Gohmert Votes Against Mortgage “Cram-Down” That will Diminish Home Loans for Young Couples

WASHINGTON, D.C.- March 05, 2009 – (RealEstateRama) — Congressman Louie Gohmert released the following statement following the House’s passage of H.R. 1106, the Helping Families Save Their Homes Act of 2009, a bill that allows bankruptcy judges to “cram-down” the principal balance of mortgage loans for borrowers facing home foreclosure and unfairly leaving responsible borrowers to pay for the homes of their neighbors:

“A home is one of the greatest American symbols of security and stability. Many individuals work hard every day so that they may own and build a life in their own homes. During this difficult economic time, they need to know that the government is not going to destroy that dream for which they’ve worked so hard. However, this mortgage “cram-down” helps only those who have made poor decisions at the expense of the 92% of homeowners who have responsibly chosen to live within their means. This bill will create uncertainty for banks that will be forced to require years of credit history to better insure that a potential borrower is not a bankruptcy risk. That means that at a time when we are casting more and more of our debt on the young people in the country, this bill will force many of them to delay potentially for years the purchase of their first home. This “cram-down” bill will also cause banks or credit unions to raise rates on their best customers to cover borrowers who made bad decisions. It will even allow bankruptcy judges, if they wish, to force banks to extend current loans into “no interest” loans for up to 30 years. Since banks do not get their money for free, other good customers will have to pay more for their loans. Congress will be forcing responsible, hardworking families and individuals who are trying to pay their own bills to be liable for the misdeeds of others.

“Furthermore, stable, community banks will be left in uncertainty as bankruptcy judges are able to change the actual principal on mortgages as they wish. This is not what the economy needs at a time when the government continues to throw hundreds of billions of dollars at the most irresponsible investment banks on Wall Street, while hurting the most responsible lenders in the country. We should not drag down the very people who make this economy strong. It is time for our government to support those who have made responsible choices rather than continue to bailout those whose poor decisions have contributed to our dire economic situation.”