Tough Love...

Sometimes tough love is better than no love at all. Washington is still buzzing over Treasury Secretary Henry Paulson's blunt, tough-love comments about the home foreclosure crisis and the real estate market last week. His core message: Foreclosures are a fact of life in the mortgage world. They happen in large numbers even when the economy is booming. They're especially high now because a lot of people messed up - home buyers as well as lenders. In the wake of those messes, the federal government's clean-up role can only be a limited one.

"There is little (that) public policy makers can, or should, do to compensate for untenable financial decisions" by home buyers looking for quick profits and willing to take on unreasonable debts, said Paulson.

The Treasury secretary's comments at an FDIC housing conference came on the eve of Senate action on a housing-relief bill that would provide refinancing opportunities to a fraction of financially-distressed homeowners now stuck with bad mortgages. Everybody else will be left to either work out loan modification terms with lenders or end up in foreclosure.

Paulson also used his speech to punch holes in the widely-accepted perception -- fostered by media coverage -- that the housing market is in deep trouble nationwide. "We need to recognize that there is not a national housing market," he said, "but a collection of regional," highly-localized sub-markets down to the neighborhood level that often perform starkly different than the national headlines might suggest.

Though news about high foreclosure rates on a national basis may be scary-sounding, the fact is that the housing bust is highly concentrated geographically. For example, said Paulson, just four states: California, Florida, Arizona and Nevada -- accounted for one quarter of all mortgages nationwide, but 42 percent of foreclosure filings last quarter. Adding in Michigan, Indiana and Ohio, these seven states -- all by themselves -- have accounted for over half of all foreclosure filings this year. Well, OK, by-golly, we’re the Magnificent Seven!

So, here we are in the midst of our little regional blow-up in Michigan, waiting for any help that we can get to get our economy back in balance and our housing market out of its tailspin. I don’t disagree with Secretary Paulson, but I sometimes wish we were hearing from Pat Paulson instead of Henry Paulson. At least, maybe we’d get a laugh out of his take on things. I used to love his dead-pan delivery.