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Today, the House of Representatives passed mortgage “cram down” legislation (H.R. 1106) that will force all homeowners to bear the cost of bad decisions made by some lenders and borrowers. Congressman Bill Posey (R-Rockledge) opposed the legislation, which will significantly raise the cost of mortgages for responsible borrowers.

“The intention of this legislation is positive – helping struggling homeowners to stay in their homes – and there are some aspects of this bill that I find favorable such as updates to the Federal Credit Union Act and helping encourage voluntary loan modifications,” said Congressman Posey. “I strongly support efforts to encourage borrowers and lenders to work out voluntary rewrites of their mortgage terms. But allowing judges to rewrite loan terms and principal balances on primary residences overturns a century of bankruptcy law and will lead to higher interest rates for all borrowers. Responsible borrowers will potentially pay thousands of dollars in higher mortgage costs. If cram down is enacted into law, it has the potential to destroy the secondary market, which could make securing home financing in the future very problematic.”

Posey also commented that when given the chance to exclude from assistance those who lied to obtain a mortgage, the Democrat majority voted down that amendment. “Taxpayers should not be forced to bailout those who lied about their income in order to buy a home they knew they couldn’t afford.”