Meddling in the Mortgage Market: Harming Homeowners through Good Intentions
In
the midst of increasing attention to how the home price bubble is
contributing to our current economic woes, some in Ohio want to enact
legislation that would change the terms of mortgage contracts. The key
aspect of this proposal would give judges new power to change the terms
of Ohioans' mortgage contracts and reduce the amount owed on the
mortgage to the home's appraised value. This modification of private
contracts by judges is known as "cramdown" in bankruptcy hearings.
Politicians supporting this Ohio cramdown will only exacerbate the
problems in the housing sector and the economy in general, hurting Ohio
homeowners and ultimately Ohio workers.
The full policy brief is available here.
Marc Kilmer is a policy analyst with the Buckeye Institute for Public Policy Solutions, a research and educational institute located in Columbus, Ohio.
