The chairman-elect of the Mortgage Bankers Association (MBA) warned the House Judiciary Committee’s Subcommittee on Commercial and Administrative Law that, if passed, the Emergency Home Ownership and Mortgage Equity Protection Act of 2007 (H.R. 3609) will become a burden to homeowners, causing them to pay more for their mortgages.

David Kittle, who serves as the MBA chairman-elect, told the subcommittee that H.R. 3609 would give judges the authority in Chapter 13 bankruptcy cases to reduce the value of a mortgage loan so it equals the market value of a home irregardless of the purchasing price on the mortgage. Judges also would be able to tamper with interest rates and loan lengths, Kittle said.
“If you chip away at the security created on home mortgages-and this bill is not a small chip, it is a sledgehammer attack—you chip away at the entire core of the mortgage finance system,” Kittle concluded. “In order to account for the added risk you will add significant costs to obtaining a mortgage. If this bill becomes law, we believe mortgage rates would jump significantly, going up 1.5 to 2 points for everyone taking out a loan.”