Speaking Tuesday, Treasury Secretary Henry Paulson sent a sobering message to homeowners currently facing foreclosure because they bit off more mortgage than they can chew. (Emphasis is mine.)
Many of today's unusually high number of foreclosures are not preventable. Due to the lax credit and underwriting standards of the past years, some people took out mortgages they can't possibly afford, and they will lose their homes. There is little public policymakers can, or should, do to compensate for untenable financial decisions. And in the midst of rapid price appreciation, some people bought homes anticipating an immediate profit. Now that their investments have not turned out as they had hoped, these people may walk away, even though they can afford their mortgage payment. These borrowers can and should be living up to their mortgage commitment — government intervention here would be inappropriate. These two categories of foreclosures — stemming from lax underwriting standards and increased speculation — will remain elevated in the near term.
Full text of the speech here, via the Wall Street Journal.