Millions of families in the United States bought the American Dream home during the past 7 years. Purchasers who bought early in the cycle are still in a good position as their homes, on average, have appreciated in value over the past 7 years and they still have equity. However, those purchasers who bought late in the cycle or who did not have a strong balance sheet now find themselves at risk of losing their homes to a foreclosure [ in Canada the term is power of sale; foreclosure refers to legal proceeding where the mortgagee ( the bank or lender) forecloses the right of redemption of the mortgagor and becomes the legal owner of the property subject only to prior encumbrances such as realty taxes that get priority). 

In 2007 there were in excess of 1.5 million US foreclosures. As of February 26/08 foreclosures increased by 90% in the US.

There is a sea of foreclosures that threatens the banks, the home owners and life savings of ordinary Americans. The American dream is crumbling under this debt load.

There are many factors that contributed to this mess. Cheap and abundant money chasing too few good deals. Organized criminals; systemic greed and incompetence. The banks lured many buyers with teaser rates that were structured to significantly increase over time. Moreover, "fat cat" executives became excessively greedy and lost their good judgment in the exchange.

The suffering of ordinary Americans caught in this perfect storm has not been adequately reviewed. The health problems, such as chronic stress; inability to sleep; the inability to function and think clearly. Depression. A whole class of Americans is falling back into an underclass. This is very dangerous as millions of patriotic Americans lose their homes and have less of an interest in the system. It is unhealthy to have the rich get richer and the middle class to get poorer and have its members fall into an underclass.

The banks have taken billions of write offs; the government has even stepped in to bail a few out. It is interesting to observe that the most ideologically pro-free market, capitalists in banking and corporate America, are now running to the government for  bail-outs. As the state attempts to help, in a poor economy and with the additional burden of financing the war on terror, it will also find that it has limits. It appears that one set of rules apply to greedy and incopetent "fat cats" and another set of rules applies to the average citizen.

In recent years, as the recent conviction of Lord Black confirms, executives too frequently learned to crooss-the-line when it came to ethics. It is necessary to regulate more effectively and in the process allow the most incompetent firms to fail and to be taken over by firms with better balance sheets and more competent leadership.

Another trend in corporate America, in recent years, was to reward executives huge sums of money irrespective of performance. This turned, on its head, one of the important pillars of capitalism, which is to reward success and good performance.

The middle class and those aspiring to the middle class have not had any such luck.

How do you get out of this mess?

First, it is important to maintain and increase Faith in the Almighty in times of the greatest need. Two, it is important to work with family and a few close friends to support each other. This should give you some additional reserves and give you a little more leverage to talk to the banks. The government is also offering some help. Work out a realistic game plan. Get  credit consulling from rebutable firms, especially if it is free. Be very cautious when third parties promise big discounts and debt foregiveness ( we can get you up to 50% foregiven) and demand money up-front or they demand control over monthly payments to be paid to creditors (they often take their fees first, do nothing and put you deeper into the whole as legal fees, penalties and higher rates follow!).

In the present environment it is pure insanity to force homeowners into foreclosure and add to the millions already listed in the market place. The mortgagees must work with borrowers to mitigate this crises. The American dream is in need of a revival and people must work together. Have hope. Do not give up. Have Faith in God! He has not abandoned you though it may seem that way at times.