Courts across the land have trashed the Vapor Money Theory - the idea that the borrower's note funded the loan, or there's no real money and so the lender never actually gave money in the form of a loan. I provide some court opinions, and a host of related citations.
MICHAEL J. BARNES, Plaintiff(s), v. CITIGROUP INC., et al., Defendant(s).
United States District Court, E.D. Missouri, Eastern Division.
June 15, 2010.
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.
YVONNE MOSELY-SUTTON v. KENNETH MACFADYEN, USDC Maryland, 17 June 2011
Plaintiff appears to make a vapor money claim by alleging that, "Lawful money no longer is available for payment of debt in our economic system." Compl. at 7. Plaintiff seems to assert that the loan at issue is unenforceable because "no such required cash was tendered," presumably at the closing of the loan. Compl. at 5, ¶ 14. To the extent Plaintiff asserts a vapor money claim, this Court has previously noted that this "theory has been consistently rejected by federal courts as frivolous and insufficient to withstand a motion to dismiss." Andrews v. Select Portfolio Servicing, Inc., 2010 WL 1176667, at *3 (D. Md. March 24, 2010). Accordingly, all claims based upon any variation of the vapor money theory must be dismissed.