Does anyone understand this is not what is happening? The government is not invalidating any contracts, at least not under Paulson's plan. This plan was worked up with the banks to help save banks from losing their butts.
Wrong. The Paulson plan releases the mortgage servicers from their contractural responsibility to uphold the terms of the securities sold and the underlying assets. The servicers would probably get sued over this, but i suspect that this horrid plan will have so little buy-in from Joe McMansion, that noone will bother.
But don't kid yourself. this is a government rewrite of a contract between a mortgage security buyer and the servicer who is to administer the payments. We're way beyond neighborhood banker and customer now.