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Q: eliminating debt.....not consolidating debt ( Answered,   8 Comments )
Subject: eliminating debt.....not consolidating debt
Category: Family and Home
Asked by: heshele1-ga
List Price: $15.00
Posted: 09 Sep 2003 10:37 PDT
Expires: 09 Oct 2003 10:37 PDT
Question ID: 253877
validity of typical net offer to "eliminate mortgages"

Request for Question Clarification by pinkfreud-ga on 09 Sep 2003 18:14 PDT
Is this the kind of offer you're referring to?

Clarification of Question by heshele1-ga on 09 Sep 2003 20:12 PDT
yes....that example is exactly the proposition that i'd like to know
is valid.....thanx
Subject: Re: eliminating debt.....not consolidating debt
Answered By: ephraim-ga on 12 Sep 2003 16:02 PDT

This search has taken me a few hours, mainly because the amount of bad
information out there is enormous. It is exceedingly hard for me in
just a few paragraphs to completely refute every single argument made
on web pages like the one referred to by Pinkfreud, above. Therefore,
I'm not going to try. Instead, I'm going to pick out a few main points
from the argument that this web page makes about mortgages, link them
to the viewpoints of certain extremist groups, and then provide you
with some legal citations from court cases that disprove the arguments
of these groups.

I also need to inform you that I am not a lawyer, and that as per
Google's policy, this answer is "for informational purposes only" and
should not be taken as legal advice. If you are seriously considering
using a scheme like this, I advise you to immediately contact a
competent lawyer who specializes in mortgages. I'm also not a
specialist in economics, and any claims I make about economic theory
should be taken as a layman's attempt to understand the issues. My
main goal is to point you at information that is available on these

First, I'd like to advise you to the fact that the arguments made on
the World News Stand web site (which Pinkfreud referred to in her
clarification) appear to be very similar to arguments made by groups
in the United States which refer to themselves as the "Patriot
Movement." In a comment below, Nelson-ga refers to a movement which
encourages people to avoid paying taxes. The arguments used to avoid
taxes and to avoid mortgages all come from the same incorrect legal
reasonings, which has been struck down by almost every real federal or
state US court which has looked at them.

The Apologetics Index "provides research resources on religious cults,
sects, new religious movements, alternative religions, apologetics-,
anticult-, and countercult organizations, doctrines, religious
practices and world views" according to their homepage at [ ]. They admit that their site is
intended to "defend the Christian faith," but the information they
have on the Patriot Movement (which also has Christian elements) seems
very accurate. They have this to say about the Patriot Movement [ ]:

"On the movement's moderate side are conservative Christians opposed
to the liberal establishment. More radical participants include both
Christians and non-Christians who deny their U.S. citizenship, drive
without licenses, and refuse to pay income taxes in an effort to live
outside "the system." Interspersed among these two groups are the most
dangerous patriots: Klansmen, neo-Nazis, and Christian Identity
believers (i.e. white supremacists who blend pseudo-Christian beliefs
with racism and anti-semitism).

The glue binding this wide assortment of persons is a lethal compound
of four ingredients: an obsessive suspicion of their government; a
deep-seated hatred and fear of federal authorities; a belief in
far-reaching conspiracy theories; and a feeling that for all intents
and purposes Washington bureaucrats have discarded the U.S.

An article by Mark Pitcavige at [
] gives a more thorough description of these types of groups and adds
the following:

"Members of the "patriot" community often develop an inordinate
emphasis on hiding personal information, including especially
financial records, from the government, from creditors, and from
anybody else. As a result, they are particularly likely to be
receptive to advertisements promising "complete privacy" or "utter
confidentiality." Schemes such as "barter banks," where "patriots"
deposit money to be converted into specie and then "bartered" for
various commodities in order to avoid the scrutiny of the government,
have long been popular among members of the movement. Other investment
schemes, including trusts and offshore banking, are similarly
attractive to "patriots.""

Pitcavige (who's a rather prolific author on this topic) has another
essay at [
] in which he states that:

"The Redemption scheme, at its heart, consists of the bizarre notion
that a bankrupt United States converted the physical bodies of its
citizens into assets against which it could sell bonds, and that
knowledgeable people can “redeem” these assets and, through
manipulating them and various imagined accounts, use them to their
advantage...The real attraction of the Redemption scheme, despite its
outlandish propositions, is that it carefully ties together a number
of popular patriot myths and misconceptions into one large structure. 
 Many of the people who attend such seminars already come “knowing”
that their name spelled with all capital letters is somehow different
from the same name spelled in upper and lower case, and “knowing” that
the government went bankrupt when it went off the gold standard, even
if they don’t understand exactly how.  The Redemption scheme not only
reiterates these myths, but cleverly links many of them together into
one explanation.  As a result, it is very compelling to many of the
people who come across it."

With all that as a background, let's take a closer look at the "Erase
The Mortgage" site and its claims.

From [ ]:

"The bank or other lending institution does NOT disclose to you that
your promissory note is actually an asset to the bank - that they
deposit. The bank does not let you know that a promissory note is
actually a "negotiable instrument" under the Uniform Commercial Code,
and that it will be deposited to fund your loan. Nor do you learn that
the bank has a liability to you of approximately the amount of the
loan. (The bank owes you by their own bookkeeping entries!)"

It is beyond the scope of this question for me to read through the
entire Uniform Commercial Code so that I can understand the sophistry
used here. I'm not going to refute the fact that banks are allowed to
resell loans on a secondary market. Any basic college-level economics
course teaches that loans can be re-sold on a secondary market, so
this isn't anywhere near the big amazing revelation that the above
paragraph makes it out to be.

Let's say you want to borrow money from a bank in order to buy a
house. What guarantee does the bank have that you will pay back that
loan? None, except for your word and the ability to affect your
credit. By placing the value of your home on the table, you now have
bargaining power. You're offering to let the bank take possession of
your home if you fail to repay the loan. Since you have a real asset
to offer as value, the bank will probably be willing to loan you more
than if you didn't have that asset to offer. Now, you have the money,
and the bank owns the mortgage on the loan. This means that the bank
has the right to collect a defined amount of money from you each
month, and if you fail to repay, the bank has the right to take your
home. The bank "owns" the mortgage. It can also "sell" the mortgage to
another bank, in which case the other bank pays the first bank for the
right to collect payments from you (or, your house, if you default).
Banks sell mortgages for many reasons, such as interest rate changes,
to raise quick money, or even if the borrower fails to make payments,
and the bank doesn't want to deal with it it sells the
mortgage to the other bank at a loss.

This is pretty basic stuff, and I'm not sure why this website is
making such a big deal out of it, except to possibly take advantage of
people who aren't familiar with it.

"The banker says, repay the loan because the bank lent you money. We
simply ask one question: Should the one who funded the loan be repaid
the money? Whether they answer YES or NO, the bank must forgive the
loan and zero out the debt."

I've quoted this particular statement, because it sounded a little too
"canned" for me. So, I did a Google search on it. Here's what I found:

[ ://,+the+bank+must+forgive+the+loan+and+zero+out+the+debt%22&num=100&hl=en&lr=&ie=UTF-8&oe=UTF-8&as_qdr=all&filter=0
Google Search: "Whether they answer YES or NO, the bank must forgive
the loan and zero out the debt."

There's a lot of web sites out there with this EXACT same paragraph
quoted. ALL of these sites make the exact same claims that this site
does...that mortgages (or loans) are a legal fiction and you don't
need to pay them back. The first site pulled up in this search is [
]. This reveals that the paragraph above is part of a larger essay
about this so-called legal fiction. No author is given for this
document, and no cites or references to other documents or specific
legal cases, laws, decisions, or opinions is given. Based on what's
written, there's no way for me to judge the legal and economic basis
of anything the author says.

Does it concern you that the site you're thinking of using has
plagiarized somebody else's work without giving them credit? Or that
the plagiarized quotation comes from an apparently "anonymous" piece
with no cites to back up the "evidence" it presents?

It's also possible that this quote originated with The Aware Group.
They include most of "The Great Banking Deception" essay at  [ ], and use it to sell
their own program for eliminating this debt. They include the
following disclaimers about their method:

"In the event that the issue is required to go to court, the purchaser
will be liable for any filing fees, court costs, lawyer’s fees or
expert representation that is needed. This is a rare circumstance, but
it is prudent that the purchaser be made aware of the possibility."

"*Neither the distributor of this product, the support provider, The
AWARE Group, it’s director, staff or Members, nor any person and/or
organization, group or corporation associated or affiliated with the
provider or AWARE are to be held liable for actions taken by an
individual purchaser. Each purchaser of this product is advised to do
their own research and are solely responsible for their actions. No
guarantee of debt relief or termination have been made or implied and
the purchaser is not to assume any has been made and no refunds will
be given."

Now, look at their service agreement at [ ]:

There are many interesting clauses here, among them the fact that in
the event you aren't happy with the services provided (for example, if
you lose a court case based on information provided by The Aware
Group), your only recourse is arbitration by "a panel of three Living
Souls without any U.S. Federal Citizenship attached to their real
names" and that the panel will "decide the matter in accordance with
the Laws and Penalties of the Living-Creator." My understanding of
this is that by using their servies, you're giving up the right to
trial in a U.S. court and agreeing to arbitration by the rules of some
undefined religion.

I personally have no problem with contracts which enforce arbitration
before a priest/minister/rabbi/monk/etc. but I would *not* enter into
one unless you clearly understand the rules by which they will decide
the case. From the material presented here, I have no idea on what
basis the dispute would be decided.

There's another clause:

"Providee agrees that Provider is not providing any legal advice and
that the Providee will seek competent counsel if legal advice is

If they're not providing legal advice and they make no guarantee about
the effectiveness of their methods about eliminating debt, then what
exactly *are* they providing? Why would you send them your money?

A little more research on this company by reading [ ] shows that these people
also preach that most Americans are not liable to pay income tax. They
claim that:

"TAXES. Learn about Gross Income: This comprehensive report looks at
the definition of 'Gross Income' per Section 61, which is the standard
definition to which, we are commonly referred by those in the tax
profession. Views the 16th Amendment and concludes that it is accurate
(properly ratified or not). The Federal Regulation that states where
the 'list of sources' can be found. Look at the 'list of sources'
affirmed by the Secretary of the Treasury and the Congress and finally
examines the definition of 'exempt income', which applies to your
earnings that are not 'gross income'!


Learn about Taxable Income: This report uses the federal statutes and
regulations themselves to document that the scope of the federal
income tax is far more limited than the public generally believes. It
will be shown that while many types of “income” can be taxable, they
can be taxable only if they come from specific taxable activities
(a.k.a. “sources”), and it will be shown that the taxable “sources”
apply only to those engaged in international or foreign commerce, but
do not apply to United States citizens living and working exclusively
within the 50 states."

There's a great page at [
] which summarizes the arguments made by tax protesters, among them,
"the 16th Amendment was not lawfully ratified, because Ohio was not
legally a state at the time it ratified the amendment; the Internal
Revenue Code was not "positive law"; the Internal Revenue Service is
not a legitimate government agency; wages do not qualify as "taxable
income"; "sovereign citizens" are exempt from income tax."

The article concludes that: "All of these arguments have been declared
frivolous by the courts -- usually repeatedly -- but are used again
and again by tax protesters; some fall in and out of style. When a tax
protest argument fails in court, the response among tax protesters is
typically not to conclude that the argument was erroneous but rather
to assume that the judge was wrong, corrupt or deliberately
misinterpreting the law."

So, I think it's pretty obvious that tax avoidance schemes and the
"eliminate your mortgage" scheme are closely linked together.

More from [ ]:

"So how does the bank loan actually work?

   1. You want a loan for your home.
   2. The bank advertises that they loan money.
   3. You "apply" for a "loan."
   4. They put you through the ringer and make you glad and relieved
that you were able to be approved for a loan. (You know, like they are
doing you a really big favor.)
   5. They have you sign a promissory note.
And here's the part you're never supposed to know
   6. Since your promissory note can be sold for money, it's an asset.
   7. The bank deposits the asset into an account for approximately
the amount of the note.
   8. The bank cuts you a check from the deposit you never knew about
(or transfers the money to those who should be receiving it).
   9. And you think you owe money back on a loan, when in fact all
that was made was an exchange."

As I said above, THERE IS NOTHING SURPRISING about the fact that banks
can and do resell mortgages. What the statement above doesn't tell you
is that a mortgage can LOSE value. If your house burns down, the bank
is now holding onto a worthless piece of paper because they can never
take possession of the home! If you don't have insurance and are
unable to repay the bank, then the bank suddenly has less money to
work with and must take a loss on the deal! The part about "all that
was made was an exchange" is deceiving. The bank gave you money in
return for your promise to pay it bank and you used your home as
collateral. It's that simple. Nothing surprising or wrong here.

More from [ ]:

"Article 1, Section 10 in part states:

    "No state shall use any Thing but gold and silver coin as a tender
in payment of its debts;"

Is it more difficult to create money with "creative bookkeeping," (or
as President Bush says, "Cookin' the Books") by depositing your
promissory note and not telling you? Or is it more difficult to mine
the gold and silver to mint the money?"

From [ ]:

"You will notice that the Settlor is John, who is a real man. But the
person whose name is on the Deed of Trust is JOHN (John's name in all
upper case letters) who is a straw man or a legal fiction. John's
legal fiction, JOHN, was created when his birth certificate was issued
by the state in which we was born. Evidence of straw man can be seen
everywhere. Look on your driver's license, your checks, anything you
get from any government agency. None of these entities can deal with
John, the man. They all have to deal with JOHN, the straw man. Look on
your personal checks at the signature. Most will have "MP" at the end
of the signature line. If you were to look at the signature line under
high magnification, you would see that it's not a solid line but
rather it is micro-print which says "AUTHORIZED REPRESENTATIVE" over
and over again. John is JOHN's authorized agent. JOHN can't sign any
papers since he has no hands. So John signs for JOHN."

OK, above, I've quoted the parts where I can clearly link these guys
to the Patriot Movement and also give you clear links to court cases
where their arguments failed:

These people claim that because the US is no longer on the Gold
Standard that your mortgage is meaningless, and that money today is
generally meaningless. Courts have struck down these arguments as
completely frivolous and irrelevant:

From [

"This has long been a favorite hobby-horse of cranks and mountebanks,
who argue that Federal Reserve Notes and other paper currency are not
"real money" and therefore tax or counterfeiting laws cannot be
applied to paper currency.  They usually refer to the US Constitution,
Art.I, sec.10, which says that "No State shall ... coin money, ...
make anything but gold and silver coin a tender in payment of debts"
-- but this clause is a restriction only of state govts and not of the
federal govt"

Unlike the Eliminate The Mortgage web page, the page above on Idiot
Legal Arguments actually provides multiple cites from court decisions
to back up its argument. Would you rather believe somebody who doesn't
provide a single citation to real legal theory, or somebody who can
point at recent court cases deciding the issue?

And then there's the "Straw Man" argument that your birth certificate
doesn't describe you because it lists your name in all capital
letters. Some real court cases can be found referred to at [ ]:

"4. United States v. Washington, 947 F.Supp. 87, 92 (S.D.N.Y.
1996)("Finally, the defendant contends that the Indictment must be
dismissed because 'Kurt Washington,' spelled out in capital letters,
is a fictitious name used by the Government to tax him improperly as a
business, and that the correct spelling and presentation of his name
is 'Kurt Washington.' This contention is baseless")"

"9. Rosenheck & Co., Inc. v. United States, 79 A.F.T.R.2d (RIA) 2715
(N.D. Ok. 1997)("Kostich has made the disingenuous argument the IRS
documents at issue here fail to properly identify him as the taxpayer.
Defendant Kostich contends his ‘Christian name' is Walter Edward,
Kostich, Junior and since the IRS documents do not contain his
‘Christian name,' he is not the person named in the Notice of Levy.
The Court expressly finds Defendant WALTER EDWARD KOSTICH JR. is the
person identified in the Notice of Levy, irrespective of the commas,
capitalization of letters, or other alleged irregularities Kostich
identifies as improper. Similarly, the Court's finding applies to the
filed pleadings in this matter")"

Idiot Legal Arguments has an entire page of legal citations for this
here [ ]. Some more

"US v. Lindbloom (WD Wash unpub 4/16/97) 79 AFTR2d 2578, 97 USTC para
50650; Braun v. Stotts (D Kan unpub 6/19/97) aff’d (10th Cir unpub
2/4/98); Jaeger v. Dubuque County (ND Iowa 1995) 880 F.Supp 640 at 643
("The court finds Jaeger’s arguments concerning capitalization
otherwise specious.  The court routinely capitalizes the names of all
parties before this court in all matters, civil and criminal, without
any regard to their corporate or individual status...."; crank's
reference to a law dictionary's definition of "capitalize" -- as a
financial term -- was completely misdirected)"

Given all this, I would be highly dubious of the claims on the page.

Feel free to ask for clarification if needed.


Additional Searches and Search strategy:

Search on patriot + movement

Search on straw + man

Search on 16th + amendment

Search on gold + standard
Subject: Re: eliminating debt.....not consolidating debt
From: nelson-ga on 09 Sep 2003 20:53 PDT
Well golly!  These folks seem as honest as the ones telling you not to pay taxes.
Subject: Re: eliminating debt.....not consolidating debt
From: sublime1-ga on 10 Sep 2003 01:56 PDT
And yet, strangely, they seem to have an explanation for
something I, and no doubt you, have never noticed before:

"Look on your personal checks at the signature. Most will
 have "MP" at the end of the signature line. If you were
 to look at the signature line under high magnification,
 you would see that it's not a solid line but rather it
 is micro-print which says "AUTHORIZED REPRESENTATIVE"
 over and over again."

MP = micro-print, and darned if it isn't true!
Now why would someone go to the trouble of 
creating checks with these little secrets,
and never bothering to point them out to us,
if there weren't a little shadiness going on

I'd be very relieved if any researcher can at
least point to an alternative explanation for
the above that's as convincing as the one 
given on the site that pinkfreud pointed out.
Subject: Re: eliminating debt.....not consolidating debt
From: knowledge_seeker-ga on 10 Sep 2003 04:17 PDT
The reason for the microprint is to prevent someone from photocopying
your check.

"Some checks have a little "MP" stamped at the end of the signature
line. If a check like this is photocopied, the signature line, when
examined under a magnifying glass, will just be a dotted line, instead
of legible words."

What bad checks look like

According to the Federal Reserve, counterfeit checks are the fastest
growing source of fraudulent checks.  For this reason many checks also
contain woven fibre, holograms, watermarks or MICR (magnetic ink
character recognition) line characters.

None of this is secret.  

Anyone who has evered ordered business checks, worked in a printshop
or who handles large checking transactions regularly (bank tellers,
cashiers, business owners) knows that a check can be verified by
looking for the microprint.

Federal Reserve Bank - Check Fraud

Subject: Re: eliminating debt.....not consolidating debt
From: heshele1-ga on 10 Sep 2003 05:39 PDT
with regard to question....advertiser claims that for fee...if
mortgage is held by bank in federal reserve can be
waived....clear insured title issued....and bank thanking you for the
opportunity of serving you...appreciate any additional information
Subject: Re: eliminating debt.....not consolidating debt
From: heshele1-ga on 10 Sep 2003 12:36 PDT
i realize that i'm not asking for a LEGAL response....just
Subject: Re: eliminating debt.....not consolidating debt
From: heshele1-ga on 12 Sep 2003 05:39 PDT
Subject: Re: eliminating debt.....not consolidating debt
From: ephraim-ga on 12 Sep 2003 07:44 PDT

I currently have your question locked while I do research to decide
whether or not I want to answer it. If the lock symbol does not appear
at the top of the page, it means that I've released the lock because I
felt that I could not do the question justice.

Just wanted to let you know in response to your comment,

Subject: Re: eliminating debt.....not consolidating debt
From: acorn-ga on 19 Sep 2003 16:03 PDT
Wow!  What a shock!  I'm funding my own mortgage!

OF COURSE I'm funding my own mortgage.  Who the heck else would be
funding my own mortgage?

(Whoops, do all caps mean my comment isn't legal? ;-)

The deal, of course, is that I am funding it over 30 years but the
seller wants the darn money tomorrow.  So I have to borrow it from the
bank today and fund it back over the next 30 years.

I am just surprised that anyone thinks that they should just get their
house for free simply by signing a mortgage.   (On the other hand, I
bought my home with a 30 year mortgage based on a city bond issue and
after 14 years the bond was met...and the rest of the mortgage was
forgiven!!!  Now THAT was a cool deal.  Of course, my taxes that year
were whopping :-)

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