Foreclosures Shove Americans into a Debt Abyss

Posted in Foreclosures, July 30th, 2008 |

The nationwide foreclosures have literally shoved the American people into a debt abyss. Irrespective of the reasons and circumstances, the financial crunch that has gripped the country has not spared the native or the immigrant, young or old, poor or the affluent. America\’s money lenders and brokers have acted the Pied Piper in leading millions of American public into the debt trap, who identify themselves with the miners of old, steeped in debt to the store and unable to repay. Each passing day witnesses several additions to the number.

Harrowing tales of distressed borrowers are splashed across the nation through the media and to the world. Diane McLeod was a valuable customer to her lenders. She was able to secure two mortgages at a time, with varying interest rates. With the fluctuating housing market trends and interest rates mounting to spark off the high rates of foreclosure, Ms McLeod began to stagger. She had a car loan to repay and a high cost credit card. Like any other American she was used to high living and spend more than she earned. She lived with her 20-year-old son in a small two bed-roomed ranch house in suburban Philadelphia and drove her car to work. She was separated from her husband and handled two jobs to fulfill her dreams, which she was doing until rates began to soar and medical emergencies left her drained. She defaulted on her mortgage payments and her credit card bills mounted. She was terminated from her job and left to ruin with her house in foreclosure and her reputation at stake. She was bombarded with calls from the house mortgage agencies, almost 20 times a day, trying to slap a foreclosure notice which she in utter frustration, refused to respond to.

Ms.McLeod represents the average American today. However her lifestyle was not totally to blame. The financial giants Citigroup, Capital One and GE Capital had begun to collect interest payments that accounted for more than 40% of her total income, adding thousands more to it as fees. These financial companies with their non-transparent loan policies that land borrowers in knee-deep trouble when things go awry, are also to blame.

In recent years, the practices that had boosted the American economy and acquired record profits for many banks for decades, have floundered and jolted the nation’s economic system in its entirety, spiraling defaults, losses and foreclosures, crippling the nation.