Countless Americans are on the verge of losing their homes to foreclosure due to a delay or default in payment of their mortgages. It all started with a high and steady leap in the interest rates of subprime mortgage and a corresponding fall in the real estate market thereby lowering the prices of houses all over the country.

During the boom in the real estate market, housing prices were soaring high above their current prices, and the market was doing very well since many Americans bought houses during that time. Those who were not financially strong took support of adjustable-rate-mortgages i.e. ARMs, option-AMRs or interest-only mortgages. ARMs helped owners to extend financially and acquire a property. Lower interest rates of ARMs allowed homeowners to pay less every month. However, none of them estimated the move of the Federal Reserve Bank. The increase in the rates by reserve bank shattered their dream house project.

As per the records of the Mortgage Bankers Association of America, the outstanding loan amount grossly appears to be more than $8.6 trillion. One fourth of the amount out of these unpaid loans is due to ARMs. Experts from Moody’s Economy.com estimate that this year the rates of $2.1 trillions loans could be reset. If this happens, then there are chances that the crisis will extend even further if the rates keep on changing for the worse.

The California based company, RealtyTrac, keeps track on nationwide property markets. They provide information on various groups like homes entering into foreclosure processes, houses facing foreclosure and the homes that have been repossessed by the banks. RealtyTrac says that this year in America foreclosures have increased drastically over the last year\’s figures.

Foreclosure does not mean that all the people facing it have become homeless. Actual foreclosure is a long process. It generally begins when the owner makes three defaults consecutively in their monthly mortgage payments. Lenders then send a notice of default to the owner. This process takes about seven to fifteen months. In the mean time, owners can sell their homes for profit, or can go in for refinancing. Many owners also work out the deals in their favor or opt for the short selling technique which is carried out by the lender. In some states, if the owner can prove his bankruptcy in a court of law then the foreclosure proceedings against him stop.

RealtyTrac data says that half of the owners missing their mortgage payments, out of the total against whom foreclosure filings are prepared actually face foreclosure.

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Apart from sub-prime lenders who trouble homeowners by filing foreclosure suits against them, frauds or con actors are also giving homeowners hard times.

The cases of people fooled by con actors are more common in Arizona. As mentioned in the report of Better Business Bureaus released recently, there are about 1.69 million homeowners in Arizona who are on the verge of losing their dream homes in the next two years. Disheartened by this fact, home owners trust anyone who shows them some light of hope. Con actors give them assurance that they will save their property by re-negotiating the terms with the lender.

Various corrupt companies who call themselves “Mortgage Foreclosure Rescue Companies” just look for a possibility to cheat anxious people just to fill their own pockets. They approach the owners via telephones, emails, mail, or even personally, claiming that they will re-work the entire loan scheme and protect their house from foreclosure. They also take money from dejected owners promising to refund it back later. Eventually, these companies disappear with the money by doing very little or nothing at all to help the poor homeowners. Desperate house owners have even paid these con artists as much as $14,000 in some cases.

The Better Business Bureaus in Arizona have received numerous complaints about such foreclosure rescue companies from people who have been conned by them. In the past three years, there have been 112 such cases filed. Out of these, 35 cases have taken place in the last eleven months alone.

To give this matter a more serious approach, The Better Business Bureaus, with an intention to help distressed homeowners give a few suggestions:

· Be cautious of any person approaching your door with a handwritten note of help or something similar in your mailbox.

· Even if you feel like taking their help, first talk to your lender or the mortgage firm regarding re-organization of your loan scheme or any options of refinancing.

· In case you are signing any documents, then always take help from your family, your lawyer or your financial agent to access the paperwork. Never give away the ownership of the property under pressure or anxiety.

· People can locate and approach their nearest Better Business Bureau by logging on to their site http://www.arizonabbb.org/. This site provides information about the reliability of foreclosure rescue companies. People can even call them at 60226-41721. They can also confirm with the Attorney general at http://www.azag.gov/.

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The foreclosure issue is being used in the political scenario as well. While the Clinton campaign was approaching registered Democrats to invite them to come to the speech, a staff member happened to find Kristi Schofield of Hampstead.

Kristi and her husband are being foreclosed and hence are forced to move out of their house by the 24^th of august. Being parents of three children, this is not an easy situation for them. Hence the Clinton campaign approached her and asked her to meet Clinton. Kristi’s husband, a computer security consultant, lost his job while outsourcing. In the mean time, their adjustable rate mortgage leaped to about three times from $2,400 a month to $6,000 a month. Consequently, she had to stop her daughter from attending dance classes and sell some of the DVD’s. Just to hold back to the house, she even cashed out her husband’s retirement fund.

They saw that everything they had was eventually being used to pay the mortgage. Even they faced major money shortage due to the foreclosure problem that they were facing. Along with banning the prepayment penalties, Clinton also required lenders to include insurance and taxes in their calculation irrespective of whether the borrowers can afford to pay the mortgage amount. She was in fact seeking to give a boost to the state licensing standards for brokers and to publish an online registry detailing brokers’ employment histories and complaints against them Clinton said she would introduce legislation after Labor Day.

Along with banning more lending practice than Clinton, Edwards wishes to rewrite bankruptcy laws and to create a fund to facilitate homeowners to free themselves from “underwater” mortgages which in fact is greater than the value of their homes. Amongst the top-tier Democratic contenders, Edwards is the one who has campaigned most sincerely and with vigor on the problems of working people. In his campaign, he tried to show that Clinton was late in her response to this relevant issue. And even the response was not strong enough to bring about the desired change in the situation.

Edward’s spokeswoman, Colleen Murray, said in a statement that “The Edwards plan remains the most aggressive. He supports a national law that would prohibit abusive lending practices, no exceptions.”

Dodd’s campaign led to same kind of reaction. His spokeswoman, Colleen Flanagan, said that “Addressing the crisis will require more than rhetoric on the campaign trail”. But Congress, which also includes Dodd’s committee, has not done much than holding hearings since the current crisis started and has added to the problems by making the regulatory requirements rather loose.

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The booming real estate market has encouraged a new player in the market i.e. Credit extending agencies. These agencies provide loans to people at low interest rates. Wooed by this, people buy a new house thinking the rates will not change much. But the scheme that seemed to work very well in the beginning has now proved out to be nothing but a pure farce as the number of foreclosure filings are increasing every day.

Home loans offered in this segment often bypass verification by lenders, brokers, agencies, firms and investors. Being spread out all over the countryside, this makes it very difficult to map out genuine ownership. In the case of Chase Home Finance (CHF), for instance, a homeowner used to send payments of his mortgage to CHF. The homeowner had to divert his monthly mortgage payments towards some other responsibility and so he could not meet his payments. It was CHF who initiated foreclosure proceedings and scheduled the auction date of the borrower’s house.

The homeowner asked for either a break with a new payment scheme or a delay in foreclosure proceedings, though there was little CHF could do as they were not the actual investors. They were just a service provider. It was an unknown investor who was actually calling the shots. The investor denied making any changes.

Similarly, there are many other homeowners trying extremely hard to save themselves from delinquent payments. But what they get at the end is nothing but a simple ‘we’re just the service provider” line. A couple of decades ago the scene was different. Then, neighboring institutions carried out the entire procedure and services of mortgages. The current situation has made the attempts of officials in Massachusetts and housing lawyers very difficult in resolving this problem.

Nowadays, lenders sell off mortgages to an investment banker. These banks in turn sell bonds to investors, assuring them pay offs with ready money from the payments of mortgages received by the borrowers. These bonds are called mortgage-backed securities. In this, property mortgages are traded for profit like buying or selling a house.

The foreclosure problem has not affected real estate prices too much. In fact, as stated earlier, foreclosed homes are being looked upon as an opportunity by investment bankers. People should be more cautious. They should know the complete details of a deal i.e. what they are buying, when they are buying and whom they are buying from. It could end up saving them a lot of grief later.

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