If a financial entity lends money and it knows something about the borrowers future ability to pay it back and the borrower doesn’t know this information and the financial institution doesn’t tell the borrower that under law is called Material Omission. If the financial institution fails to disclose information the borrower needs that is called Fraudulent Inducement.

Catherine Austin Fitts states during her time with the government the government knew that the incomes of the middle class was going to go down do to jobs going abroad. They knew the middle class was going to be wiped out. So the right thing to do would be to make the economy more productive by lowering the debt of the middle class. To have the middle class take on more debt would be Fraudulent Inducement.

Catherine Austin Fitts Assistant Secretary of Housing/Federal Housing Commissioner at the United States Department of Housing and Urban Development in the first Bush Administration, believes that most mortgages written after 1996 were fraudulently induced.

Catherine also believes that the reason the Housing Bill and the bailout happened is because most of Fanny and Freddie debt has no collateral behind it. Most mortgages are in multiple pools. She feels and for good reason one would find an unbelievable amount of collateral fraud in both the Treasury and mortgage markets.