BankFreedom Authorized Associate

______________________________________

______________________________________

 

February 14, 2002



R. U. Cheating, CPA, PC

_____________________________

_____________________________



Re: Material Omissions on Audits of Federally Insured Loans


 

Dear Certified Public Accountant:

It has come to our attention, after consulting with other CPAs, and researching the United States Code, the corresponding Code of Federal Regulations, the Uniform Commercial Code, SEC Regulations and certain Federal Reserve Bank Publications that there is good reason to believe some of the audits performed by your firm may have misrepresented the financial conditions of some of your clients because of material omissions concerning Federally insured loans.

In particular, it appears that the Borrower will be relying upon the Lender's compliance with Federal Laws 12 USCA 1831n (a)(2)(A) and/or 12 CFR 741.6(b) that require the use of Generally Accepted Accounting Principles (GAAP) for Federally-insured loans, and upon the Lender's compliance with Federal Reserve Policies and Procedures concerning the granting of loans (see Federal Reserve publications "Modern Money Mechanics", p. 6, and "Two Faces of Debt", p. 19, for clear statements that promissory notes for loans are deposited into "borrowers' transaction accounts" and are payable upon demand just like a regular deposit accounts), to demand the full and immediate payment of the Borrower's deposit with the Lender from this "borrower's transaction account", since the Lender lent their own Net Worth to the Borrower - - not the funds from the Borrower's deposit account.

We would appreciate an opportunity to discuss this with you and to present some alternatives to limit your exposure to civil and criminal actions as more people become aware of the true bookkeeping entries behind some mortgage loan transactions.

 

Sincerely,

_______________________________

BankFreedom Authorized Associate