I follow Representative Michele Bachmann (R-Minnesota) on Twitter.  She shared today a video of her speaking on the House Floor about the “Cramdown” Mortgage Bill which was passed last night in the House by a 234-191 margin.  Twenty-four Democrats joined with Republicans to oppose this bill, and seven GOP voted in favor of it.

She describes this bill as “the vehicle to pass bankruptcy cramdown which will allow bankruptcy judges to modify the terms of residential mortgages. In turn, this will increase interest rates for all homebuyers as lenders increase rates to price for this risk.”

 

Well not all of the BlueDog Democrats flipped, but the GOP wasn’t completely united either.

Well it heads to the Senate.  Unfortunately this bill will reward irresponsibility, as well as, give judges entirely too much power in these cases.  It will hose lenders and in the midst of this mortgage crisis we have forgotten the primary guilty party in all of this – people who took out loans they knew they couldn’t afford.

Time to contact your Senator to ask can we please bring some common sense back to these matters?

2 comments
  1. Having worked in lending, I'm going to have to disagree with the idea that borrowers always know what they can and can't afford.

    Should they? Yes. Do they? No.

    I had many people come in and apply for loans that they couldn't possibly afford. I'd run their incomes, debts, and the proposed new payment and point out that it left them with negative net income each month, and they'd ask, “What does that mean?”

    Lenders bear a lot more responsibility than they want to admit. They pitched loans to people who never should have been applying, and they used low-starting-rate ARM's to make it look possible for people to make those payments.

    Borrowers have some blame, yes, but the people who should have been experts in this stuff were asleep at the switch, too.

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