The World’s Biggest Typo
February 26th, 2008 by Peter SudermanFor this bill Mr. Reid decided to ignore the normal vetting of committee hearings and markups, and it shows. Democrats laud the $200 million in the bill for credit counseling, but the actual language of the bill directs $200 billion to something called the Neighborhood Reinvestment Corporation. We trust this error will be eliminated before Mr. Reid achieves Guinness fame for creating the world’s most expensive typo.
The typo is a big glitch, obviously, but the bill in question is more problematic than that; the whole thing is a mistake. The Emergency Home Ownership and Mortgage Equity Protection Act (can’t we get a shorter name? even the acronym, EHOMEPA is irritatingly long) would allow judges to rewrite the terms of mortgage contracts, in essence telling mortgage companies, “I know you had a legally binding contract, but tough cookies. The borrower’s going to pay less.” It’s called a “cram down,” and it does no good for the housing market. As the WSJ points out, even witing the Democratic party, which ostensibly backs the bill, some legislators are squeamish about allowing this sort of violation of contract.
Now, that might sound good to a few squeezed out borrowers, but, as FreedomWorks Chairman Dick Armey explained in an op-ed last month, the result would be significant damage to the mortgage industry — and to home ownership overall. Why? Because the mortgage industry will simply end up compensating for the potential losses incurred through higher fees for everyone. Credit card rates, the articles notes, are much higher than mortgage rates in large part because those terms can be rewritten. Allowing this sort of judicial meddling can only hurt an industry — and an economy — that doesn’t need any more trouble right now.
February 26th, 2008 at 6:16 pm
“Credit card rates, the articles notes, are much higher than mortgage rates in large part because those terms can be rewritten.”
Can’t you opt out of those re-writes in a credit card’s terms if you want to though?
February 27th, 2008 at 1:37 pm
There are so many things wrong with this post and Armey’s op-ed (including problems created by the very bankruptcy bill y’all had no problems with a few years ago, the fact that judges and juries are already called upon to re-do bad contracts, and the fact that the mortgage industry helped write the bill in question) that I don’t even know where to begin.
Look, I don’t think it’s a good idea either, but for REAL reasons. At least be honest about it, dude.