Senate Proceeding on Apr 3rd, 2008 :: 2:27:01 to 2:33:40
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2:26:48 to 2:27:01( Edit History Discussion )

Max Baucus: the senator for being agreeable and working with us. mr. cornyn: mr. president? apollo. the presiding officer: the senator from texas. mr. cornyn: mr. president, i want to address the durbin amenent,

2:27:01 to 2:27:16( Edit History Discussion )

John Cornyn: because ien'm concerned that the durbin amendment would hurt low a nd middle income families by making mortgage interest payments higher, make them more expensive and by discouraging credit counseling

2:27:01 to 2:33:40( Edit History Discussion )
Speech By: John Cornyn

2:27:16 to 2:27:38( Edit History Discussion )

John Cornyn: and mortgagee renegotiations and inadvertently steering more american homeowners into bankruptcy. let me just try to quantifyua what i mean in terms of the expense. it's estimat ed that the so-called

2:27:38 to 2:27:55( Edit History Discussion )

John Cornyn: cram down provision would raise interest rates o average of 1.5%. in texas the average loan -- home loan is $122,000 a year. the monthly payment for a 30-year fixed home mortgage at 6% is $734. if you

2:27:55 to 2:28:13( Edit History Discussion )

John Cornyn: add a percentage point and a half to that, it goes up by $122 a month. so if these estimates are correct, and i think they're the best information we have available to us now, the average increase

2:28:13 to 2:28:25( Edit History Discussion )

John Cornyn: to the -- to texas homeowners would be almost $1,500 a year, that would be $1,465 a year. and for that reason, among others , i oppose theos durbin amendment. the bill actually risks increasing the costs

2:28:25 to 2:28:43( Edit History Discussion )

John Cornyn: of owning a home for every american, not just people in my state in texas. there's beene' a little history to this provision as well. the democrat congress and president jimmy carter back in 1978 had

2:28:43 to 2:29:01( Edit History Discussion )

John Cornyn: a reason for exclude ing from cram down the ability -- of a bankruptcy judge to actually go in andn rewrite the interest rate so tt people could afford their home. as a matter of fact, the cram down exception

2:29:01 to 2:29:15( Edit History Discussion )

John Cornyn: which this amendment would eliminate actually helps people buy homes. and it's pretty clear to senator specter from pennsylvania quoted the united states supreme court opinion relative to this, but it's

2:29:15 to 2:29:29( Edit History Discussion )

John Cornyn: pretty clear that the congressional intenngt to exclude from cram down home mortgages was intended. some have disputed that congress was pursuing a policy of making home mortgages more available when

2:29:29 to 2:29:42( Edit History Discussion )

John Cornyn: we had the cram down exception. senator durbin, i believe said that the cram down exception for home mortgages makes no sense whatsoever. the record from the 1978 act clearly shows that congress viewed

2:29:42 to 2:29:57( Edit History Discussion )

John Cornyn: exceptions to cram down d as a means of making mortgages more available. . the senate judiciary committee report explained that thexp purpos e of the real estate l exception was to, -- quote -- "afford greater

2:29:57 to 2:30:12( Edit History Discussion )

John Cornyn: protection."." close quote -- quote -- "by creating a safe harbor that would facilitate rather than discourage this kind of financing." close quote. as i alluded courts recognized the policy of interpreting

2:30:12 to 2:30:24( Edit History Discussion )

John Cornyn: theg act, justice stevens in nobleman versus amersrican savings bank s said the american congress did so and so i would say that the congress of 1978, president carter, an justice stevens -- and

2:30:24 to 2:30:40( Edit History Discussion )

John Cornyn: justice stevens all have acknowledged that this policy of accepting moment mortgages from cram down makes sense and keeps mortgage rates low.~ which i think ought to be our policy. inadvertently, i think

2:30:40 to 2:30:57( Edit History Discussion )

John Cornyn: this hi amendment would alsot encourage more people to seek bankruptcy as a wayay to -- as a way to deal with their financial difficulties. it's been argued that this provision would actually encourage borrowers

2:30:57 to 2:31:09( Edit History Discussion )

John Cornyn: to negotiate with their lender. one problem with that is, as we all know, that most mortgages these days athre actual sold -- are actually sold by the lender. they are then packaged p and purchased

2:31:09 to 2:31:23( Edit History Discussion )

John Cornyn: as securities and sold on the open market. and it is, in fact, what has happened in the subprimeub mortgage marketar which has created this crisis, that the people who actualelly bought those

2:31:23 to 2:31:38( Edit History Discussion )

John Cornyn: securities now find that they're worth dramatically less than they thought because of the problems that these mortgage holders are having. so it's c iertainly not a given that they will be in a position

2:31:38 to 2:31:51( Edit History Discussion )

John Cornyn: to negotiate with aia lender who no longer even holds that mortgage. i'm concerned, though, that the amendment does go toos far in those rare cases where negoti ations are still possible to remove a a

2:31:51 to 2:32:08( Edit History Discussion )

John Cornyn: homeowner's incentive to negotiate instead steers them into bankruptcy. the durbin amendment would, in fact, create a siren song that would lure struggling families into the rocks of bankruptcy. for most

2:32:08 to 2:32:19( Edit History Discussion )

John Cornyn: americans, our homes are our largest and most cherished investment. the chance to have their mortgage decreased by a bankruptcy court basically to renegotiate what -- a negotiated interest rate would

2:32:19 to 2:32:32( Edit History Discussion )

John Cornyn: actually encourage setruggling families to seek bankruptcy protection instead of trying to negotiate n and get their finances back in order in a way that will preserve their credit and will not lure

2:32:32 to 2:32:46( Edit History Discussion )

John Cornyn: them into bankruptcy. i think it's worth noting that bankruptcyba itself has lasting and serious consequencesen to the credit rating of the people who who -- who are -- who seek it. bankruptcy is not

2:32:46 to 2:32:58( Edit History Discussion )

John Cornyn: in the long-term interest of every family that falls behind on their mortgage. now, we should encourage negotiations where possible and, in fact, as we all know, that's what happens anyway. very few mortgage

2:32:58 to 2:33:11( Edit History Discussion )

John Cornyn: holders refuse to negotiate with the borrower when they get it behind in their t payments because, frankly, they don't want the property back. they wantan to continue the loan in effect if possible.si

2:33:11 to 2:33:25( Edit History Discussion )

John Cornyn: so i think the durbin amendment actually discourages negotiation and createsea a -- an effective magnet attracting peoplect into bankruptcy, and i've already talked about why i think that's a bad

2:33:25 to 2:33:40( Edit History Discussion )

John Cornyn: idea. of course, the -- this amendment also waives the bankruptcy law's counseling requirement when a home is in foreclosure, which is inconsistent with the underlying shelby-dodd compromise which

2:33:40 to 2:33:53( Edit History Discussion )

Richard Durbin: provides $100 million to encourage credit counseling. the goal of this bill should be, of course, to help struggling families get back on their feet. want to encourage bankruptcy filings that would

2:33:40 to 2:35:20( Edit History Discussion )
Speech By: Richard Durbin