Ohio House Bill 3 (Home Foreclosures) - Interested Party Testimony
Executive Summary
This testimony is offered on behalf of the Buckeye Institute's 1851 Center for Constitutional Law, a public interest law firm dedicated to defending Ohioans from regulations with widespread, deleterious effects. House Bill 3, as currently constituted, is such a regulation, and if signed into law in its current form, the 1851 Center is likely to initiate legal action challenging the constitutionality of its loan modification provisions.
House Bill 3 authorizes Ohio judges
to rewrite existing mortgage agreements; and appears to even authorize
the Ohio Department of Commerce to "implement a comprehensive loan
modification program."
Specifically, Section 2308.04 of the bill empowers Common Pleas judges to reduce the principal amount and/or interest rate of the loan. Meanwhile, Section 1223.34(B) empowers the Department of Commerce to (1) reduce the interest rate on a home loan; (2) extend the period over which a homeowner may repay a home loan; (3) defer the amount of principal due on a home loan; (4) reduce the principal due on a home loan; and (5) utilize "other factors that the director determines are appropriate."
Although the sponsors of
this bill have expressed the intent to rescue homeowners who are
currently in foreclosure or risk thereof, it is clearly
unconstitutional to interfere with existing mortgage agreements in
Ohio. As such, any provision authorizing Common Pleas judges or the
Ohio Department of Commerce to modify existing mortgage contracts will
be stricken from HB 3 upon legal challenge. This will not only negate
assistance for current homeowners, but it will leave the statute
applying only to prospective mortgage contracts.
As applied to
these prospective mortgages, House Bill 3, as currently written, would
clearly raise interest rates for prospective homeowners, thus harming
more Ohioans than it would help, and enhancing the likelihood of
increased delinquencies.
The full testimony is available here.
Maurice A. Thompson is the Director of the Buckeye Institute's 1851 Center for Constitutional Law, a Center dedicated to protecting the constitutional rights of Ohioans from government abuse. Prior to coming to the Buckeye Institute, Mr. Thompson was an attorney for the Sam Adams Foundation in Chicago. In addition, he has practiced privately in Ohio and Illinois, and clerked for a judge in Ohio.
Mr. Thompson is a native Ohioan. He undertook undergraduate studies in economics and philosophy at Miami University in Oxford, Ohio, and studied law at Case Western Reserve University in Cleveland, Ohio.
