Most homeowners who consider filing bankruptcy in order to escape a crushing debt burden often feel guilty about bailing out on debts they originally promised to pay back. Whether they are attempting to get back on top of a mortgage through the protection of the courts or just eliminate high interest credit cards and huge medical bills, though, bankruptcy should be considered more of a business decision than anything else.

After all, it is inconceivable that a multinational corporation would go bankruptcy and its directors feel guilty about defaulting on billions of dollars of debt. Such businesses do not appear on the nightly news apologizing profusely to their creditors; instead, they are simply liquidated for whatever they are worth and the banks are paid off as best they can. If there is not enough to pay all of the debts, then the creditor are out of luck -- nothing more is done after the business' assets have been sold off.

Even worse, in some cases of insolvency, it is not the corporations that are stuck with the bills, nor are the creditors faced with huge losses -- all of the negative consequences of bad business decisions are transferred to the general public. When Bear Stearns went under, the Federal Reserve provided tens of billions of dollars for a bailout courtesy of American people, and legislators are proposing similar acts to bail out the mortgage giants Fannie Mae and Freddie Mac and sticking the bill with all of us.

Never will any of these corporations apologize to each and every one of us about their illogical business decisions, misplaced trust in people who could not pay their mortgages, or failure to plan for a future longer than the end of this fiscal quarter. In fact, many bankrupt companies end up blaming the problem on the actions of the people in other sectors of the market; e.g., the soft economy, greedy speculators, bad press, and so on will be the cause of corporate bankruptcy.

All of this should indicate to homeowners that there is no reason for shame if they need to file bankruptcy to protect their assets and financial lives against lawsuit-happy collection agencies and creditors. When economic conditions change and families experience a financial hardship, then the business of their ability to meet debt payments must also change to meet the new conditions. If there is no way to maintain a reasonable standard of living as well as pay the debt, then something must give.

There are a lot of good reasons to avoid bankruptcy, but a feeling of moral responsibility to the lenders is not one of them. If the banks all declared bankruptcy tomorrow, there would be a huge number of depositors who would never get any of their money back that they lent to (deposited with) the banks. The FDIC insurance fund will not last long enough as it stands now to meet nearly all of the coming bank failures. And there would be even fewer apologies from the banks to the people whose money they mismanaged.

The most important element of the legal process known as foreclosure is time. Homeowners never seem to have enough of it to recover fully from their financial hardship, to work out a solution with their lender, or move out of the house before eviction. However, there are a number of ways to put the process on hold even just for a few extra weeks.

Even for families who have no desire or ability to stop foreclosure and keep making payments on a house, it may be helpful for them to live in the property for free for as long as they can. This gives them time to put together a savings plan, pay down other debts, or just begin to recover from the hardship that pushed them into foreclosure. And for homeowners who do want to save their homes, the longer they can try to find a way out, the more likely they will be to succeed.

Probably the most important tactic will be to contest the lender's foreclosure lawsuit at every turn, either through the use of an attorney or by diligently reading and understanding the rules to make motions in court. Banks are often given a free pass by homeowners to steal houses because the lawsuit is not challenged. The mortgage company gets a default judgment and the property is fast-tracked to sheriff sale, while the eviction date approaches ever closer.

The best way to make sure homeowners have more time is simply to answer, contest, or object to every paper that the bank files in court. With thousands of rules and laws and regulations at every level from local to state to federal, it is almost guaranteed the lender did something wrong. The trick is for homeowners to learn how they can identify these rules violations or contest the foreclosure based on other legal concepts, and make the best defense they can.

Of course, it is also vital for the borrowers to make sure that they are following the court rules as closely as possible. Many courts allow between 15-20 days for an answer to be filed after the date of service. The sooner homeowners file their answer, though, the sooner the bank will file its own answer again; thus, for homeowners looking for more time, it may be beneficial to file the paperwork on the 14th or 19th day (depending on when it is due). The lender also needs to be served with any motions filed in court, and sending the paperwork certified or registered mail will take up another few days.

With the length of time a typical lawsuit can take, and the complexity in a contract law case involving foreclosure, this simple tactic can give homeowners 1-2 years of extra time to remain in their home without making a mortgage payment. Two of the more creative methods of defending against a foreclosure that have come up recently is contesting who owns the original loan, and requesting the entire loan be rescinded due to violations of the Truth in Lending (TIL) regulations. Of course, these may not be successful in every case of mortgage foreclosure, but getting more time to work on a long-term solution is the main goal.

But combined with a contingency plan for bankruptcy, homeowners can take even more time to plan for their financial futures and eliminate one of the last remaining headaches -- their other debt. Declaring bankruptcy even just a few days or hours before a sheriff sale has the effect of immediately stopping the auction and putting the foreclosure process on hold while the issue is tied up in bankruptcy court. This can give borrowers another few months to stay in their home mortgage free and save up money.

Also, if the homeowners are in foreclosure because of a financial hardship, and have loads of other credit lines that are in default, it may make sense for them to discharge these debts and get a fresh start with Chapter 7 bankruptcy. Once the mortgage is finally dealt with and the owners have to move out (hopefully years after the initial missed payment), there may be little logical reason to keep paying other unsecured debts like credit cards or personal loans with skyrocketing interest rates and huge junk fees.

A few thousand dollars in credit card debt can quickly balloon to tens of thousands of dollars once interest rates go up to 29%, and homeowners just getting over a foreclosure may not want to deal with this past headache. As well, with two years of late mortgage payments and a foreclosure, their credit can not get any worse so it may be the perfect time for bankruptcy. Hopefully with two years of savings, homeowners will not feel compelled to borrow money at 19% interest ever again. Bankruptcy can give such families the one way ticket they need out of the debt trap.

Homeowners are facing foreclosure in record numbers due to the predatory lending, financing, and investing activities of the largest banks in the world. Much of the coming depression was engineered, either inadvertently or purposely, and it is up to the borrowers to defend themselves against the economic devastation anyway they can. It is a mistake for homeowners to give these lenders a free pass, allow them to foreclose with no objections, move out of a house too soon, and put the financial health of the banks ahead of their families' futures by continuing to make impossible payments on debt that was never designed to be paid back.

Simply having a foreclosure on one's credit report will not decrease the score to the point where it is impossible to get any other loans. However, the entire foreclosure process often has many more negative aspects to it than just the actual legal procedures in the county courts and charge-off of the loan after a county auction.

As soon as homeowners begin missing mortgage payments, their credit score will begin to drop immediately. Having one or two missed payments over years of steady payments, though, does not impact their loan history as much as when they experience a hardship and start stringing together 30-, 60-, or 90-day periods where they are late.

Once borrowers do fall behind by more than a month or two, though, their ability to take out any new large loans based on their credit rating will effectively disappear, as potential lenders will be aware that there is a current financial crisis and any new loans have little chance of being repaid. This is, of course, one of the main reasons homeowners should try and stop foreclosure as soon as there is a chance of financial hardship, even before they have missed their first payment.

But in terms of the credit score, even having several late mortgage payments may not drag it down as far as possible. The credit reporting agencies base their scoring system around the total picture of the borrower's payment and credit situation, meaning that the more debts the homeowners can keep up payments on, the higher they will keep their score.

Also, if homeowners have numerous credit cards, car loans, student loans, and other bills and have kept on time with all of them, they may be able to retain a good score (although probably not an excellent one). The real risk to the credit report comes when payments are late on numerous debts at once, as may happen during a real economic hardship.

Even borrowers with a near perfect credit score above 750 (out of 800 total) can experience a drop into the low 600s just by missing mortgage payments for consecutive months and going into foreclosure. Combine that with numerous other late payments or collection accounts, and the score can drop into the middle or high 400s, which make it virtually impossible to obtain even a high-interest credit card with a very low limit and predatory terms.

The important thing to remember is that simply having a foreclosure is not that significant an event to destroy homeowners' credit scores all on its own. But for owners who are defaulting on other debts at the same time as facing foreclosure, it may take years of recovery to regain even a good credit rating. For homeowners who are in danger of foreclosure, though, it will be dependent on their circumstances whether to preserve their home at all costs or keep their credit score as high as possible.

First, let me give you a little background information about myself; don’t take this as a sales pitch, I just want you to understand my depth of expertise in the field of foreclosure. I’ve been helping families save their homes from foreclosure for about 12 years and I am very good at doing it.

Over the years, I have personally helped 1000’s of foreclosure victims stop foreclosure. My company works nationwide and we have local affiliates in almost every state, so we can help anyone, at any time, in every state. I have written many articles about foreclosure and I’m interviewed by newspapers, radio and TV channels quite frequently. Many people consider me an expert at stopping foreclosure.

This is where it gets personal:

Last week I went home to visit my family for the 4th of July. My parents live on a lake in Michigan and have the whole family over for most holidays. Because I live in California, I don’t get home often, but I couldn’t resist going home to watch fireworks with my family on the lake.

My parents don’t really understand what I do for a living, they just think it has something to do with getting mortgages. Even though I’ve explained it several times, It obviously never sunk in, because after the fireworks, my dad asked me to help pack some of his WWII medals and memorabilia and then broke down in tears while explaining that this would be the last time we would see fireworks together on the lake. At first I was afraid he was sick or he was going to die, which immediately brought tears to my eyes as well. But then he told me they were losing the home to foreclosure in two weeks.

I was shocked! Why didn’t they tell me sooner, why didn’t they ask for money? At first I was very angry with my dad for waiting so long to tell me and it’s even worse that they didn’t ask for help. The only good thing about the situation is that the foreclosure laws allow ample time to stop the process. In my experience, it only takes about 30-60 days to stop most foreclosures, so having less than 14 business days to put an end to this one would be difficult.

My dad had been working for the same company for over 25 years and suffered a non-work related injury that caused him to miss 8 months of work. By this time he had recovered and was working again, but the loss of income for 8 months caused all their bills to fall behind. They had missed about $40,000 worth of payments and the lender added nearly $6,000 in additional fees! Even though they could now make the payments for the house, they could not come up with $46,000 to pay the arrears. They tried to sell the house, but in 6 months, there were only three people who even looked at it. They thought their only option was to let the bank take the house. They did have money saved for retirement, but they decided not to use it, since they planned to retire in 3 years. (Thank god they didn’t cash in their retirement accounts.) Since the bank would no longer accept their payments, they managed to save about $6,000, but the bank said they needed $23,000 to stop the foreclosure and the normal mortgage payment would be $1,300 higher than usual. They didn’t have anywhere near $23,000 saved and they couldn’t afford the extra $1,300 on top of their normal payment, so they knew they couldn’t keep that mortgage. Refinancing wasn’t an option either, because the home didn’t appraise for enough and their credit scores had dropped when they started missing payments.

Here is how we stopped the foreclosure in just two days:
(I’m summarizing here to save time, but this should help give you an idea of the exact steps taken to end the foreclosure before running out of time)

Monday Morning July 7th 9:00 am
I dialed the lender at 9:00 am and eventually spoke to an actual person at 10:42 am. I told them my name was Mike, with ForeclosureFish. I intentionally left out my last name, so they didn’t know I was related. (I’ve found that lenders would rather work with a 3rd party, who is not emotionally attached, rather than the borrower themselves or a family member.) I explained that I had been employed to help resolve the foreclosure and get the loan back on track. I was placed back on hold for another department; someone eventually answered again at 12:13 pm.

Before calling, I had faxed a signature authorization to the lender that allowed my company to speak on my parents behalf. I also pulled up the original appraisal that the lender ordered when the mortgage was given to my parents. I knew that many lenders inflated their appraisals to help get loans approved, so I wanted to use that as ammunition against them when fighting this case.

Monday Afternoon 12:13 pm
Shandra answered from the Loss Prevention Department. I explained who I was and gave her the loan number I was calling about. I told Shandra that the call I was making was really a formality and that we intend to turn this case over to our attorneys, but I wanted to make an attempt to modify the terms of the loan first. She told me that she didn’t have authorization to speak with me about the account and that I would have to call back once I have a notice of authorization. I explained that I had been on the phone for 3 hours and that the authorization was faxed over 48 hours ago (ok, I lied) and that I faxed it again this morning before I called. After being on hold for a few min. she came back and said she found the authorization and could speak with me. At that time, I told her that it was our intention to file a lawsuit against them for a fraudulent mortgage, because of the original inflated appraisal and the circumstances related to how the loan was provided. (Who knows if a lawsuit was plausible in this case, but most lenders are guilty of something.) I told her we were obligated to give them a chance to make things right first, and this was the purpose of my call. This is the same approach we would normally take with other cases, however, it is done in writing, rather than over the phone and generally we verify that the lender has broken a rule or law first.

She explained that a modification had already been turned down, so there was nothing she could do to help. This is what I expected to hear from her and asked to speak with her department manager.

Monday Afternoon 12:47 pm
After leaving a message for Darin, the Loss Prevention Department Manager, he returned my call 10 min. later. This surprised me, because I fully expected to make several calls before getting a returned call. When I spoke with him, he said they would obviously want to do anything possible to avoid a lawsuit, but he also explained that two weeks was not enough time to get a loan modification approved.

I tried to appeal to Darin’s good nature (Ha, Ha) by asking him if there was anything he could do to delay the sale for long enough to get an approval. He said that the only way he could postpone the auction is if we paid $2,700 to cover the attorney fees. He said this would allow a 30 day extension and could be done anytime up to 24 hours before the sale.

I told Darin, that if that was the best he could do, I would just have to inform our attorneys that he failed to re-evaluate the case once the financial situation had changed and forced the home into foreclosure. I then asked him for his complete name and employee number for my records.

Darin: “I’ll tell you what. If you can fax me the forms I need completed in the next hour, I’ll try to put a rush on it and if everything looks goos, I’ll submit it for a modification.”

He said he couldn’t make any promises, but he would try. He faxed me the forms to fill out and we sent them back 30 min. later, followed up by a phone call.

Monday Afternoon 3:00 pm
In my follow up call to Darin we reviewed the financial documents together and came to an agreement that a loan modification would work in this case, but it still needed to get approved, which could take up to two weeks. Darin just submits the case to his investors and they approve the final deal. By this time, Darin and I have established a good relationship and I now feel that appealing to his good nature may work, so I tell him that I am leaving on vacation in two days and would really like to get the case resolved by then. (It’s sad, but when I work on cases, the people on the other end care more about making me happy than helping the foreclosure victim save the home.) He said he would submit the case today after the paperwork was complete and that I could call and check the status tomorrow afternoon.

Tuesday Morning July 8th 9:00 am
I called Darin to ask if there were any problems when he submitted the case last night. I got his voice mail, but left a message with my cell phone number and instructions to contact me if there was anything he needed.

Tuesday Afternoon 1:00 pm
I called Darin a second time and left a message. He returned my call a few minutes later and I told him that we wanted to be prepared to take action as soon as the mortgage modification was approved. I knew from experience that we would probably have to make a payment to start the new plan, and I wanted to make sure everything was ready to go as soon as possible. This call was really just to let Darin know that I was not going to leave him alone until this was resolved today.

Tuesday Afternoon 2:12 pm
Darin called me to let me know the modification would be approved, but we would need to begin a “workout plan” to stop the sale, while we wait for the modification to take place.

This meant that the payment plan they originally game my parents would be paid for 2 months and then the loan would be modified to a lower payment and the arrears would be built into the loan.

This is what it broke down to:

• Cash needed to start plan: $4,500
• Payments for first two months: $4,300
• Payments for remaining 180 months: $2,795 (original payment was over $3,000)

My parents had 12 years left on their loan and when it was modified, it turned into a 15 year fixed loan, which lowered their monthly payment. This made the home much more affordable and the $6,000 they had saved covered nearly all the extra expenses.

As soon as we had the approval in writing, we sent a Western Union payment for $4,500, which immediately stopped the foreclosure and began the repayment plan.

I will follow up with Darin several times over the next few months, to make sure the plan goes exactly as we arranged, but we got everything in writing and my parents can easily make the new payments. Now my parents will get to keep their home and when the market recovers they’ll hopefully regain all the equity they’ve lost from these poor conditions.

Needless to say, my parents didn’t tell me about their problems, because they were embarrassed and didn’t want to admit they needed help. But had I know about the problem sooner, I could have virtually guaranteed that it never would have been a problem. Luckily, I was free to spend most of two days on the phone and had all the paperwork, knowledge, and experience to quickly stop the process, but things could have just as easily gone the other way.

If you are facing foreclosure, your first step should be to get help and, by all means, talk to your family about the problem. Always talk to your lender to find out what solutions they have available and if that fails, please seek professional help to stop foreclosure.

Originally posted at: Foreclosure At A Personal Level And How It Was Stopped

Recently, a rumor has popped up online about the largest mortgage lenders in the country halting any more loan modification programs and beginning to take a much harder line on foreclosures. Although it seems hard to believe, when the actual process of modifying a mortgage is considered, it is even more difficult to understand how banks can keep offering this solution at all to homeowners. The trends of corruption and deception that were exhibited so plainly during the housing boom are still on display as the bubble collapses into a foreclosure nightmare.

Unfortunately, with the amount of greed and deception that was spread around as homeowners lied to get loans, appraisers inflated values, and bank lending compliance officers looked the other way, too large a percentage of borrowers in foreclosure could never have afforded their homes under any circumstances. But now after living in these properties for a few years, they have gotten attached to them and will be willing to go through the same cycle of lying to stop foreclosure.

And with many homeowners who were not qualified for a mortgage now facing foreclosure, the applications for workout programs and mortgage modifications are flooding into the lenders. Homeowners who used fraud to obtain a mortgage in the first place have not suddenly straightened out because their home has declined in value by 30%. On the contrary, many of them will be quite willing to engage in more lying to qualify for a lower payment or just to stay in their homes for a few more months.

In such an environment of corruption and entitlement, the banks have also played a large part (in fact, probably the primary part). As the bubble bursts, lenders have realized that they have stuffed their client bases with people who took advantage of the loose money policies as much as the banks themselves did. But the banks' mistakes in giving loans to deadbeats may lead to severely negative consequences for the honest families who have done all they could but experienced a financial hardship anyway.

Many times, lenders accomplish very little even when they qualify homeowners for a modification or other arrangement. Besides the lying on the workout plan application, many homeowners will not have the required down payment to begin a program. Too often, they will agree to a plan anyway, never make the initial down payment, and just end up right back in foreclosure within weeks, having wasted potentially months of time promising they have enough resources to get back on track.

But even when homeowners can afford the down payment to begin a repayment plan, banks typically raise their monthly payment by a considerable amount. Loan modifications that actually lower the bill are much more uncommon than simple payment plans where the regular payment is due, plus a portion of the defaulted amount. Inevitably, this is a set-up for failure, and many borrowers will miss a payment within months and the bank will start foreclosure again.

Offering workout arrangements to homeowners in foreclosure, for the most part and especially due to the subprime debacle, is probably just not profitable for mortgage companies. They spend money and resources to staff a loss mitigation department just to see homeowners never make a payment on the modification, and experience high turnover rates of customer service employees who refuse to deal with another hundred calls from the same handful of tenacious clients. The fact that slowly impoverishing much of the country was the plan all along is never mentioned, of course.

Thus, loan modifications seem more like a PR stunt by greedy banks and a way to keep the foreclosure crisis at as slow a burn as possible and grab as many real estate assets for as long a time as circumstances allow. Of course, some borrowers would make it through an entire workout arrangement, but too many end up defaulting again in a few months, as the payment plan just set them up for failure. The only good that comes of it is slightly less bad press for the lenders, but even that small amount of goodwill has almost entirely evaporated as trust in the banking system has fallen.

If the banks really have begun to take a much harder line and go after homeowners more aggressively, this can only mean more bad news for Americans. Unfortunately, this may not be such a huge overreaction by lenders, who have padded their books with fraudulent buyers who will lie as much as they can to save their homes and live free for a few more months. Many innocent homeowners will lose their properties because of such a decision, but at least the banks can line up for taxpayer-funded bailouts while the rest of us suffer homelessness, higher prices, and rewards for institutional corruption.

When buyers are looking into purchasing a foreclosed home, they may have to wade through dozens of properties in various states of disrepair. Either from homeowners taking frustrations out on the house or simple neglect by a bank owner, foreclosure properties are often in a state that requires extensive work before they are livable. However, occasionally homeowners may come across a listing pointing out a "clean foreclosure." How this type of property differs from the average can mean savings for home buyers and a beneficial solution for the banks owning such houses.

A "clean foreclosure" is simply a phrase used by Realtors when they list foreclosure properties on the open market after the sheriff sale has been conducted. The term relates very little to the condition of any other non-foreclosure property that is listed and is mainly used to differentiate between the standard foreclosed home and the so-called clean one. But due to the nature of these properties and the legal process that takes a home away once the mortgage is in default, designating a property in this manner causes it to stand out just a little bit.

Some homeowners, if they are unable to stop foreclosure and will soon be forced to leave their home, may cause various damage to the property. This may be in an attempt to get back at an uncooperative bank for taking the house and to take their frustrations out against the county legal system, which may allow the foreclosure to go through regardless of predatory lending practices or mortgage lender misconduct. But the fact the many foreclosed homes may have such willful damage means that repairs may need to be done by new buyers.

Also, depending on how long a property sits on the open market, it may fall into disrepair. After a year of having no heat or cooling, even houses in great condition will start showing the effects of the weather. And it may take only one severe storm for the roof to start leaking or the basement to flood. Even if the former owners did no damage when they left, in the absence of any serious community effort at maintaining such areas of economic devastation, a property which sits empty for a long period of time may become a target of random vandalism, squatters, or thieves.

Obviously, homes in this condition will need extra work before they are completely livable again, and the selling price for damaged foreclosure homes can be far less than a typical house for sale. Clean foreclosures, though, are properties that, although the owners went into default and had their home auctioned off, are not exhibiting any extraordinary signs of damage or depreciation yet. The sales price may be lower than the average price for such a home, but it will not need as many repairs as the typical foreclosure home, either.

In effect, by designating a property as a "clean foreclosure," Realtors are pointing out that purchasing this house may represent a great deal for buyers. As banks are often the owners of foreclosed homes, they can be more willing to work out an arrangement beneficial to purchasers, since they would just like to make up the loss on the legal process and unload the property. With steep declines in housing prices across the country and an unabated foreclosure crisis putting many homes on the market, finding such a property in a clean state for a reasonable price can entice more buyers back into the housing market.

Now that the foreclosure crisis has taken the economic lives of hundreds of mortgage lenders, a handful of banks, and untold numbers of families, it makes sense to evaluate what has happened to engineer the events now taking place. With a central bank controlling the money supply and the nation enjoying issuing the reserve currency of the world, it is not difficult to analyze how the country has been set up to be sold off to the highest secret foreign corporate bidders.

When the internet and telecommunications bubbles were on their way up in the late 1990s, and in the middle of a decade of strong dollar policies coming from the Federal Reserve, US financial companies had great power over the investment flows between nations. With a little plotting, it was quite easy for speculators to remove capital from the Southeast Asian nations and collapse their currencies.

The next step was for the International Monetary Fund and World Bank to offer these nations in deep economic shock some handy therapy, in the form of loans. In return, the nations had to agree to privatize many of their public services, closing down state-run plants and utilities and selling the assets on the open market. Multinational corporations then moved in to take over these assets and run them for profit at the expense of the people living in them.

With the strong dollar policy and the collapse of the foreign nations' currencies, the corporations could move in and buy the formerly state-owned assets for relatively cheaply. They took dollars near their peak value and invested them in the assets in other countries that were near their low value in terms of the value of the foreign currencies.

Then, while these foreign nations were starved for capital and could offer manufacturing and labor for cheap, most of the American manufacturing base was outsourced to these same countries. While trillions of dollars have been leaving the United States to these countries, the housing bubble is created to entice people into purchasing real estate they can not afford for long.

Creative new loans are designed and accepted by banks and investment companies to ensure that the bubble will collapse. The foreclosure crisis is engineered in two ways. First, the largest banks are financing the movement of assets overseas, thereby removing jobs from the economy and pushing workers into bankruptcy or foreclosure. The same banks that homeowners send their mortgage payments to every month are the ones giving loans to manufacturers to ship jobs overseas and downsize homeowners.

Second, even if some homeowners can keep hold of their current jobs, resetting interest rates will double their payments in a few short years. With the Federal Reserve in control of manipulating interest rates, it is quite easy to drive millions into foreclosure. The Fed began raising interest rates, which decreased home values and put the first cracks into the entire housing industry facade. People could not afford the mortgage payment, and negative equity positions ensured they could not sell.

Once rates were increased and the crisis became self-sustaining, they were taken down again, collapsing the value of the American currency, the dollar. Now, with the dollar at a low, the investments the corporations made in the Asian currencies are worth much more, even as the value of assets, real estate prices, and the stock market in the US are falling. Now, these corporations that made trillions of dollars investing in the assets of countries with collapsed currencies can take their profits and drive values down even further in America and buy assets for cheap.

With the collapse of the Government Sponsored Enterprises like Fannie Mae and Freddie Mac and a steadily declining stock market, the entire country is ripe for the privatizing. As the federal government decides how much to reward the moral risk of making poor loans, corporations flush with appreciating foreign currencies are just waiting for the right moment to invest in such assets. They will be buying the country with the money they control, and using positions of power which allow them to collude into engineering these bubbles for their own profits and to increase their control.

Closely related to the question of if homeowners who lose a property to foreclosure will ever be able to qualify for a new loan again, is how soon they can apply for another mortgage. Thankfully, the answer to this question depends mainly on how much the homeowners are willing to work to repair their financial situation and how serious they are about establishing new, responsible credit histories. Borrowers who want to become homeowners again very quickly have resources at their disposal, while those who simply do not care can wait longer and pay more, but will still be able to get a new mortgage eventually.

How soon former homeowners can qualify for another mortgage after foreclosure will depend on many different variables, all of which relate to their financial condition following the loss of the home. In some cases, borrowers may escape foreclosure with their credit in somewhat decent shape, while other homeowners will have numerous charge-offs, collection accounts, and severe delinquencies that will make it much more difficult to qualify for any new credit for years. Much of this negative information, though, can be overcome either through a large down payment or through a serious program of credit repair.

The most important aspect of being able to get a mortgage after experiencing the loss of a house is for homeowners to begin a savings plan. With enough of a down payment, they will be able to qualify for any loan that they want, even for another home purchase within months of the original foreclosure. Of course, many banks will want at least a 35% down payment, but if the borrowers have the financial means to put down such a large amount, they will have a good chance of qualifying for a new loan despite poor credit and no efforts to improve their scores on their own. This may be the fastest way back to homeownership for most families, if they have the resources for it.

Realistically, however, putting down 35% when buying a home may not be in the realm of possibility for most borrowers. Savings, though, should be the first priority for any family after foreclosure, because the larger the amount they are able to put down, the better the interest rate will be and the more likely they will be to qualify for the loan in the first place. But while they are saving up for the next purchase, it is also important to work on the credit history and begin working to boost up their scores by removing negative information and adding positive credit use.

Credit repair and debt validation/consolidation programs can be started as soon as the owners have recovered from their financial hardship, and will have a positive impact on the ability to borrow money in the future. In fact, homeowners facing foreclosure should begin working on their credit as soon as they can, because the process can take from several months to over a year to remove some old inquiries and inaccurate or closed account information. The more accounts the owners have to resolve, the longer the process may take.

Although it will be difficult, if not impossible, to remove the actual foreclosure and defaulted mortgage payments from the credit report, former homeowners can focus on all of their other debts to create a more consistently positive record of credit use. Having numerous late payments, dozens of inquiries, and charged-off accounts assigned to collection agencies can drag down a score dramatically, but these may be the easiest records to remove. Even better, depending on the situation, if a lender or collection agency breaks the law, borrowers can often sue their creditors for at least $1,000 per violation, which can always be put towards the down payment savings plan.

But, if loan applicants have access to a 35% down payment, they can often qualify for a new mortgage anytime after foreclosure. The bank will not be so concerned with the credit history, as they are sure that they can sell the house for enough to make up any losses they would experience as a result of the homeowners defaulting. It is only when former homeowners do not have much money that they will need to work on credit repair or simply wait until they can get a new home purchase loan again.

With a serious effort at clearing up their credit histories, it may take from one year to 18 months for the repairs to make a significant difference, after which the borrowers can apply for a new loan. The terms may not be the best, and they may be required to put down a large part of the purchase price, but it will most likely be quite a bit less than 35%. Although it will cost a few hundred dollars of materials and postage to dispute and remove credit records, the savings on the new mortgage will far outweigh these small expenses.

However, if the foreclosure victims simply wait and do no credit repair, they may be able to qualify for a new mortgage within three years after the foreclosure. Again, they may be required to put down at least 15-20% of the purchase price, and the interest rate will be somewhat high, compared to if they had done more credit repair, but losing a home does not preclude borrowers from qualifying for a loan for the full 7-10 years a foreclosure stays on the credit report. Obviously, this is the easiest and least costly way to qualify for a new home again, but it takes the longest amount of time and the owners will be doing themselves no favors in terms of payment and interest terms.

The bad news is that it will be extremely difficult for former homeowners to qualify for a new mortgage within a year of facing foreclosure; their credit will just be too damaged and the loss of the home too recent. The good news, though, is that the more resources and work they put towards the effort, the quicker they will be able to purchase a new home and the better the terms will be. Foreclosure, as mentioned above, does not mean that a family will have to rent for the next decade -- with just a few months of work and a savings plan, it may be relatively simple to become homeowners again even after a foreclosure.

Besides the possibility of having nowhere to go after foreclosure and being publicly humiliated during an eviction, one reason homeowners may try and stay in a foreclosed house as long as possible is that they do not believe they will ever own a home again. After all, banks would never lend to foreclosure victims, right? Wrong -- and by keeping in mind a few simple principles and applying them for the first few years after losing a home, borrowers may find it quite painless to qualify for a new mortgage.

It is possible for homeowners to get a loan after foreclosure, but this is not to say it will be easy to qualify for a new mortgage right away. Banks may require at least a 35% down payment and offer interest rates above 10% if foreclosure victims try to qualify for a loan in the first months after the foreclosure. Thus, the best long-term strategy may be for former homeowners to work on improving the credit accounts they still have open, then taking out new small loans when appropriate, and finally starting a savings plan to work up to qualifying for a new home loan.

Just after a foreclosure, homeowners may have severely damaged credit, depending on how far behind they were in the mortgage and if they missed payments on other open credit lines. Borrowers who missed payments on credit cards, car loans, student loans, and other debt will have a more difficult time improving their credit than homeowners who fell behind only on their mortgage. This is because making on time payments on the other debt can serve to prop up a sinking credit score due to a late or defaulted mortgage.

There are numerous resources for homeowners to begin improving their credit scores, either through a third party that specializes in credit repair, or on their own through the use of self-help websites. A few common tips include keeping on time with all other bill payments, making small purchases every month and paying off nearly the entire balance (but carrying a small amount from month to month), and disputing directly with creditors or the credit reporting agencies old or inaccurate data that is still listed on the credit report.

It may take upwards of 1-2 years for debtors to improve their credit scores significantly after a foreclosure has taken place, even with the help of credit repair services. However, this period should not be focused on just increasing their score, but this time should also be used to begin a savings plan. When the time comes to apply for a new mortgage, it will be important to have some sort of down payment to offset the relatively recent foreclosure, and having an emergency fund with even a few hundred or thousand dollars in it can mean the difference between a small emergency and a full-blown financial hardship.

But another step former homeowners should take is to open up small lines of credit even after the foreclosure. Rates and payment terms may not be great (in fact, they may be downright lousy), but if they are able to keep these new lines open and make payments on time, this will reflect well on their credit histories. Of course, this is not to say that borrowers should take out dozens of loans just to show they can apply for credit and keep an account from being sent to collections, but paying off a few old accounts (whether charge-offs or just old closed accounts with remaining balances) and opening up new ones and keeping them up to date can positively impact the credit score.

Within a few years after the foreclosure, a family may be able to qualify for a new loan to purchase a home again. The most relevant factors will be how credit has been used since the financial hardship that led to the loss of the house, and how much the borrowers are willing to put down on their new home. In fact, banks may not loan anymore than 75-80% of the purchase price of the house with a foreclosure on the applicant's credit reports. So the savings plan may be the deciding factor and should not be overlooked when putting together a long-term plan to regain homeownership.

But a consistent plan of credit repair, maintaining a good history of credit use, and saving up for a down payment can have remarkably positive effects for people who faced foreclosure just a few years ago. A foreclosure does not indicate that it is impossible to get another mortgage, but it does mean that it will take more work than usual on the part of the borrowers to prove they are credit worthy and deserve a second chance to be given a loan to purchase a house. As well, the more they save up and put down on the new home, the more they own that home, and the more resources will be available to them in case they face another hardship in the future.

One of the most important aspects of Chapter 13 bankruptcy and how it relates to the home mortgage foreclosure process is its ability to put the entire proceedings on hold, no matter how far along they have gone or when they homeowners file for bankruptcy. This means that foreclosure victims can, in many cases, wait until just a few hours before their home is scheduled to be auctioned at a county sheriff sale, and still have the sale stopped.

The stopping of an auction is possible by filing bankruptcy due to the fact that filing immediately creates a federal court order known by the term "Order for Relief." This is also commonly referred to as the "automatic stay," and prohibits any creditors from continuing to engage in collection activities while the issue is tied up in the court system. As the sale of a property to satisfy a foreclosure judgment counts as a collection effort on the part of the mortgage company, the auction is prohibited by this federal court order once the homeowners enter into bankruptcy.

Due to the Bankruptcy Abuse Prevention and Consumer Protection Act, passed in October 2005 and also referred to as the bankruptcy reform laws, homeowners with little time to find a solution need to be aware of at least one new aspect of filing bankruptcy. A new requirement stipulates that borrowers must have attended credit counseling within the 180-day period before the petition is filed with the court. If homeowners have not completed this before they file, the bankruptcy will have no effect and the filing may be thrown out (although there are some allowances for an emergency filing).

For homeowners who are considering filing bankruptcy to stop foreclosure on the day of the county auction, it is even more important to make sure the credit counseling requirement is taken care of. Courts are split as to whether or not counseling on the same day as the filing is acceptable or not, with some agreeing that same-day counseling just needs to be completed before the petition is filed, while others argue that the counseling should be done at least one day in advance. As a general rule, it may be better just to get the counseling done long before a final decision as to whether or not to file is made.

One of the main drawbacks to filing bankruptcy a few hours before the sheriff sale of a foreclosed house, though, is that the county government will typically not be aware of the automatic stay going into effect until after the house has been auctioned. The courts do not move swiftly enough to alert all creditors that the borrowers have filed their petition with the court, so it is likely the auction will go ahead as scheduled, while the homeowners will have to try and have the sale rescinded or reversed at a later date. This is because the foreclosing bank may receive no proof of the bankruptcy filing until after the auction has been conducted.

Unfortunately, this is easier said than done, due to the difficulty of convincing large bureaucracies like banks and county court systems to reverse any of their actions or decisions. Homeowners who know they filed for bankruptcy in time to stop the sale may find out later on that the house was auctioned as planned and that the county no longer lists them as owners of the property. This can be especially frustrating, as it is now up to the owners to proceed correctly to have the sale reversed and their names put back into the ownership records, a process which can take months.

Thus, filing bankruptcy in an effort to stop foreclosure at the last minute can be an effective way for homeowners to put the entire process on hold and get some breathing room. However, it is important to know all of the procedures that need to be done before the petition can be filed, and it is also important to make sure that the automatic stay has its desired effects on the auction. Homeowners can rely on bankruptcy as a last-ditch effort to save a home, but they also need to make sure they have completed the pre-filing requirements, as well as keeping track of the sheriff sale to prevent any hasty transfer of ownership from the borrowers to the lender.

Homeowners insurance is one of the peripheral issues that families facing foreclosure must deal with. While it is possible that the county can take the home through a different type of foreclosure for unpaid property taxes, and the mortgage company will be pursuing a lawsuit for the defaulted mortgage contract, there is little the homeowners insurance company will do upon nonpayment. However, this does not mean that property owners have nothing to worry about.

There are two most likely scenarios when homeowners begin missing their mortgage payments, and what happens with the insurance will relate to how the premiums are paid. The issue may be handled differently depending on if the owners pay the insurance on their own or if it is paid monthly through the escrow on the mortgage. Most homeowners, though, escrow their property taxes and homeowners insurance through their monthly mortgage payment.

Typically, when payments are missed on an insurance policy, the coverage will continue for a period of months. If something happens to the house, the owners will be covered by their policy, although the amount they have fallen behind will be deducted from total awarded to them for the accident. However, if numerous payments are missed for longer than just a few months, the policy will lapse and the owners will no longer have any coverage.

When the policy has lapsed, the owners will no longer be covered under any of the provisions. This means that, if anything happens to the house, the insurance company will have no responsibility to make a payout to the owners since the insurance was not kept up. A small but growing number of homeowners have actually burned down their homes in foreclosure to attempt to collect the insurance money, but this is not advisable if the premiums are not paid up and is fraudulent in any case.

What may happen at this point, though, is the mortgage company will buy its own homeowners insurance for the house, and they will add the monthly premiums to the amount owed on the loan. If the homeowners want to get back on track with the mortgage, they will have to pay back this extra amount for the forced insurance. Lenders will also not shop around for the best rates, so the monthly cost for the policy may be quite a bit more expensive than the owners were used to.

Simply missing payments on the insurance policy, though, will not create any other liability for the homeowners later on. The insurance company will discontinue coverage for any damage to the property, but there is no danger it will sue the owners for any deficiency judgment or other lawsuit related to the lapsed policy. Thankfully, in this instance, unlike the mortgage or property tax payments, homeowners do not have to worry about being sued again and having to deal with more liens or collection agencies.

Of course, this should not be an issue at all if the homeowners pay the insurance through their monthly payment to the lender. The bank will keep paying the taxes and insurance to make sure the policy does not lapse, while adding the amount of these missed payments to the total needed to reinstate the loan. Any insurance payments the lender makes will be included in the payoff and foreclosure judgment.

Thus, homeowners facing foreclosure should keep in mind that their property insurance will still need to be paid if they wish to keep coverage in case of fire, natural disaster, or other accident. While their bank may place forced insurance in the case of a policy lapse, the rates are often very high, but the owners will have to pay back any premiums made on this policy to the lender to stop foreclosure. Keeping the insurance policy current on a house, while it is somewhat less important than saving the home to begin with, is one more issue homeowners in foreclosure need to keep in mind.

When homeowners receive a bank's foreclosure complaint in the mail, they are usually given from fourteen days to a month to file an answer with the court. While the circumstances of the situation should determine how exactly the owners will respond to the lawsuit, there are a number of different options they may consider when fighting back against their lender's attempt to auction the house.

In most cases, though, the first thing homeowners may wish to do is consult with a local attorney to make sure that they are accurately following all of the local and state Rules of Procedure. It may be as good an idea to read the rules on their own and begin to formulate their answer to the complaint based on them. If the rules of procedure are not followed to the letter, there is a good chance the bank's lawyers will attempt to have the answer discounted or thrown out altogether.

The bank, in its original complaint, must lay out a number of issues and prove certain elements of its case to the court. For example, the bank must show that it has a legally binding contract with the homeowners, that the bank performed its end of the contract as agreed, the homeowners breached the contract, and that because of this breach the bank has suffered actual damages. If the bank fails to make its case on any one of these points, it may not be able to prove it is entitled to foreclosure of the house.

Recently, one defense against a certain element of the bank's case has becoming increasingly popular. Since the bank must prove that it has a contract between itself and the homeowners, some borrowers have used this to challenge the lender's ownership of the mortgage loan. If the lender can not show that it owns the loan, there exists no contract between the two parties, and the bank can not sue for foreclosure. The fact that many prime and subprime mortgages were packed up and sold off in slices and never had individual owners assigned to them from the huge pool of investors means that many mortgage are floating around with no real party to the contract who is due the monthly payments and has standing to sue the owners.

Rules of procedure also apply to the mortgage company and its attorneys when attempting to sue homeowners. If the borrowers can show blatant disregard or breaking of certain rules, the court may have no choice but to throw the case out of court for the time being. The bank may be able to start over from square one and bring the suit back into court, but at least the attorneys will be a little more careful next time and the homeowners will have bought more time to find a longer-term solution to foreclosure.

Certain jurisdictional issues may also come up, if the owners do not believe that the court in which the bank brought its lawsuit has the power to compel them to answer the complaint. In fact, it may be very difficult for any plaintiff to prove that the court has jurisdiction over the defendant, for the simple fact that the entire issue is based more on legal opinions than concrete facts. Proving jurisdiction factually, if the owners really want to stick the issue, may create problems for the lender's attorneys.

Of course, no legal defense may be good enough in the presence of a corrupt judge who railroads every homeowner through the system and throws out objections on any grounds possible. County courts, through the filing fees paid by lenders seeking foreclosure judgments, have a financial incentive to keep their clients, the banks, happy and get in and out as many cases as the court can reasonably handle, regardless of the economic health of the area's homeownership community. In such cases, homeowners should make their case but also know when to appeal bad decisions and when to give up and simply move on.

For borrowers who really want to stop foreclosure any way possible, answering the foreclosure complaint is a virtual necessity. Even if it just drags on the process for a few extra months, the additional time may present a final solution to the mortgage. But homeowners can also make a strong case in the courts and may have a good chance of having the bank's lawsuit thrown out for now. There are various ways to go about filing an answer, and borrowers should consult their county and states rules of procedure, but the widespread corruption and deception in the mortgage markets over the past years may make it somewhat easier to shoot down a bank's arguments.

There is no question that the most important tool that the increasingly cash-strapped people of American can use to reassert their power over the economy and their financial lives is their monthly debt payments. Without the huge amounts of borrowing that have been done in recent decades, most of the money in existence right now would cease to exist, and banks would be in a much more difficult position.

In fact, many banks, if customers stopped making debt payments, would face collapse and bankruptcy in a matter of days as cash flow would dry up surprisingly fast. Smaller lenders that relied on only one specific type of credit, usually subprime mortgage loans, have already gone out of business, and the FDIC is preparing for the possibility of large numbers of bank failures. And this is just the beginning, and reflects only more defaults than expected primarily in the mortgage market.

It is the banks that have impoverished the nation, manipulated interest rates and the housing market, tricked the people into taking out more loans than could ever be paid back, and attempted to make it more difficult to escape this predatory credit trap through bankruptcy. But by enslaving the people and chaining them to their corporate jobs under threat of foreclosure or public humiliation, the lenders have also given Americans the one most important tool that can bring them all down.

When one group or organization takes out a large loan from a bank, that group then owns the bank and can dictate the terms of the agreement from that point forward. After all, if the group that took out the credit decides not to pay it back, the bank will be in serious trouble as they will have to write off that loan and they will not be collecting the principal or interest payments any longer. Thus, the borrowers have a large influence on the banks simply through the act of borrowing.

Over the past decade, banks had spent all of their time handing out money to everyone who could sign their name on a piece of paper, thereby creating massive amounts of new credit. But they have also given away all of their power to control money by relying on the financial health of the lower and middle classes of America, who are now being squeezed out of the economy by the banks' larger economic manipulations.

But it is these same borrowers, the group comprising the lower and middle classes who are now losing their homes en masse, that own all of the loans and, by extension, the banks. If enough of them simply stop paying the debt they have taken out, the banking system may not even be able to survive long enough to initiate foreclosure lawsuits and attempt to repossess assets. Politicians, in turn, may have to start listening to their constituents instead of the banks.

Such a simple refusal to pay (if it is not possible to pay off a bill entirely and retire the debt completely, thereby also destroying the money) may be a most effective social movement and act of civil disobedience. Without causing a single act of violence or breaking a law, the people could show the banks, bill collectors, and their lapdogs the politicians who is really in charge and that the health of the people is intrinsically intertwined with the actions of Wall Street. The lenders would no longer be able to treat the people as a feeding trough for easy money and a garbage dump for predatory lending scams and bad financial investments.

Of course, this is not an act that could be taken without large-scale participation by homeowners and borrowers, and there may be negative consequences for some families who end up losing their home or assets anyway. But it would not take long for a skyrocketing default rate to catch the notice of politicians, who may then realize that it is in their own best interests to serve the will of the people instead of looking for excuses to protect banks and corporations from the manipulations of the government, banks, and corporations.

The banks would notice the lack of payments coming in the door immediately, and may decide it is finally time to come to the negotiating table with homeowners who are struggling financially. Some borrowers may even get their phone calls returned by mortgage companies, or end up with an approved loan modification or other foreclosure solution, instead of being ignored until the day before their home is auctioned off out from under them.

However, the longer the foreclosure crisis rages along at a pace that allows the banks to go to the government every few months begging for more bailouts, tax breaks, and free money, the more homeowners will end up homeless without any action being taken to hold the predators accountable. Unfortunately, if the situation persists as it has for the previous year, more people will be unable to stop foreclosure, the banks will cover up their own bankruptcy through Federal Reserve bailouts, and prices will keep rising as a result of the continuing manipulation of the markets for the benefit of banks.

In the end, though, it may finally be time for the average person, so preyed upon by the banking industry for nearly a century in this country, to start reasserting ownership of the money of the nation. Although there may be a shock to the banking system if large groups stop paying their bills, it may be preferable to the slow burn of just enough people losing their homes in small numbers at any given moment, which engenders enough apathy for the current system of lender misconduct, deception, and corruption to continue.

With all of the bad economic news coming out every day, and the continuing collapse of housing prices and record foreclosure numbers, it often seems like the situation just can not get any worse. Unfortunately, the numbers being reported now about the number of foreclosures compared to a year ago quite underestimate the problem, as foreclosures take months to wind their way through the legal system.

This means that the high foreclosure rates have not yet begun to reflect what is happening in the real estate markets right now, as the numbers only represent how many homeowners defaulted on their mortgages nearly half a year ago or more. In some states with redemption periods after a foreclosure auction, homeowners who are currently falling behind may not be counted in the economic numbers for more than a year or two, depending on how far behind courts and banks are in pursuing foreclosure lawsuits against defaulting homeowners.

All of the current and coming economic collapse may very well indicate the end of the concept of "growth" as a measurement of the health of a nation or its people. Even as it has become more and more difficult to grow out of one problem or another, banks, investment firms, and government have all worked together to keep up an illusion of constant growth. But in order to keep up the illusion, corruption and deception have been relied upon to cook the books and manipulate the numbers.

Various tricks have been used for years to create an illusion of economic growth, when the reality of the situation is simply that more people are working longer hours for more of their lives and never getting ahead. Elderly couples who receive too little from Social Security and retirement accounts to pay their bills have to work, which means economic growth. People who eat out everyday contribute more to economic growth than families who make their own meals. Computers get faster, so the higher processing numbers count as economic growth even though the difference may be negligible. Such delusions of progress at the expense of personal satisfaction can be found in nearly all of the official accounting of growth.

Both political parties have benefited from the subprime mortgage fiasco and both presidential candidates have ties to the mortgage companies that have ensured the impoverishment and homelessness of many of their victims. And no matter who wins the White House, this corruption can be expected to continue as long as the propaganda of infinite economic growth remains firmly entrenched in the public mind. As the economy grows, so too will government regulations and control, which usually restricts the freedom of individuals while rewarding the corruption of politically-connected lobbying groups.

As the country goes into a deeper recession than has been experienced in decades, with June 2008 being the worst June month for the stock market since 1930, homeowners may wish to look to their own families and communities for foreclosure assistance. Even if local banks are able to remain open and avoid falling victim to the financial manipulations of the large money center banks, there may be little credit available for borrowers in the coming years. Local solutions will keep some communities together and in good health, while the subprime crisis turns less well-connected areas of the country into ghost towns.

In another wave of unintended consequences of bank's poor lending activities and the pump and dump nature of the housing market over the past decade, defaults on Home Equity Lines of Credit have risen to historic highs. This comes just a few months after mortgage companies began to lock homeowners out of access to their accounts, due to declining home values in local real estate markets.

Many homeowners who took out these lines of credit against the equity in their houses used them for large purchases or as a backup credit card to pay the necessary monthly expenses in case of a financial hardship. Now that lenders have locked some of these accounts and the entire economy is in full-blown hardship mode, it was only logical that homeowners would begin missing their payments in droves. For some, it is a matter of paying debt down on credit accounts they still have access to, while others will not be able to keep up on any of their bill payments.

The entitlement factor also plays a part in the decision of which debt payments to fall behind on. After all, homeowners had a contract with the bank to have access to a certain amount of money in case they needed it, and now the bank has cut them off from that. Although most consumers are aware of the fact that banks can and will change contracts and alter terms at will and it will all be legal, homeowners who can only make one debt payment this month will choose an open credit line to pay, rather than one that has already effectively been involuntarily closed.

The only somewhat good news about this situation is that, with such a rise in HELOC defaults to the highest numbers ever recorded, maybe more banks will be willing to come to the negotiating table with borrowers. Lenders with a HELOC lien on a property may hold the third mortgage on a property that has declined severely in value, and can expect to get absolutely nothing if the house is sold at a county sheriff sale. Therefore, it is in the best interest of these banks to help their clients stop foreclosure for as long as possible, in the hopes that markets will recover.

One of the few ways that mortgage lenders may be able to provide some tangible assistance during this economic recession will be to help homeowners stay in their properties. Although banks may have to settle for less in the short term, offering a mortgage modification or other workout agreement may result in a far better chance of recovering more of the value of a loan over time than simply foreclosing and attempting to sell a property at auction. The rise in HELOC delinquencies is just another indication that borrowers can use all the help they can get, and banks will be suffering almost as much as homeowners if they are unwilling to provide some measure of assistance.

For a long time, small local banks have taken a bad rap in comparison to the largest mortgage companies and the resources of mortgage brokers with access to literally hundreds of different lenders. With the collapse of many subprime lenders and severe tightening of credit in the consumer lending market, however, it may finally be time for homeowners to give their local bank another look. Especially if they may anticipate facing foreclosure or another hardship, working with a community bank may be much easier.

One good reason to consider local banks is that the mortgage will most likely not be packaged, sliced up, and sold off to investors in the secondary market, with a change of mortgage servicing company every few months. Smaller banks that operate in a local area are much more likely to hold onto their loans and continue collecting payments for the life of the mortgage. Foreclosure victims often complain about lenders that sell the loan but do not inform the borrowers, or a foreclosure process that is thrown into confusion when the bank sells the loan right in the middle of everything.

In fact, the financial investment that local banks have in their loans is another reason to consider using one instead of a large national lender. Community banks have a vested interest in keeping wealth in the area, because they will be more likely to collect the entire amount of the mortgage back. Large banks that sweep in, pump a community full of money, then leave with the wealth of the area as the bubble bursts have no reason to improve the lives of the people living there. They simply pump and dump a neighborhood and leave the people to deal with the economic devastation left in their wake.

In the case of a foreclosure, smaller banks may also be more flexible and easier to work out a deal with. If nothing else, they are almost assuredly easier to get in contact with, as they have no need for enormous customer service departments, loss mitigation departments, collections departments, and a small army of supervisors, managers, and vice presidents. Banks with such departments, despite their enormous resources, often fall behind in their efforts to provide any personal or meaningful service to clients in desperate situations. Community banks, again, also have a vested interest in helping homeowners stop foreclosure and repair their financial situations.

A final reason to consider using a local bank for mortgages is that these banks will use the money they receive from the interest on a loan to extend more credit to families and businesses in the area. Community-oriented banks can invest in the future of a neighborhood, allowing local business communities to flourish and provide goods and services to the people. Cities with no strong community bonds are more likely to fall victim to larger corporations coming in and sweeping up the wealth of the area before leaving the neighborhood in a poorer state than it was before the corporations moved in.

Although local banks, because they did not offer the extreme lowest rate and the most creative financial products, have been somewhat neglected by the mortgage purchasing public in recent years, the collapse of the subprime market and blatant exhibitions of corruption may change this trend. As the large banks tighten lending even further, it may be community banks that will have to step up and contribute more to the long term economic health of a city or county. With so much talk of a depression coming as a result of the housing bubble, the only way for some areas to avoid poverty may be for them to become more self-centered and focus on preserving wealth in the community.

For homeowners who have dealt with the loss of a home due to a mortgage company's fraud, misconduct, or illegal activities, it is little surprise that banks most often win their foreclosure lawsuits against the clients they target. Nearly all of the laws are designed to give some token disclosure notices but, more importantly, make sure that homeowners are kept as much in the dark as possible about what is actually happening to them in the mortgage process.

There have been a surprising number of cases coming out in the news lately, however, that illustrates just how corrupt the mortgage industry had become in the decades-long run-up to the boom and the orgy of bad loans during the subprime fiasco. Mortgage servicing fraud, banks taking advantage of bankruptcy laws, the impossibility of banks to prove they own the mortgage to have standing to sue for foreclosure, and now violations of the Truth in Lending Act may eventually give homeowners some new opportunities to hold their lenders accountable.

Mortgage servicing fraud occurs when a servicing company is hired by the financial institution which holds a mortgage to collect payments from the homeowners and take care of the administration of the loan. Because the financial companies are more interested in getting as much as they can out of homeowners, and the fact that simply collecting interest does not provide a huge return, servicers routinely turn to fraudulent methods of jacking up loan fees and pushing homes into foreclosure for the purpose of resale at a higher price.

Homeowners who have gone through this type of predatory collecting report the forced insurance, escrow account balance discrepancies, obscene legal and late fees, and other charges that can add tens of thousands of dollars to their mortgage balance. Although they may initially believe it to be some sort of dreadful mistake on the part of the lenders, many quickly realize that their efforts to stop foreclosure are thwarted at every turn by the bank's lawyers. Numerous class action lawsuits have resulted in some servicing companies being forced to pay their victims, but this often comes at a much later date than the initial foreclosure and the companies are given a slap on the wrist and allowed to continue perpetuating fraud on clients.

This kind of fraud and obscene profit taking by mortgage companies is also apparent in the bankruptcy process. The bankruptcy reform laws were designed to prevent borrowers from taking advantage of the process to avoid their loan obligations. However, this was never a problem so much as the huge fees, interest charges, late charges, and so on that banks charge to homeowners (and other borrowers) once they fall behind on their payments.

Bankruptcy courts have recognized this, although there is little that they can do about first mortgages right now in terms of lowering the total balance owned. There has been some talk of allowing bankruptcy court judges to reduce the total to be more in line with the actual value of a given property, but this proposal has so far gone nowhere in Congress. Banks and their constituents, the politicians, have argued against giving this kind of power to people to wield in their most desperate financial hour against banks.

One of the more surprising defenses that homeowners have used recently to fight a foreclosure lawsuit is demanding that the bank prove to the courts that it has the original mortgage contract and has standing to sue for foreclosure. With the Enronization of the mortgage industry, this can be a difficult requirement to meet for the banks, which often only hold various rights to a portion of the mortgage. The loans were sliced up and sold off to investors in packages, meaning that no one in particular was ever assigned ownership of a particular mortgage. For some courts, this has indicated that the company coming in to sue for foreclosure has no right to do so, since no one can sue for default of a contract they do not own.

Finally, a relatively new type of lawsuit by homeowners against banks has been to point out blatant disregard of the Truth in Lending Act (TIL) and that the bank failed to provide disclosures required by law. A class action suit that is being allowed to proceed against a lender is seeking that mortgages found to be in violation of the act be rescinded, or canceled altogether. Clear violations of the TIL have never been taken lightly, but the possibility of lenders having to release their loans because of this fraud should cause significant worry in the boardrooms of many of the largest mortgage companies.

If the plaintiffs receive a victory in this case, it could be a significant victory for homeowners facing foreclosure, many of whom were not given required disclosures or did not fully understand how their mortgage worked. With so many admissions by financial professionals that no one working for the banks knew exactly how the loans worked, it may be somewhat easy for homeowners to make this case even if they did sign the disclosures. After all, if not even the bank's high-priced lawyers can explain how the mortgage works, then how could the homeowners themselves really understand them?

State attorneys general have also gotten in on the new game of suing lenders long after the fraud has been perpetrated on the constituents of the states. Countrywide Financial Corp., one of the largest mortgage lenders in the country and one hardest hit by the subprime fallout, has been sued by three states so far for such practices as misleading customers, making risky loans, discriminatory lending, and deception. The states are attempting to have the lender pay for its violations and unfair business practices and provide restitution to homeowners, although this may be a bit too late for homeowners who have already lost their homes.

Although it may seem like small consolation to homeowners trying to find some way to hold onto their homes, any new legal methods to fight back against the bank should be welcome tools. There is still no guarantee that corrupt judges will not just let banks railroad homeowners attempting to defend themselves, and the banks will fight back against these tactics vigorously. However, the growing trend of using the bank's own profit-maximization-risk-elimination schemes against them may point to more power of homeowners and local and state governments to make sure that banks can not come pump and dump the wealth of a community, taking massive profits and leaving massive poverty in thei