Washington, D.C. – According to Third District Congressman Dan Lungren the Mortgage "Cram Down" Bill is not the answer for the current foreclosure problem.
Lungren is referring to H.R. 1106 defined as The Helping Families Save Their Homes Act which passed the House 234-191. The plan gives bankruptcy judges the power to alter contracts by reducing mortgage principal, adjust interest rates, extend maturity dates and limit recovery of mortgage-related creditor fees.
Stated Lungren, "I have a considerable number of foreclosures in my district and I will do all I can reasonably do to help families keep their homes. However today’s legislation giving bankruptcy judges the ability to modify mortgate agreements will not help the current situation in my district. The contents of this legislation should sound an alarm to anyone looking to refinance their mortgage.
This bill will increase uncertainty and lead to high risk premiums which in turn will bring higher interest rates to all those wishing to purchase a home. It is my feeling that the "cram down" provisions work against the purpose of revitalizing our housing market.
Although the title of the legislation reflects a noble objective, the actual effect of the bill is likely to make a very bad situation even worse. Most likely the real "cram down" will be down the throats of borrowers which is the last thing that I want to see happen. I know there are good intentions behind this bill but sometimes good intentions do not make effective policy."
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