‘Cram-down’ Will Add Uncertainty to Market, Increase Mortgage Costs

WASHINGTON – March 06, 2009 – (RealEstateRama) — Congressman John Kline issued the following statement today after opposing H.R. 1106, mortgage “cram-down” legislation that passed today in the U.S. House of Representatives:

“I opposed the irresponsible legislation that passed today in the House of Representatives, which includes a ‘cram-down’ provision that allows bankruptcy judges to rewrite the mortgage terms on an individual’s primary residence. Rather than assist struggling homeowners who have acted prudently and played by the rules, this cram-down provision will add uncertainty to the market and increase mortgage costs for all American homeowners at a time when they can afford it least.

“My Republican colleagues and I offered a meaningful solution that would ensure none of your hard earned tax dollars are used to bail out those who made poor decisions. Unfortunately, it was defeated by the Democrat leaders in the House. Among its highlights, our solution would explicitly prohibit taxpayer assistance to any borrower that lied about their income on their mortgage application, as well as any lender that failed to follow proper underwriting standards. Further, the bill would prohibit taxpayer funds from being used as incentives to lenders to rework loans for irresponsible borrowers.”

# # #

In his fourth term in Congress, Congressman Kline is a member of the House Ethics Committee, the Intelligence Committee, the Education and Labor Committee, and the Armed Services Committee.