Royce Opposes Irresponsible Housing Legislation

Press Release

Royce Opposes Irresponsible Housing Legislation

"...we are headed down a road that is very ill advised."

Today, the House passed irresponsible housing legislation. Rep. Ed Royce (R-CA) opposed this legislation because of his concerns with the long term implications the cram down provision will likely have -- making it more costly for homeowners to obtain a mortgage in the future and hindering the housing sector's ability to recover from this difficult period.

"As Supreme Court Justice John Paul Stevens said during Nobelman v. American Savings Bank, there is a reason why that mortgage contract is held in the law the way it is. If you manage to allow [bankruptcy judges] to reduce that mortgage then the consequences will be that capital will not come into the system to drive down interest rates," said Royce.

In 2008 alone, 2.3 million loans were restructured through the Hope Now Alliance on a case-by-case basis. These workouts allow the borrowers to stay in their home and avoid unnecessary foreclosures.

"Besides the impact this legislation will have on interest rates, think now about what happens with the HOPE Now Alliance where people at the table work to renegotiated their loans. Are either the borrower or the lender going to stay at the table? We are headed down a road here that is very ill advised," said Royce.

Note: Investors Business Daily recently ran an op-ed penned by Rep. Ed Royce entitled "Letting Judges Rewrite Loans Is Toxic Itself." Royce's piece highlights the serious problems with the 'cram down provision' included in the housing legislation. To read the op-ed please, click here.

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