House rules

For many Americans, talk of a foreclosure crisis smacks of hyperbole. While national foreclosure filings have climbed from about 70,000 per month in 2005 to between 200,000 and 250,000 per month now, such numbers represent only a small fraction of the country's total homeowners.

Most middle- to upper-class neighborhoods are spared the regular reminder of foreclosure signs that dot front yards in many lower-income areas. But the issue is not strictly limited to the bottom end of the socioeconomic strata. A historic monetary easing by the Greenspan-dominated Federal Reserve earlier this decade enticed lenders and homebuyers across the income spectrum into questionable deals. Now, wherever overreaching borrowers, exotic loan products, rising interest rates, and cooling home values meet, crisis lurks around the corner.

And though the number of delinquent homeowners pales in comparison to those making payments, the impact of the recent surge in foreclosures nationwide ripple into every niche of the real estate market. In reaction, lenders have tightened requirements to qualify for loans or lines of credit. Property values have begun to level off and decline. Builders are left without market demand for homes already under construction. And many renters face rate hikes or evictions from landlords strapped for cash flow.

How did the country get here? How did the housing market suddenly shift from one of the greatest periods of growth in history to stagnation, rampant bankruptcies, and scores of abandoned homes? The answers to those questions may help solve a far greater quandary: What should the nation do now?

President George W. Bush is showing signs that he supports a federal bailout. His administration has entered into discussions with congressional liberals like Rep. Barney Frank of Massachusetts, who favors funneling $300 billion to refinanced, affordable-cost mortgages.

But what message does such a package send to prudent borrowers whose tax dollars are now going to imprudent neighbors who bought more house than they could afford? Should government remove the negative consequences of foolish behavior and run the real risk of encouraging it in the future?

Mike Rosser, who has spent 43 years in the mortgage business, including 15 as vice president of national accounts for AIG United Guaranty, told WORLD that government relief prevents correction at the problem's root. "Free markets work," he said. "Free markets will punish the bad and cleanse the system. Government programs only delay true resolution."

Rosser favors coordination between government and private agencies to offer counseling services to homeowners in danger of foreclosure-providing sound advice at limited taxpayer expense rather than costly bailouts that fail to educate. On that front, churches and other nonprofits are indispensible for communicating lessons of financial stewardship that encourage people to live within their means.

WORLD traveled to three of the nation's hardest-hit areas for a firsthand look at how Christian leaders, congregations, and local communities are responding to the foreclosure crisis in their backyards.

Denver, Colorado: No Rockwell here | by Mark Bergin

Fort Myers, Florida: Market swamp | by Jamie Dean

San Diego, California: California quake | by Lynn Vincent