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Foreclosure-Gate: Tap-Tap-Tap Dance Around The Issue....

There is an implied covenant of dealing in good faith in all contracts. I cannot induce you to commit to a contract that I have every reason to believe you cannot perform on - that is, where my intent is not your performance as I represent to you but rather I intend and expect that you will default. People have tried to defuse this mess by saying that "the borrowers are to blame for borrowing money they could not pay." But the problem with this analysis is that it fails to take into account that the lenders knew by 2006 they were in the majority making loans to people who couldn't pay and continued to issue those loans - which means they were making loans for the explicit purpose of inducing people not to borrow and pay but to borrow and default, destroying the borrower financially. And incidentally, for those who wish to point to the UCC (and some people are starting to in their claim that this is a "nothingburger"), there's a problem that arises with the Uniform Fraudulent Transfer Act when the lender makes a loan knowing that the cash flow and asset position of the debtor is insufficient to make payment as agreed. So what did Geithner (who, I will remind you, was Citi's along with the other big banks', primary regulator for safety and soundness during this entire mess) do? Did he force the banks to tell the truth, to unwind fraudulent transaction, and take these institutions through receivership? Uh, no. Instead he, along with the banks, President Obama and Kanjorski, extorted FASB - the accounting standards body - forcing them essentially at gunpoint to make legal marking these loans which everyone knew were crap when they were made at whatever the banks wished, instead of at their actual value - which, for those 80%, was in fact recovery value at the time of origination or approximately 50 cents on the dollar! Got it yet folks? The banks made loans they knew could not be paid as agreed. That's fraud in the inducement (on the borrower) and under longstanding case and statutory law makes the debt avoidable. They sold them to people while intentionally concealing that they knew they were making loans that could not be paid as agreed. That's fraud in the inducement too (on the MBS buyer this time, as they were sold paper that was worth substantially less than promised with full knowledge of that fact.)

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