Treating Symptoms in the Housing Industry

I recently read this opening paragraph in a story I found in a back-issue of ESPN The Magazine: “Death is delivered pink. The lethal liquid that’s injected into the jugular of broken-down racehorses is always colored. That way, a vet can find it quickly. That way, it can’t be mistaken for any other drug. There’s no time for fumbling when a 1,200-pound animal has suffered a catastrophic injury — a broken leg or a fractured ankle.” It was penned by Seth Wickersham as part of his feature, The final furlong; in the May 2009 issue. Beautifully written and heartbreaking, I realized that I had considered this kind of extreme measure as something from the Wild West days and not a current practice. It got me thinking about something Garth Graham told me last week. Garth is the president of Financial Literacy Solutions, a firm that offers a multimedia management platform that is currently using over 200 professionally produced videos to teach people how to handle their money. His contention is that delinquency and foreclosure are not problems in and of themselves, but rather symptoms of an illness that, if not cured, will continue to ruin people’s lives. And that made me think about how we, as a society, always tend to focus on the symptoms and not the root cause of illness. As people, we demand relief from troubling symptoms, yet shy away from making meaningful changes in our lives that would accomplish the same result. We party too late and take a pill in the morning. We decide not to party so late and take a pill to get to sleep. We take anti-depressants to aid us in the pursuit of happiness, only to face more disappointment when they don’t actually provide pure happiness. When our Founding Fathers wrote that all men have the “unalienable Right” to the “pursuit of happiness,” a lot of people here must have thought that they meant we had a right to be happy. But, that’s not what they said. We have the right to pursue it, but happiness is not the goal; it is a symptom of freedom and personal development. We all want to be cured of what ails us, but short of that and in the meantime, just give us something to treat these symptoms. Today, our lawmakers are arguing over who will get free pills and low-cost surgeries (and who will pay for it all) instead of thinking about leading Americans into healthier lifestyles (which may not even require legislation, if you can imagine that). Meanwhile, another group of lawmakers is trying to keep people in homes by writing laws that will change future events; at least that appears to be what they are doing. And that brings me back to my conversation with Garth. If historic delinquency and foreclosure rates aren’t the disease, they certainly feel like it for the mortgage firms operating today. On the consumer side, many homeowners are coming down with an illness brought on by financial illiteracy, taking a gamble on increasing home values and incomes, or the poisonous bite of a predatory lender. The symptoms are clear to see and everyone is crying out for relief and the government is fumbling around in an effort to alleviate the suffering. I’m coming to the conclusion that this horse is running in its last race and it’s time to get past the moratoriums, the cooked third-tier assets and the political bullying and start the work of putting it down. Garth’s company probably has the solution that will keep many future homeowners from making the same mistake. Long term, it looks like a solid play. But knowing why you’re drowning rarely makes the experience of being underwater any better. Despite the government’s relentless bullying, despite the new technologies servicers are bringing to bear on the problem, and despite the thoughtful solutions offered by companies like Financial Literacy Solutions, I suspect that we’ll be seeing a lot of big, pink liquid-filled syringes used before this market finally comes out of the downturn.