House Proceeding 03-06-09 on Mar 6th, 2009 :: 1:21:30 to 1:23:45
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1:21:26 to 1:21:46( Edit History Discussion )

K. Michael Conaway: to grant a no-interest 30-year mortgage as an alternative to dropping the principal materially. mr. conaway: will the gentleman yield? mr. gohmert: i certainly will. mr. conaway: the perverse impact of these cramdown provisions is we will have fewer mortgages. if you're a banker and lending money for a 30-year payout,

1:21:30 to 1:23:45( Edit History Discussion )
Speech By: K. Michael Conaway

1:21:47 to 1:22:07( Edit History Discussion )

K. Michael Conaway: then you've got to be very secure in your collateral because, you know, circumstances come and go with respect to the borrower's ability to repay, their health, all those kinds of things, but if you have a 30-year loan, what you're on the hook to leave out there as long as the customer makes those payments, then the collateral is a huge piece as to why you decided to

1:22:08 to 1:22:29( Edit History Discussion )

K. Michael Conaway: make that loan. if bankruptcy judges are now allowed to come in and adjust that value of the collateral to the banker, then the banker's going to react in a couple of ways. one, the banker on the front end says, ok, if the bankruptcy judge has this authority to reduce the value of my collateral, then i'm going to

1:22:30 to 1:22:50( Edit History Discussion )

K. Michael Conaway: be willing to loan less money. which means instead of coming up with the traditional 20% down, before we got into the subprime nonsense, banks will insist on much higher down payments, because they've got to be assured that throughout the life of that loan, their collateral never gets upside down, that the borrower can

1:22:51 to 1:23:12( Edit History Discussion )

K. Michael Conaway: continue, if the borrower quits paying, they can get that house back and pay off the rest of the loan by selling that house. they will also respond by raising interest rates, because interest rates reflect risk for the borrower and the lender. the higher the interest rates, the more likelihood that that loan could default at some point in time.

1:23:13 to 1:23:34( Edit History Discussion )

K. Michael Conaway: so this cramdown provision will put a chilling effect on future home mortgages. which may be the intent. i heard one of our colleagues say on a talk show with a fellow that, you know, maybe this individual home ownership is overrated, it got us in this problem, maybe we don't want americans to own their own

1:23:35 to 1:23:46( Edit History Discussion )

K. Michael Conaway: homes because they can't handle the responsibility of paying it off. let's put in public policy things that will help discourage home ownership, which doesn't make a lot of sense to me, but i was just listening and trying to