PART 3 of my Diary on Gary Peters HR 1106, Bankruptcy Rules & Mortgage Foreclosures

HR1106&S896

-----He Voted YES on modifying bankruptcy rules to avoid mortgage foreclosures.

This amendment would allow bankruptcy judges to modify home mortgages by lowering the principal and interest rate on the loan or extending the term of the loan.  Why would a lender make a 30-year loan if they fear the powers of the Federal Government will violate the very terms of that loan?  Would you want the govt to modify a contract that you entered into and are bound to? Gary Peters thinks that is just fine.

H.R. 1106 would have forced responsible U.S. taxpayers and homeowners to compensate delinquent borrowers and irresponsible lenders that took out and made the bad loans in the first place.

It would have forced banks to eat the costs when the principal owed on the mortgage is reduced, and then the banks facing insolvency would have had to then turn to the government for more bailout funds.

The taxpayers then would have wound up paying twice: first to bail out the borrower who couldn’t afford their house, and then the bank that was forced by government to make the bad loans in the first place.  Lenders must charge for that added risk, and experts estimate that the additional costs would raise mortgage rates by as much as two full percentage points or substantially increase required down payments.  Way to go Gary.  Your kind of accounting has gotten us in the mess we are in.

So Congressman, about your YES vote on HR 1106, allowing a bankruptcy judge to modify the principle and interest on a mortgage.  Have you thought through this one?  Why would a lender make a 30-year loan knowing the Federal Government could violate the very terms of that contact?  Would you loan someone a large sum of money under these conditions?  So you voted to allow the government to come in and change the rules in the middle of the game Gary?  Modifying the contract like this just delays the inevitable and puts the banks in jeopardy… then they may need to be bailed out…oh wait, you’ve done this before. So you voted that it was OK to put yet another burden on responsible taxpayers forcing them to pay for delinquent borrowers and then we pay to bail out the banks when it all doesn’t work out.   I’m glad the senate didn’t go for this bad legislation, but your inability to see the damage it would do in your district really concerns me.  In fact the whole 111th congress concerns all the taxpayers seeing as we are about to get the biggest tax increase in history this January.  We are not looking forward to the bill you will be sending us for all your bad legislation, Gary.  Finally I’m wondering that since lawyers would have been the big ‘winners’ of this legislation (who have heavily contributed to your campaigns), if that may have influenced your poor judgment at all.   You are doing a good job representing your campaign contributors, but what about the voters of MI 9th who can’t pay for those favors,? You made the taxpayers of the 9th district the big losers, and maybe you should lose in November because of this.