Video archive of the US Congress

House Proceeding 02-26-09 on Feb 26th, 2009 :: 0:02:35 to 0:07:55
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Lamar S. Smith

0:02:31 to 0:02:51( Edit History Discussion )

Lamar S. Smith: voluntary modification outside of the bankruptcy. mr. speaker, on that i note i reserve the balance of my time. the speaker pro tempore: the gentleman reserves. the gentleman from texas. mr. smith: mr. chairman, i yield myself such time as i may consume. the chair: the gentleman is recognized. mr. smith: mr. chairman, our country has fallen into a

Lamar S. Smith

0:02:35 to 0:07:55( Edit History Discussion )
Speech By: Lamar S. Smith

Lamar S. Smith

0:02:52 to 0:03:12( Edit History Discussion )

Lamar S. Smith: serious economic recession. a recession that is worsened by the foreclosure crisis. until we address the rising number of foreclosures, it will be difficult for the economy to recover. but some of what is in this bill we consider today will helpful. providing loan servicers a safe harbor from the threat of

Lamar S. Smith

0:03:13 to 0:03:33( Edit History Discussion )

Lamar S. Smith: litigation if they offer borrowers meaningful loan modification also help blunt the cris. but the counterproductive components, especially the bankruptcy provision. this bankruptcy provision not only will fail to solve the foreclosure crisis, but also will make the crisis longer, and wider.

Lamar S. Smith

0:03:34 to 0:03:54( Edit History Discussion )

Lamar S. Smith: allowing bankruptcy judges to re the overall cost of lending. lenders and investors will hesitate to put up capital in the future if they fear the judges will rewrite the terms of their mortgage contracts. less available capital and increased risk means that borrowers will pay higher

Lamar S. Smith

0:03:55 to 0:04:15( Edit History Discussion )

Lamar S. Smith: interest rates in the future. allowing bankruptcy judges to rewrite mortgages will also encourage borrowers to file for bankruptcy. under this bill a borrower will be able to reduce, for example, a $500,000 mortgage to $400,000. when housing prices rise in the future, that borrower has no obligation to pay back the

Lamar S. Smith

0:04:16 to 0:04:37( Edit History Discussion )

Lamar S. Smith: $100,000 amount they crammed down. $100,000 windfall. and experts predict that receiving this windfall will provide an incentive for borrowers to file for bankruptcy. if bankruptcy filings increase as a result of this legislation, which is predicted, it is

Lamar S. Smith

0:04:38 to 0:04:58( Edit History Discussion )

Lamar S. Smith: unlikely that the count 368 brumentcy judges -- bankruptcy judges could handle the additional caseload in an effective manner. this will prolong the crisis as borrowers wait for their bankruptcy plan to be court approved. in fact, even senator durbin, the primary sponsor of this legislation in the senate, has

Lamar S. Smith

0:04:59 to 0:05:21( Edit History Discussion )

Lamar S. Smith: stated that he is willing to restrict this legislation to subprime mortgages in an effort to make this proposal reasonable. so the legislation we are considering today and the housing affordability and stability plan announced last tuesday really amount to another entitlement program, a program that comes at the expense of the

Lamar S. Smith

0:05:22 to 0:05:42( Edit History Discussion )

Lamar S. Smith: 92% of the homeowners making their payments on time. it is a program that benefits lenders who wrote irresponsible loans and borrowers who borrowed more than they could afford. in other words, this legislation will punish the successful, tax the responsible, and hold no one accountable.

Lamar S. Smith

0:05:43 to 0:06:04( Edit History Discussion )

Lamar S. Smith: if we pass this legislation, what message does it sd to responsible borrowers who are making their payments on time? how can we ask them to foot the bill for their neighbors' mortgages? what are homeowners to think if they pay back the full amount of principal ey owe while others receive a government granted reduction in principal? we need to do everything we can

Lamar S. Smith

0:06:05 to 0:06:25( Edit History Discussion )

Lamar S. Smith: to help solve the foreclosure cris. but we need to do so in a manner that doesn't bankrupt the taxpayers or our financial system and that is in fact fair to all. and as we work to solve the foreclosure cr rememb as the president said in his address to congress on tuesday,

Lamar S. Smith

0:06:26 to 0:06:46( Edit History Discussion )

Lamar S. Smith: quote, it is only by understanding how we arrived at this moment that we'll be able to lift ourselves out of this predicament, end quote. this foreclosure crisis was brought in largely by irresponsible mortgage policies. those policies were implemented by lenders and supported by government sponsored entities like fannie mae who were all too

Lamar S. Smith

0:06:47 to 0:07:07( Edit History Discussion )

Lamar S. Smith: willing to put profits ahead of prudence. their irresponsible behavior was encouraged by members of congressnd the clinton administration. too often borrowers spurred on by cheap credit and little or nothing as a down payment borrowed more than they could afford. the mortgage bankruptcy provisions in this bill are not the answer.

Lamar S. Smith

0:07:08 to 0:07:28( Edit History Discussion )

Lamar S. Smith: allowing bankruptcy modification of home mortgages costly, generate unintended consequences, and likely delay the resolution of the foreclosure cris itself. if we are going to enact this bankruptcy provision despite all of its flaws, we should at least limit relief to subprime and nontraditional mortgages.

Lamar S. Smith

0:07:29 to 0:07:50( Edit History Discussion )

Lamar S. Smith: we should provide bankruptcy judges with clear guidance on the procedure to follow in modifying the terms of home mortgages, g make lowering payments to an affordable level the paramount goal of we should provide much stricter provisions for allowing a lender to recapture any principal that is reduced in

Lamar S. Smith

0:07:51 to 0:07:56( Edit History Discussion )

Lamar S. Smith: home is later sold at a profit. mr. chairman, this bill and the amendments we are going to

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