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Is Your Mortgage Illegal, Violate the Constitution, Doesn’t Really Exist and is Unenforceable? Hint: B.S.

For so long I’ve heard the arguments that some claim that a mortgage is not a real document and violates all sorts of laws and arguments and can’t be enforced.

People sell all sorts of crazy courses and make all sorts of claims to get money from people in order to show them how to “cancel” their mortgage. I’ve mentioned or reported on some of them in the past.

I just came across a court case filed by someone that seems to encapsulate all the claims made people as to why their mortgage is not enforceable. I’ll include it at the end of this article for you to see (Attached Complaint). Let me know what you think of it. Post your comments.

But the entire assertion that a mortgage is not real falls under the “Vapor Money Theory” and has been shot down repeatedly by the court. In fact, as recently as yesterday. In another similar complaint (source) yet another person has bought in to the conspiracy theory that a a mortgage is not valid. The judge had this to say about the claim.

In his Complaint, Plaintiff appears to argue that he does not owe the money due on his loan because it was not backed by actual money. Specifically, Plaintiff alleges that he, “turned over a bond [to an unspecified party] as an asset exchange,” and “this bond was then exchanged with other instruments from the United States Department of Treasury.” (Compl., P. 5). Plaintiff maintains CitiMortgage materially altered the bond, with the intent of defrauding Plaintiff. (Id.). Plaintiff further claims there was no consideration for the contract in the amount of $113,451, the original amount of the bond of collateral held by Plaintiff, and that “CITIMORTGAGE, INC. cannot, loan the capital stock of their directors, nor can they loan the money of their depositors, and they can only loan money.” (Id. at 6.)

With these vague allegations, Plaintiff may be attempting to allege the “vapor money” theory as a ground for recovery. In the typical vapor money claim, “Plaintiff alleges that the promissory note he executed is the equivalent of `money’ that he gave to the bank. He contends that [the lender] took his `money,’ i.e., the promissory note, deposited it into its own account without his permission, listed it as an `asset’ on its ledger entries, and then essentially lent his own money back to him….He further argues that because [the lender] was never at risk, and provided no consideration, the promissory note is void ab initio, and Defendants’ attempts to foreclose on the mortgage are therefore unlawful.” Demmler v. Bank One NA, No. 2:05-CV-322, 2006 WL 640499 at *3 (S.D. Ohio Mar. 9, 2006). While the vapor money theory has not been addressed by any court within the 8th Circuit, it and “similar arguments have been rejected by federal courts across the country.” McLehan v. Mortgage Electronic Registration Sys., No. 08-12565, 2009 WL 1542929 at *2 (E.D. Mich. June 2, 2009) (citations omitted). See, e.g., Thomas v. Countrywide Home Loans, No. 2:09-CV-00082-RWS, 2010 WL 1328644 (N.D. Ga. Mar. 29, 2010); Andrews v. Select Portfolio Servicing, Inc., No. RDB-09-2437, 2010 WL 1176667 (D. Md. Mar. 24, 2010); Barber v. Countrywide Home Loans, Inc., No. 2:09-CV-40-GCM, 2010 WL 398915 (W.D.N.C. Jan. 25, 2010); Kuder v. Washington Mut. Bank, No. CIV S-08-3087 LKK DAD PS, 2009 WL 2868730 (E.D. Cal. Sept. 2, 2009); Rodriguez v. Summit Lending Solutions, Inc., No. 09cv773 BTM(NLS), 2009 WL 1936795 (S.D. Cal. July 7, 2009); Johnson v. Deutsche Bank Nat’l Trust Co., No. 09-21246-CIV, 2009 WL 2575703 (S.D. Fla. July 1, 2009); Gentsch v. Ownit Mortgage Solutions Inc. No. CV F 09-0649 LJO GSA, 2009 WL 1390843 (E.D. Cal. May 14, 2009). Thus, the vapor money theory is not a valid route to recovery, and Plaintiff’s claims based upon it must be dismissed.

Basically, those claims that a mortgage is not a valid document and can’t be enforced are bogus and you should save your money before you pay for any course or service that tries to tell you otherwise.

Attached Complaint

This compulsory Counterclaim arises out of Claim of Countrywide Home Loans where act of lending CREDIT is unlawfully committed in violation Shaughriessyof Article 1 Section 10 of the U.S. Constitution, which in part states : “No State (or State/national chartered Bank) shall … emit Bills of Credit;…” State ex rel. Birnamwood Oil Co . v., 243 Wis 346,10 NW 2d 292, 295

Comes now XXXX, Third Party Plaintiff, by special visitation and not appearing generally, before this honorable court seeking a remedy in Admiralty as is provided by “The Saving to the Suitors Clause” at USC 28-1333(1).


Third Party “Plaintiff may elect to bring suit either as admiralty action in federal court or as state common-law action in state court…” T.N.T. Marine Service, Inc. v.Weaver Shipyards & Dry Docks, Inc (1983 CA 5 Tex) 702 F2nd 585, 36 Fit Serv 2d 293, cent den (US) 78 F Ed 2d 141, X04 S Ct1S1″ . Emphasis added.

In 1938 (September 16) in Schlaefer v. Schlaefer,71 App DC 350,112 F2d 177, the United States Government (US Govt) supplanted the Equity Rules of Practice with the Federal Rules of Civil Procedure; and in Erie v.Tompkins. 304 US 643,58 S Ct 817, 82 L Ed 1188 overruled Swift v. Tyson 41 US 13, 16 Pet 1, 10L Ed 865, which held that there was a body of federal general common law to be applied. As a result, the corporate United States Government (19 CJS § 884), and its franchised states and local goverrunents, now adjudicates cases in Admiralty/Maritime Jurisdiction. I believe that the U.S. Govt merged law and equity in federal courts providing for only one remaining action, which embraces all actions formerly STYLED suits in equity and actions at law. This admiralty maritime jurisdiction in a State-Republic court proceeds in a common law jurisdiction as provided for in T.N.T. Marine Service. Inc. v. Weaver Shipyards & Dry Docks. Inc., supra.

I am standing in my unlimited commercial liability as a Secured Party Creditor and request that the Third Party Defendants do the same, and waive all of their immunities in accordance with principal of parity (all are equal under the Law) . I respectfully request the indulgence of this court as I am not schooled in law. This is provided by the precedent set by Haines v. Kerner at 404 US 519.


“State court may not deprive party with Maritime claim of federally created rights by applying limiting principles of state law to claim.” Casey v. Palmer Johnson.Inc. (1981, BD Wis) 506 F Supp 1361.

“Admiralty and maritime jurisdiction is conferred on courts of United States by Art. 3 § 2 of Constitution and cannot be enlarged or restricted by [STATE] legislation;… The J.E .Rumbell (1893) 148US 1, 37 L Ed 345,13 S Ct 4982′

In that Admiralty/Maritime Jurisdiction embraces all actions (i .e. Civil and Criminal), I am reserving all our U.S. and Georgia-Republic Rights, specifically Rights set forth in Paragraph M of Georgia’s Bill of Rights .

“M. Right to trial by jury; number of jurors; selection and compensation ofjurors. (a) The right to trial by jury shall remain inviolate, except that the court shall render judgment without the verdict of a jury in all civil cases where no issuable defense is filed and where a jury is not demanded in writing by either pity. In criminal cases, the defendant shall have a public and speedy trial by an impartial jury; and the jury shall be the judges of the law and the facts.” Emphasis added,

AS TO COUNT 1: I, XXXX the Third Party Plaintiff, Secured Party Creditor, a Natural Man, created by God (Genesis 2:7), Demand that the CountrywideHome Loans, Jimmy Munoz, Sheila Zuckerman and Adrian Ely produce their Proof of Claim. I demand to inspect the “Original Mortgage Note”, with wet ink signatures, along with the Title Page that shows whether or not the mortgage has been satisfied. I believe that the COUNTRYWIDE HOME LOANS has sold the original note and failed to give credit to my account per Fed. Res. Bank of Chicago’s 1992 publication Modem Money Mechanics page 6, which in part states:

“What they [banks] do when they make loans is to accept Promissory [e.g. mortgage] notes in exchange for credits to borrowers’ transaction accounts [of XXXX].” Emphasis added.

This note was created on my credit and signature (12 USC 1815(L)(1), and was not an asset of Countrywide Home Loans until I gave it to the Countrywide.

Title 12 USCS § 1813(L)(1) is FDIC reguladons referencing the term “deposit”. In part, the term “deposit” means “the unpaid balance of money or its equivalent received or held by a bank in the usual course of business and for which it has given or is obligated to give credit, …” When Countrywide Home Loans accepted my mortgage “Note in exchange for credits to [my] borrowees transaction account”, it became obligated to me, the Third Party Plaintiff. Section (L)(1) goes on to state, “… That, without limiting the generality of the term ” money or its equivalent [e.g. a Mortgage Note]”, any such account or [mortgage note] instrument must be regarded as evidencing the receipt of the equivalent of money when credited or issued in exchange for cheeks or drafts or for a promissory [mortgage] note.”

I believe that Countrywide Home Loans having sold my mortgage note has not been damaged and has no legal right to a claim. As you well know, Proof of Claim must be established by law (FDCPA 15USC § 1692). Only the Original Mortgage Note will be accepted as proof of claim. If the Third Party Defendants have the original mortgage note, let them bring it forth and offer their Proof of Claim for my inspection. I believe the Third Party Defendants DO NOT have lawful Proof of Claim, and there is no evidence to the contrary. This is Dishonor in commerce, Theft, Fraud, Conspiracy, and Racketeering.

AS TO COUNT 2: The “Agreement” (UCC 1-201(3)) upon which Couriirywide is relying does not meet “Course of Performance” required by UCC 1-303. The “Agreement” did not provide the Plaintiff with knowledge of the nature of the transaction. It concealed the fact that Countrywide exchanged our Note [which was my Asset] for a credit to the borrowers transaction Account i.e. the account of XXXX. In light of this concealment, I filed a UCC Financing Statement, claiming my original Note #IS2348874 of $147,613 .00 and a Tenant-Life Estate of $77,000.00. I Third Party Plaintiff believe that the Third Party Defendants cannot provide proof of claim to rebut the lawful nature of my Counterclaim as set forth in Count 2 . Exhibit 1.

AS TO COUNT 3 : I, XXXX, tendered a lawful offer to Countrywide Home Loans to settle their [“alleged”) claim. Countrywide Home Loans has chosen to dishonor my lawful offer and has refused to zero the account. This is a Dishonor in Commerce, Fraud, Theft of Public Funds,
Racketeering, and Conspiracy, and I believe there is no evidence to the contrary. I also believe that once tender of payment of an obligation to pay an instrument is made to a person entitled to enforce the instrument and the tender is refused, there is discharge, to the extent of the amount of the tender. UCC 3 – 603.

I believe that the Third Party Defendants cannot provide proof of Claim to substantiate that my tender of offer and their refusal to accept the offer does not constitute a discharge of the alleged debt.

AS TO COUNT 4 : Third Party Plaintiff believe that COUNTRYWIDE HAS NOT satisfactorily complied with RESPA 12 USA §2605;(1) Duty of loan servicer to respond to borrower inquiries; to 12USCS § 2605; (2) relating to Action with respect to inquiry nor to (3) Protection of credit rating. I have sent documentation dated dune 20, 2008, August 14, 2008, November [18, 19, 24 and 25 2008 and January 6, 2009, and COUNTRYWIDE has failed to address the issues in the documentation, which acquiescence is an estoppel. Winslow v. Bums, 47 NM 29,132 P2d 1048, 1050. I have exhausted administrative procedures required to invoke the judicial power of this Court. I believe that the Third Party Defendants cannot provide proof of claim to rebut Count 4 .

AS TO COUNT 5: I Third Party Plaintiff believe that constitutional law prohibits the emission of bills of credit (U.S.Constitution Article I Section 10). I believe that the Third Party Defendants can produce no proof of claim that they loaned anything but credit and that their “alleged loan” was not an ultra vires act outside Countrywide’s government granted corporate charter.

“The doctrine of ultra vires, by which a contract made by a corporation beyond the scope of its corporate powers is unlawful and void and will not support an action, rests, as this court has often recognized and affirmed, upon three distinct grounds: The obligation of any one contracting with a corporation to take notice of the legal limits of its powers; and interest of the stockholders not to be subject to risks which they have never undertaken; and, above all, the interest of the public that the corporation shall not transcend the powers conferred upon it by law.” QUOTING: De La Vergue Co.v.German Savings Institution 175 US 40, 58o, 20 S Ct 20, 25, 44 LEd 65. First National Bank v. Monroe 69 SE Rep 1123,1124,11.25,1126 (1911).


“A contract of a corporation, which is ULTRA VIBES, in the proper sense — that is to say, outside the object of its creation as defined in the law of its organization, and therefore beyond the powers conferred upon it by the Legislature – is not voidable only, but wholly void, and of no less effect”

“But, when the contact is beyond the powers conferred upon it by existing laws, neither the corporation, nor the other party to the contract, CAN BE ESTOPPED, by assenting to it, or by acting upon it, to show that it was prohibited by those laws.”

“When the contract if once declared ultra vires, the fact that it is executed does not validate it, nor can it be ratified, so as to make it the basis of suit or action, nor does the doctrine ofestoppel apply.” QUOTING – F & PR Co.v. Richmond, Fredericksburg & Potomac and Richmond & Petersburg Railroad Connection, 145 Va 266, 133 SE 188. Emphasis added.

I believe that the Third Party Defendants cannot substantiate proof of claim that Countrywide Home Loan’s Agreement/Contract is not wholly void.

“The provisions referred to do not give power to a national bank to guarantee the payment of the obligations of others solely for their benefit, nor is such power incidental to the transaction of bating. A bank can lend its money, but not its credit.” QUOTING- First National Bank v.Monroe,135Ga.614,69SE 1123, 32 LRA (NS) 550. Emphasis added.

I, the Third Party Plairitit~ believe that the Third Party Defendants cannot provide probative evidence to establish proof of Claim that Countrywide Home
Loans in servicing a loan can guarantee payment. I also believe that the Uniform Commercial Code, which is the governing law for
contracts/agreements, in Section 1-310 Subordinated Obligations, in part, states:

“Subordination does not create a security interest as against either the common debtor or a subordinated creditor.”

AS TO COUNT 6: I Third Party Plaintiff believe that Ihave the Right to require that Countrywide admit into evidence document S3 registration statement that Countywide filed when it sold my Note. No.152348874. I believe that Countrywide is subject to FRCP Rule 36. I also believe that I have a Right to a compulsory Counterclaim and under FRCP Rude 13a (to which Countrywide is subject) a ” .. ,claim [to] relief exceeding in amount … that sought …[by Countrywide]. I believe that the Third Party Defendants cannot provide proof of claim to rebut Count 6.


The Third party Defendants have 21 calendar days to cure their Dishonor by the Following:

1. Dismiss any and all claims against the Third Party Plaintiff with prejudice, Notice Banks County that the mortgage Note has been satisfied, remove security deed from County records, clear my credit with all credit agencies, and provide me with the payment of$147,613.00 Countrywide received when it sold my Note and did not give me the credit it exchanged for my Note, OR

2. Pay all damages as indicated by the counterclaim contained herein with Real Money, Surrender any and all Public Hazard Bonds, other Bonds, Insurance Policies, 801K, CAFR Funds, etc. as needed to satisfy counterclaim herein, ..OR,

3.Prove your claims against me by providing me with lawfully documented evidence that is certified true and correct, by (Officers of the Court), in their unlimited commercial liability, while Under Oath, On and For the Official Record, under penalties of the law including Perjury. This evidence must prove your case by a preponderance or the greater weight of evidence and must answer each and every averment, Point by Point individually. If any and all points are not answered fully and accompanied by lawfully documented evidence, as provided herein, that will be Default on the part of the Third Party Defendants (estoppel by Acquiescence Sherlock v, Greaves, 106 Mont 206, 76 P 2d 87, 91). Non Response according to the conditions herein will be default . Incomplete answers and/or lack of documented evidence as outlined herein will be Default. If the Third Party Defendants fail to respond as outlined herein, within 21 calendar days, this will be Default Silence is consent. Non Response Will be a Self Executing Confession of Judgment by all Third Party Defendants, and will be complete agreement with all the statements, teems, and conditions of this contract. This is a contract in Admiralty. Any officer of the court that interferes or involves him/herself with this claim will be added to this claim and become a Third Party Defendant. All Third Party Defendants are individually and severally liable for this claim. – Source

About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


  • This is click bait because this man has obviously not conducted any REAL research into the topic of mortgages. You can read the “AFFIDAVIT OF WALKER TODD,” who was an attorney for the Federal Reserve and find out the truth.

    You can start here:

    15 U.S. Code § 1635.Right of rescission as to certain transactions

  • What if a video rental store was allowed to practice Fractional Reserve Lending?

    The Local Government purchases a Movie DVD and for a small interest fee loans it to Video store “A”. Video Store “A” makes a copy of the DVD and loans it to Video Store “B” for a small interest fee. Video Store “B” makes a copy and loans it to Video Store “C” for a small interest fee. And Video Store “C” makes a
    copy and loans it to Video Store “D” for a small interest fee. This lending and copying continues until the particular movie has reached a threshold and no Video Store has any interest in “borrowing” the movie.

    If the Government wants its DVD returned Video Store “A” can fully comply because it has the original DVD in its possession. And similarly if Video Store “B” needs to return the copy to Video Store “A” it can because it never loan the original copy. So it too can comply. Even when the Video Stores rent out the DVD to a patron, it can still comply if given enough time for its return.

    The Federal Courts claim that there is no real Movie copying in this system, because each of the Video Stores always kept the original, or the original copy. The video Store were able to “balance” their books (inventory) so to speak. The Video Store Owners Loves this system because it allows them to get an inexpensive inventory and they can pass the savings on to their customers. The customers also like this system because they are able to get inexpensive rentals.

    As far as Hollywood is concern, well they are not so bright to figure out that they could sell more Movie DVDs than just to governments. In real Fractional Reserve Lending, this really is the reason why it is allowed. If it ever dawns on people what is happening to the money that they labor for everyday, there would be a stampede to change the laws. But right now the people are more interested in watching Lady Gaga, or Basketball Wives, or Jersey Shore, etc. The Federal Court system is compromised and they will do what ever it takes to support the powerful financial interest that can counterfeit money with impunity.

  • how can a judge claim that the Vapor money theory is non-existent? Vapor money, AKA fractional reserve banking is exponentially inflationary. how else do we get the M3 money supply? Where does the money come from. I took a close look at these cases and they are not supported by any economist. This is a judicial matter that should be argued by economist not judge-turn-economist who simply make blanket statements with no historical or financial support

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