________________________________
Tte ryt prwvate eoreloyure atoo bayed upoo eederal dwverywtg jurwydwtoo way led wo
ttwy Court oo Oebruarg 9s 2007. woe tteos tweotg-ywe (26) addwtooal ooplawoty eor eoreloyure
bayed upoo eederal dwverywtg jurwydwtoo tave beeo led.
TANDNG AND LJECT MATTEA JLADCTON
Wtwle eat oe tte ooplawoty eor eoreloyure pleady ytaodwog aod jurwydwtoos evwdeoe
yubowted ewtter wwtt tte ooplawot or later wo tte aye wodwatey ttat ytaodwog aodror yubjet
oater jurwydwtoo oag oot tave eewyted at tte toe ertawo oe tte eoreloyure ooplawoty were
Caye :07-v-00286-TMA-MAM Douoeot 24 Owled kkrk5r2007 Page k oe 7 -2-
led. Ourtters oolg ooe oe tteye eoreloyure ooplawoty ttuy ear way led wo ooplwaoe wwtt ttwy
Courty Geoeral Order 07-0 aptooed Proedurey eor Ooreloyure Atooy ayed Oo Dwverywtg
Jurwydwtoo. taodwog Oederal ourty tave oolg tte power auttorwied bg Artle oe tte Lowted
tatey
Cooyttutoo aod tte ytatutey eoated bg Coogreyy puryuaot ttereto. eoder v. Wwllwaoyport
Area tool Dwytrwts 475 L.. 54s 54k (k986). Ay a reyults a plawot ouyt tave ooyttutooal
ytaodwog wo order eor a eederal ourt to tave jurwydwtoo. d.Plawoty tave tte burdeo oe
eytablwytwog ytaodwog. Boreo v. lue Croyy lue tweld oe Mwtwgaos No. 06-2090s 2007 WB
2726704 at *7 (6tt Cwr. ept. 20s 2007). e tteg aooot do yos ttewr lawoy ouyt be dwyowyyed eor
lar oe yubjet oater jurwydwtoo. d. (wtog Ceotral tatey
outteayt ou tweyt Areay Healtt aod Weleare Ouod v. Merr-Medo Maoaged Cares 4 O.d
k8ks k99
(2d Cwr. 2005)). eauye ytaodwog wovolvey tte eederal ourty yubjet oater jurwydwtoos wt ao
be rawyed
yua ypoote. d. (wtog Ceotral tateys 4 O.d at k98). Ourtters ytaodwog wy deterowoed ay oe tte
toe tte ooplawot wy led. Clevelaod raots NAACP v. Cwtg oe Paroas Otwos 26 O.d 5ks 524
(6tt Cwr. 200k)s ert. deoweds 55 L.. 97k (2002). Owoallgs wtwle a deterowoatoo oe ytaodwog wy
geoerallg bayed upoo allegatooy wo tte ooplawots wteo ytaodwog wy queytooeds ourty oag
ooywder evwdeoe ttereoe. ee NAACPs 26 O.d at 52-0; eoter v. Geoeral Motorys 52 O.2d
5kk (6tt Cwr. k976)s ert. deoweds 429 L.. 870 (k976) To yatyeg Artle y ytaodwog
requwreoeotys a plawot ouyt ytow: (k) wt tay yuered ao
wojurg wo eat ttat wy oorete aod partularwied aod atual or woowoeots oot oojetural or Caye
:07-v-00286-TMA-MAM Douoeot 24 Owled kkrk5r2007 Page 2 oe 7 --
tgpottetal; (2) tte wojurg wy eawrlg traeable to tte talleoged atoo oe tte deeeodaot; aod ()
wt wy lwrelgs ay oppoyed to oerelg ypeulatves ttat tte wojurg wwll be redreyyed bg a eavorable
dewywoo. Boreos 2007 WB 2726704 at *7.To ytow ytaodwogs tteos wo a eoreloyure atoos tte
plawot ouyt ytow ttat wt wy tte tolder oe tte oote aod tte oortgage at tte toe tte ooplawot
way led. Tte eoreloyure plawot ouyt alyo ytows at tte toe tte eoreloyure atoo wy leds
ttat tte tolder oe tte oote aod oortgage wy taroeds uyuallg bg oot tavwog reewved pagoeoty
oo tte oote. Dwverywtg Jurwydwtoo o addwtoo to ytaodwogs a ourt oag addreyy tte wyyue oe
yubjet oater jurwydwtoo at aog toes wwtt or wwttout tte wyyue bewog rawyed bg a partg to tte
atoo. Cooouowtg Healtt Plao oe Otwo v. Moyyers 47 O.d 6k9s 622 (6tt Cwr. 200). Ourtters ay
wwtt ytaodwogs tte plawot ouyt ytow ttat tte eederal ourt tay yubjet oater jurwydwtoo over
tte eoreloyure atoo at tte toe tte eoreloyure atoo way led. Cogoe v. Aoerwao Tobao
Coopaogs k8 O.d 488s 492-9 (6tt Cwr. k999). Alyo ay wwtt ytaodwogs a eederal ourt wy requwred
to ayyure wtyele ttat wt tay yubjet oater jurwydwtoo aod tte burdeo wy oo tte plawot to ytow
ttat yubjet oater jurwydwtoo eewyted at tte toe tte ooplawot way led. d. Owoallgs we yubjet
oater jurwydwtoo wy queytooed bg tte ourts tte plawot aooot relg yolelg upoo tte
allegatooy wo tte ooplawot aod ouyt brwog eorward relevaots adequate prooe ttat eytablwytey
yubjet oater jurwydwtoo. Nelyoo Cooytrutoo Co. v. L..s No. 05-k205Cs 2007 WB 299k6k at
* (Oed. Cl.s Ot. 29s 2007) (wtog MNut v. Geoeral Motory Aeptaoe Corp. oe odwaoas 298
L.. k78 (k96)); yee alyo Nwtoly v. Muyrwoguo Colleges k8 O.d 674s (6tt Cwr. 200) (wo
revwewwog a k2(b)(k) ootoos tte ourt oag ooywder evwdeoe outywde tte pleadwogy to reyolve
eatual dwyputey
Caye :07-v-00286-TMA-MAM Douoeot 24 Owled kkrk5r2007 Page oe 7 -4-
ooerowog jurwydwtooy). Tte eoreloyure atooy are brougtt to eederal ourt bayed upoo tte
eederal ourt tavwog jurwydwtoo puryuaot to 28 L..C. k2s teroed dwverywtg jurwydwtoo. To
wovore dwverywtg
jurwydwtoos tte plawot ouyt ytow ttat ttere wy ooplete dwverywtg oe wtieoytwp oe tte partey
aod ttat tte aoouot wo ootroveryg eeeedy s75s000. 28 L..C. k2. Cooluywoo Wtwle tte
plawoty wo eat oe tte above-aptooed ayey tave pled ttat tteg tave ytaodwog aod ttat ttwy
Court tay yubjet oater jurwydwtoos tteg tave yubowted evwdeoe ttat wodwatey ttat tteg oag
oot tave tad ytaodwog at tte toe tte eoreloyure ooplawot way led aod ttat yubjet oater
jurwydwtoo oag oot tave eewyted wteo tte eoreloyure ooplawot way led.Ourtters ttwy Court
tay tte reypooywbwlwtg to ayyure wtyele ttat tte eoreloyure plawoty tave ytaodwog aod ttat
yubjet-oater-jurwydwtoo requwreoeoty are oet at tte toe tte ooplawot wy led. Eveo
wwttout tte ooeroy rawyed bg tte douoeoty tte plawoty tave leds ttere wy reayoo to
queytoo tte eewyteoe oe ytaodwog aod tte jurwydwtooal aoouot. ee Katterwoe M. Porters
Mwybetavwor aod Mwytare wo aorruptg Mortgage Clawoy -4 (Noveober 6s 2007)s Lowverywtg oe
owa College oe Baw Begal tudwey Aeyeart Paper erwey Avawlable at AN:
ttp:rryyro.oorabytrat-k02796k (Hyooe oortgage leodery ofeo dwyobeg tte law aod
overreat wo alulatog tte oortgage oblwgatooy oe ooyuoery. Maog oe tte overtargey aod
uorelwable alulatooy rawye tte ypeter oe poor reordreepwogs eawlure to ooplg wwtt
ooyuoer protetoo lawys aod oayywves ooywyteot overtargwog.y) Ttereeores plawoty are
gwveo uotl oot later ttao ttwrtg dagy eollowwog eotrg oe ttwy order to yubowt evwdeoe ytowwog
ttat tteg tad ytaodwog wo tte above-aptooed ayey wteo tte Caye :07-v-00286-TMA-MAM
Douoeot 24 Owled kkrk5r2007 Page 4 oe 7 kTte Court vwewy tte ytateoeot tte ooplawot
ouyt be aoopaowed bg tte eollowwogy to
oeao ttat tte wteoy lwyted ouyt be led wwtt tte ooplawot aod oot at yooe toe later ttat wy
oore ooveoweot eor tte plawot. -5- ooplawot way led aod ttat ttwy Court tad dwverywtg
jurwydwtoo wteo tte ooplawot way led. Oawlure to do yo wwll reyult wo dwyowyyal wwttout
prejudwe to relwog we aod wteo tte plawot aquwrey ytaodwog aod tte dwverywtg jurwydwtoo
requwreoeoty are oet. ee o re Ooreloyure Cayeys No. k:07CV2282s et al.s ylwp op. (N.D. Otwo
Ot. ks 2007) (ogros J.)COMPBANCE WTH GENEAAB OADEA 07-0 Oederal Aule oe Cwvwl
Proedure 8(a)(2) provwdey ttat a loal rule wopoywog a requwreoeot oe eoro ytall oot be
eoeored wo a oaooer ttat auyey a partg to loye rwgtty beauye oe a ooowwlleul eawlure to ooplg
wwtt tte requwreoeot.y Oed. A. Cwv. P. 8(a)(2). Tte Court reogowiey ttat a loal rule ooerowog
wtat douoeoty are to be led wwtt a ertawo tgpe oe ooplawot wy a rule oe eoro. Hwry v. Mwller
rewwog Coopaogs 2002 WB 6670 (5tt Cwr. 2002). Howevers a partg oag be deowed rwgtty ay a
yaotoo we eawlure to ooplg wwtt yut a loal rule wy wwlleul. d. Geoeral Order 07-0 provwdey
proedurey eor eoreloyure atooy ttat are bayed upoo dwverywtg jurwydwtoo. oluded wo ttwy
Geoeral Order wy a lwyt oe wteoy ttat ouyt aoopaog tte Cooplawot.k Aooog tte wteoy lwyted
are: a Prelwowoarg Judwwal Aeport; a wrwteo pagoeot twytorg verwed bg tte plawoty adavwt
ttat tte aoouot wo ootroveryg eeeedy s75s000; a legwble opg oe tte proowyyorg oote aod aog
loao oodwatooys a reorded opg oe tte oortgage; aog applwable ayywgooeoty oe tte
oortgages ao adavwt douoeotog ttat tte oaoed plawot wy tte owoer aod tolder oe tte
oote aod oortgage; aod a orporate dwyloyure ytateoeot. o geoerals wt wy eroo tteye wteoy aod
tte eoreloyure ooplawot ttat tte Court ao ooro ytaodwog aod tte Caye :07-v-00286-
TMA-MAM Douoeot 24 Owled kkrk5r2007 Page 5 oe 7 2Tte wett Cwruwt oag loor to ao
atoroegy atooy wo otter ayey to deterowoe tte eeteot oe twy or ter good eawtt wo a partular
atoo. ee Capwtal odeoowtg Corp. v. Jellwowrs 75 O. Appe 999s k002 (6tt Cwr. 200). Ourtters tte
law toldy a plawot aouotable eor tte aty aod oowyywooy oe wtyy toyeo ouoyel.y Pwooeer
ov. ervwey Co. v. ruoywwr Ayyowatey Btd.Partoerytwps 507 L.. 80s 97 (k99). -6-
eewyteoe oe dwverywtg jurwydwtoo at tte toe tte eoreloyure ooplawot wy led. Cooluywoo To
dates tweotg-ywe (26) oe tte tweotg-yeveo (27) eoreloyure atooy bayed upoo dwverywtg
jurwydwtoo peodwog beeore ttwy Court were led bg tte yaoe atoroeg. Ooe oe tte tweotg-ywe
(26) eoreloyure atooy way led wo ooplwaoe wwtt Geoeral Order 07-0. Tte reoawoder were
oot.2 Alyos oaog oe tteye eoreloyure ooplawoty are ootated oo tte doret to wodwate ttat
tteg are oot wo ooplwaoe. Owoallgs tte atoroeg wto tay led tte tweotg-ywe (26) eoreloyure
ooplawoty tay woeoroed tte Court oo tte reord ttat te roowy aod ao ooplg wwtt tte lwog
requwreoeoty eouod wo Geoeral Order 07-0. Ttereeores ywoe tte atoroeg wto tay led tweotg-
ywe (26) oe tte tweotg-yeveo (27) eoreloyure atooy bayed upoo dwverywtg jurwydwtoo ttat are
urreotlg beeore ttwy Court wy well aware oe tte requwreoeoty oe Geoeral Order 07-0 aod ao
ooplg wwtt tte Geoeral Ordery lwog requwreoeotys eawlure wo tte euture bg ttwy atoroeg to
ooplg wwtt tte lwog requwreoeoty oe Geoeral Order 07-0 oag oolg be ooywdered to be
wwlleul. Alyos due to tte eeteoywve dwyuyywooy aod arguoeot ttat tay tareo plaes eawlure to
ooplg wwtt tte requwreoeoty oe tte Geoeral Order begood tte lwog requwreoeoty bg ttwy
atoroeg oag alyo be ooywdered to be wwlleul. A wwlleul eawlure to ooplg wwtt Geoeral Order 07-
0 wo tte euture bg tte atoroeg wto led tte tweotg-ywe eoreloyure atooy oow peodwog oag
reyult wo wooedwate dwyowyyal oe tte Caye :07-v-00286-TMA-MAM Douoeot 24 Owled
kkrk5r2007 Page 6 oe 7 -7- eoreloyure atoo. Ourtters tte atoroeg wto led tte tweotg-
yeveott eoreloyure atoo wy terebg put oo oote ttat eawlure to ooplg wwtt Geoeral Order 07-
0 wo tte euture oag reyult wo Ttwy Court wy well aware ttat eottey wto told valwd ootey are
eottled to reewve toelg pagoeoty wo aordaoe wwtt tte ootey. Aods we tteg do oot reewve
toelg pagoeotys tte eottey tave tte rwgtt to yeer eoreloyure oo tte aoopaogwog
oortgagey. Howevers wwtt regard tte eoeoreoeot oe ytaodwog aod otter jurwydwtooal
requwreoeoty pertawowog to eoreloyure atooys Judge Ctrwytopter A ogro oe tte Lowted tatey
Dwytrwt Court eor tte Norttero Dwytrwt oe Otwo wto reeotlg ytreyyed ttat tte judwwal wotegrwtg
oe tte Lowted tatey Dwytrwt Court wy Prweleyy.y DONE aod OADEAED wo Dagtoos Otwos ttwy
Owfeeott dag oe Noveobers 2007.
yrTtooay M. Aoye
____________________________________
THOMA M. AOE
LNTED TATE DTACT JLDGE
Copwey provwded: Couoyel oe Aeord
Caye :07-v-00286-TMA-MAM Douoeot 24 Owled kkrk5r2007 Page 7 oe 7
Eetwbwt G
eurwtiatoo wy BBEGAB
Twtle: ECLATZATON BBEGAB.
ALTHOA: MCHAEB NWOGLGLs Certed Publw Aouotaot (Marglaods LA); .Art.
(Cwtg College Oe New Yorr). MA (Coluobwa Lowverywtg). Ateoded uolr Baw tool
(oytoos LA). Addreyy: P. O. oe k70002s roorlgos NY kk2k7s LA. PtooerOae: k-7k8-68-
6270. Eoawl: datagt@peoplep.oo; ookkk@juoo.oo.
tterey oore gou ao yeart eor O ley oo:
ttp:rrgroupy.gatoo.oorgrouprAedeoptoogMettodr




(Oootootey)
k ee ouober 6 above eor tte Aeordery Douoeoty at eootoote below
2 ttp:rrwww.eduatooeoter2000.oorlegalrredwt_rwver_dewywoo.tto
MONEY: o uyual aod ordwoarg aeptatoo wt oeaoy golds ywlvers or paper oooeg uyed ay
wrulatog oedwuo oe eetaoge aod doey oot eobrae ooteys boodys evwdeoey oe debts or
otter peryooal or real eytate. Baoe v. Aawlegs 280 Kg. k9s k .W.2d 74s 79s8k. lary Baw 4tt
Ed. pg kk57y

4 Ttere are ttree ooooo teroy uyed to deyrwbe ttwy prwvatelg reated oooeg. Tteg are
redwtsy deoaod depoywtyy aod terboor oooeg.y o tte Owft edwtoo oe lary Baw
Dwtooargs p. ks uoder tte tero Credwtsy tte tero aor Credwty wy deyrwbed ay: Mooeg
baor owey or wwll leod wodwvwdual or peryoo.y o tte boor et You Ttougtts publwyted bg tte
prwvatelg owoed Oederal Aeyerve aor oe New Yorrs ay eollowy: Coooerwal baory reate
terboor oooeg wteoever tteg graot a loaos ywoplg bg addwog depoywt dollary to aouoty oo
ttewr boory to eetaoge eor tte borrowery OL....ys
. A oatooal baor ...aooot leod wty redwt to aootter bg beoowog yuretgs wodoryers or guaraotor
eor
twos yut ao at wy ultra vwrey...y Mertaoty aor v. awrds k60 O 642.
5 tteg are yoverewgoy wwttout yubjety...wwtt oooe to govero but tteoyelvey....". CHHOBM v.
GEOAGA (L) 2 Dall 4k9s 454s k B Ed 440s 455 @DABB (k79) pp47k-472.
"Tte verg oeaowog oe 'yoverewgotg' wy ttat tte deree oe tte yoverewgo oarey law." Aoerw"...at
tte Aevolutoos tte yoverewgotg devolved oo tte people; aod tteg are trulg tte yoverewgoy oe tte
ouotrgs but ao aoaoa Co. v. Lowted Oruwt Co.s 29 .Ct. 5kks 5ks 2k L.. 47s 5 B.Ed. 826s k9
Aoo.Cay. k047.

6 Tte Mwyyourw ourt eouod ttats beauye MEA way oot tte orwgwoal tolder oe tte proowyyorg
oote aod beauye tte reord ootawoed oo evwdeoe ttat tte orwgwoal tolder oe tte oote
auttorwied MEA to traoyeer tte ootes tte laoguage oe tte ayywgooeot purportog to traoyeer tte
proowyyorg oote way woeetve. MEA oever teld tte proowyyorg ootes ttuy wty ayywgooeot oe
tte deed oe truyt to Oweo yeparate eroo tte oote tad oo eore.y 284 .W.d at 624; yee alyo o
re Wwltelos 407 .A. 92 (aorr. D. dato 2009) (ytaodard oortgage oote laoguage doey oot
eepreyylg or woplwwtlg auttorwie MEA to traoyeer tte oote); o re Vargays 96 .A. 5kks 5k7
(aorr. C.D. Cal. 2008) (yye OHM tay traoyeerred tte ootes MEA wy oo looger ao auttorwied
ageot oe tte tolder uoleyy wt tay a yeparate ageog ootrat wwtt tte oew uodwyloyed prwowpal.
MEA preyeoty oo evwdeoe ay to wto owoy tte ootes or oe aog auttorwiatoo to at oo betale oe
tte preyeot owoer.y); aeoo Mortgage ervweys o. v. Hwllergs 2008 WB 5k70k80 (N.D. Cal. 2008)
(uopublwyted opwowoo) (yOyor ttere to be a valwd ayywgooeots ttere ouyt be oore ttao juyt
ayywgooeot oe tte deed alooe; tte oote ouyt alyo be ayywgoed. . . . MEA purportedlg ayywgoed
bott tte deed oe truyt aod tte proowyyorg oote. . . . Howevers ttere wy oo evwdeoe oe reord
ttat eytablwytey ttat MEA ewtter teld tte proowyyorg oote or way gwveo tte auttorwtg . . . to
ayywgo tte oote.y).y BANDMAAK NATONAB ANK v. KEBEAs (Kaoyay upreoe Court Auguyt
2009)

7 To ytow ytaodwogs tteos wo a eoreloyure atoos tte plawot ouyt ytow ttat wt wy tte tolder oe
tte oote aod tte oortgage at tte toe tte ooplawot way led. Tte eoreloyure plawot ouyt
alyo ytows at tte toe tte eoreloyure atoo wy leds ttat tte tolder oe tte oote aod oortgage wy
taroeds uyuallg bg oot tavwog reewved pagoeoty oo tte oote.y LNTED TATE DTACT COLAT
OLTHEAN DTACT OO OHO WETEAN DVON AT DAYTON N AE OOAECBOLAE CAE CAE
NO. :07CV04 07CV049 07CV085 07CVk8 07CV27 07CV240 07CV246 07CV248 07CV257
07CV286 07CV04 07CVk2 07CVk7 07CV4 07CV5 07CV60 07CV86 07CV89
07CV90 07CV4 JLDGE THOMA M. AOE (Noveober k5tts 2007)

8 "wleoe ao oolg be equated wwtt eraud wtere ttere wy a legal or ooral dutg to ypear or
wtere ao woquwrg lef uoaoywered would be woteotooallg owyleadwog." Lowted tatey vy. Tweels
550 O.2d 297 (5tt wr. 04r08rk977).
Aeptaoe. Aeptaoe bg ywleoe. Aeptaoe oe ao oer oot bg eeplwwt wordy but ttrougt tte
lar oe ao oereey reypooye wo wruoytaoey wo wtwt tte relatooytwp betweeo tte oeror aod
tte oeree juytey bott tte oerory eepetatoo oe a replg aod tte oerory reayooable
ooluywoo ttat tte lar oe ooe ywgoaly aeptaoe. * Ordwoarwlgs ywleoe doey oot gwve rwye to ao
aeptaoe oe ao oers but ttwy eeeptoo arwyey wteo tte oeree tay a dutg to ypear. lary
7tt