Up Close and personal with Governor Rick Perry

I was at a mini-conference sponsored by Americans for Prosperity (Texas) on Saturday. While I was disappointed in the overall shape the conference took (see next post), I did get a chance to ask Rick Perry a question. It was one that Michael Barone asked in one of his last posts as an employee of U.S. News & World Report (he's moved to the Washington Examiner): what can we learn from Texas about forclosures, that is, Texas has relatively few. Why is that?

Let's look at an interactive map, shall we? Last weekend, I went to Las Vegas and spent quality time with people who live in Deschutes county, OR, Las Vegas (Clark Cty,) NV, and Rupert (Minidoka Cty), ID. If you run your cursor over the state of Texas, you'll see that foreclosure rates are pretty low, and the total economic stress index, as measured by AP, is also low statewide. But check out Deschutes County in Central Oregon, or Clark County, NV. My cousin from Bend said that homes in her area are down 40- 50%. My aunt is a real estate agent in Las Vegas, where home prices are down about a third overall. . She says that the rental market is booming because so many foreclosures mean that more people are renting- interesting for the landlords, I'm sure. I mean, what do they use for references and credit history?

So I asked Governor Perry to what did he attribute this low foreclosure rate: was it something other than the overall excellent fiscal health of the state? Texas leads all states in exports, business climate, and has no state income tax, and began 2008 with a budget surplus. He gave credit to the conservative nature of the banking industry in the state, which suffered from an extremely severe housing bust in the mid-'80's. He didn't credit some excellent legislation that was on the books until 5 years ago, which disallowed homeowners from taking out second mortgages on their homestead. In practical effect, it kept people from cashing out based on the appraised value of the home, so no matter what the prices of housing were doing you could only refinance the existing mortgage at its face value (if I recall correctly...). This had the effect of putting the skids on the refi craze, at least until five years ago, which was enough to buffer much of the effects of the bubble that had been in the works around the country for nearly two decades.

Maybe Governor Perry didn't mention the change in the homestead law because he signed it. Just saying.