Posted by: Jack Henry | May 9, 2019

Editor’s Corner: Dead Pledges and Cramdowns

Oh boy, do I have some financial fun for everyone today! On this happy day of May, I would like to talk to you about the words mortgage and cramdown (or cram-down).

The other day as I was editing, I thought, “Where the heck did that ‘t’ in mortgage come from?” Apparently this wasn’t the first time I wondered, because I wrote about it a couple of years ago in Editor’s Corner. But I’m getting old, and I want to revisit it.

Most of us know what a mortgage is. It’s a deal between you and a bank where they loan you money to buy a property, and you spend what seems like a lifetime paying back that money (mortgage) plus interest. But what about that “t” in the spelling? What’s that?

The word mortgage is from the French mort gaige, which translates as “dead pledge.” As Wikipedia explains it:

The word mortgage is derived from a Law French term used in Britain in the Middle Ages meaning "death pledge" and refers to the pledge ending (dying) when either the obligation is fulfilled, or the property is taken through foreclosure.

Now you can take that trip to Paris and really wow them with your language skills! You’re welcome. J

And now for cramdown. This was a new term to me, introduced in another document I was editing. According to Investopedia, a cramdown is:

…the imposition of a bankruptcy reorganization plan by a court despite any objections by certain classes of creditors. A cramdown is often utilized as part of a Chapter 13 bankruptcy filing and involves the debtor changing the terms of a contract with a creditor with the help of the court. A cramdown reduces the amount owed to the creditor to reflect the fair market value of collateral that was used to secure the original debt. A cramdown provision (also known as "cram-down") is primarily used on certain secured debts, such as a car or furniture. Cramdowns are not permitted on mortgages for homes that serve as a primary residence.

Let’s stay away from cramdowns and concentrate on smackdowns instead!

Happy Thursday!

Kara Church

Technical Editor, Advisory

Symitar Documentation Services

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