October 06, 2008
Monday

It's not your fault you don't know that the percentage of American home mortgages in foreclosure today is about 2.75 percent.

That shocking but true figure hasn't been emphasized nearly enough by our favorite politicians and media sensationalists, who, as they usually do when real and imagined "national" crises appear, have managed to create the misleading impression that the current foreclosure mess affects every second or third American household.

Yes, the financial crisis is real. Yes, some homeowners and Main Street folk have behaved badly. Yes, the greedy, corrupt corporate and political rats on Wall Street and in Washington are largely responsible for the meltdown that will cost us and our grandtaxpayers untold hundreds of billions if not trillions of inflated dollars.

And yes, the near-quadrupling since 2005 of our annual mortgage foreclosure rate (historically about 0.7 percent) has ignited a banking and credit crisis that looks to be dragging the whole world into recession.

But there are two truths about the foreclosure mess that our beloved media -- especially the TV branch -- have done a lousy job of revealing to the masses.

One is that 97 percent of America's home mortgage loans are not in the process of being foreclosed.

The other is that the mortgage crisis is not spread evenly across America. It is concentrated in some very specific -- and some very predictable -- geographic and demographic places.

Perfect national statistics are hard to come by. But according to the Mortgage Bankers Association, as of Aug. 1, most new foreclosures were occurring disproportionately in eight states.

Four are the usual suspects -- Nevada, Florida, California and Arizona, boom states where regional housing bubbles were fueled by an irresponsible alliance of house-flippers, predatory lenders, fraudulent borrowers and notoriously politicized federal laws like the Community Reinvestment Act, which forces banks to give mortgages to poor people and even illegal immigrants who can't afford or qualify for them.

Four other states -- Michigan, Rhode Island, Indiana and Ohio -- can blame tough economic slumps for their higher rates of new foreclosures. The remaining 42 states are actually below the average national foreclosure rate, which the MBA says is higher than at any time in the last 36 years.

The good folks at Foreclosure.com provide a current state-by-state listing of houses in various stages of financial doom. As of Thursday, its national count of homes already in foreclosure was 496,000. California's number alone was about 175,000. Florida's was 51,000, Nevada's 22,000 and Ohio's 10,037. Pennsylvania's was a distant 2,879, West Virginia's a humble 576 (no jokes, please) and Vermont's was a saintly 97.

Those wildly divergent numbers are no surprise to Foreclosure.com's spokesman Stephen Chip, who blames the media -- specifically the cable channels -- for making it seem our foreclosure spike is a result not of a relatively few bad actors but of the collective irresponsibility of American homeowners.

But maybe the average American is not such a dupe. Maybe, despite the East Coast media and political spin, most Americans know full well that they and their good neighbors are not the perpetrators of our scary financial meltdown. Maybe that's why so many Americans believe Washington's zillion-dollar bailout bill is such a crock.

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