You can bank on it?

Court documents from the US show that whilst a couple were found to have deliberately deceived a bank the fault lay with the lender - for not checking the information supplied by the loan applicant.

"While the Court finds and concludes that the Debtors made a material false representation concerning their financial condition to the Bank in October 2006, with knowledge of its falsity and the intent to deceive the Bank, the Court finds and concludes that the Bank’s nondischargeability claim under § 523(a)(2)(B) must fail.

The Bank failed to prove that it reasonably relied on the Debtors’ false representation concerning their income, as set forth in the October Loan Application. As a result, the Bank’s claim has been discharged. Judgment will be ordered accordingly"

Moves are underway to allow courts to rewrite contracts thereby forestalling bankruptcy and/or foreclosure; "cramdown"

"The question that faces us now is this: After committing over one trillion dollars in taxpayer money to address the financial crisis, why don't we take a step that would indisputably reduce foreclosures and that would cost taxpayers nothing?" Sen. Durbin said in a statement introducing the legislation.

A measure allowing court-ordered mortgage workouts could be passed separately, or as part of Congress's coming economic-stimulus package. Senate negotiators say Citigroup's endorsement of the measure is important for bringing other big lenders on board quickly, improving the measure's chance of passing with the stimulus bill.

"We think it would be great to put this on the stimulus, and the bank support will make it all the easier to accomplish that," said Sen. Charles Schumer (D., N.Y.), who, as one of Citigroup's home-state senators and key player on the Senate Banking Committee, is brokering the talks.

The reversal by lenders reflects new political realities in Washington, and a judgment that banks may lose less in the long run by negotiating a compromise on an issue that resonates with Americans squeezed by job losses and credit problems. The proposal appears to have wide support in the new, more Democratic Congress.

For Citigroup, one of the nation's biggest mortgage lenders, the stakes are high. The bank faces tough scrutiny by the new Congress, where Democratic leaders have questioned the bank's efforts to help struggling homeowners.