Overinflated job markets and overinflated housing markets went together during the real estate boom years of the 2000s. But too many companies believed in the Federal Reserve's illusion of low interest rates fueling investment and too many homeowners believed in the same illusion of constantly rising home prices. Now all of that has changed.

Whether is has changed for the better or for the worse in the long run is yet to be determined, but during the current economic recession, the world seems to be becoming a much more dangerous place. And neighborhoods hit hardest by the foreclosure crisis are experiencing the most serious erosion of public safety and rising crime related to abandoned properties.

By pumping up the housing market with inflated dollars and below market interest rates, the Federal Reserve and the banks have turned communities across the country into ghost towns and best and crime-ridden slums at worst. Homeowners left in these towns and cities are facing more risk than ever before.

The risks from foreclosure-related property crimes are just the beginning. Squatting in abandoned, bank-owned properties is becoming more widespread as formerly employed workers take advantage of the overproduction of homes to stay off the streets. Community organization groups have even taken to breaking back into foreclosed homes and putting the former owners back into properties they no longer own.

During an economic recession, crime rates generally rise, but the current depression will be far greater than any before it. Vast amounts of resources are being directed away from job-producing companies through government agencies to help bail out bankrupt private corporations or bankrupt local and state governments. Unemployment will remain high and climb even higher as a result.

Thus, the number of people unemployed will continue climbing and those unable to find jobs will become increasingly desperate to find food, shelter, and other resources for their own families. While abandoned and foreclosed properties can provide shelter, current homeowners should also consider their own safety against home invasion and robberies.

Unfortunately, foreclosed homes are not the only targets of criminals and vandals. While these types of properties are a target for those who can strip them of their valuable assets (pipes, wires, siding, and so on), they are typically not full of food, cash, or people to take advantage of. Only occupied properties offer these rewards for the violently inclined.

And even more worrisome for many homeowners is the real possibility that public safety may break down during the recession. With so much of the growth of the economy fueled by rising property values, local governments were able to keep growing by capturing more property tax revenue from citizens. With rising foreclosures and more empty homes, revenues have fallen dramatically.

This means that there will be fewer people employed as police officers or firemen, as cities and counties that relied on property tax revenue and subsidies can no longer pay for them. In case of an emergency such as vandalism, arson, squatting in a property, or even a home invasion, homeowners may have to rely on their own abilities to survive or protect their families.

During the coming years, people will be learning more self sufficiency and survival tactics in order to deal with a breakdown of the current order. A financial and economic system that once engendered trust from all over the world is now being forced to reveal one disaster or fraud after another. And the little remaining trust is quickly evaporating.

People now realize that their 401k plans and their homes are not ATM machines and have begun saving more money and taking more precautions in terms of their money and assets. What homeowner can trust in the same companies and individuals that set up the market for destruction in the hopes they would be bailed out by the very homeowners and investors they were impoverishing?

The deepness of the recession has caused an erosion of trust and an erosion of responsibility. We are all criminals now, it seems. If corporations are not going to the government for bailouts, criminals are going to corporate and private owned properties for shelter and easy targets. For the remaining homeowners and people with integrity, though, now is long past the time to begin preparing.

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Defending Your Home Against an Invasion - Some Tips to Secure the House

One story that is becoming more common during the foreclosure debacle is that of homeowners committing suicide to escape the financial difficulties. This is the wrong decision to make, but it is understandable due to the personal identification that people are conditioned to make with their credit scores. In fact, it is sad that so many people identify themselves with their economic conditions. But if people fall into foreclosure or bankruptcy, little about them personally or psychologically should be deeply affected.

Businesses and corporations that are experiencing the credit crunch and decreased consumer spending are filing bankruptcy and closing down stores every day at this point. Even some banks, due to their poor financial decisions, have failed and been taken over by the federal government. For such companies, declaring insolvency and seeking protection of the federal bankruptcy courts is completely a business decision based on changing economic conditions -- why should it be any different for the average person who loses a job or whose interest rates double?

But one story that never shows up in the media is CEOs of hundred million dollar companies committing suicide over corporate bankruptcy, because this story never happens. These managers do not personally identify with the companies they are running, and they know that shutting down, laying off hundreds of people, or declaring bankruptcy it is a decision made purely because of a downturn in the economy. Homeowners and borrowers have to look at it the same way if they lose a job or prices rise too high for them to keep on top of all of their bills; there is no shame in facing financial hardships.

But homeowners have an opportunity to mount a defense against banks crashing the economy, foreclosing on homes, and generally impoverishing the middle class. But this would involve one of the aspects of America that has essentially disappeared due to the atomization of the average family. Community ties have either been severed in old neighborhoods, or they were never established in new pump-and-dump suburbs. But every area hit hard by foreclosures would benefit from more community involvement in defending against these foreclosures due to fraudulent inducement of debt.

Neighbors who are not facing foreclosure (yet) are still running around in the hamster wheel, caught in the credit trap and too busy to help others standing up alone against the banks. Making it more difficult to create a movement against the stealing of homes is that only a few homeowners at a time will face an auction or eviction during any one week. And foreclosure victims facing the loss of their homes at the same time are too spread out over the country to make effective local stands.

But it is only by having large numbers of neighbors and community participants that the people can tell the banks and their government enforcers to leave them alone in their homes. A lot of this bad mortgage debt was fraudulent from beginning to end, and is written on void contracts because of the deception. Unless more people come together to force these predatory banks out of their cities, though, it will be one family at a time making a personal stand against increasingly powerful banks.

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.

The fraudulent inducement of unmanageable housing debt, the bailout of the financial institutions at the expense of American homeowners and individuals, tax breaks for banks and homebuilders, a massive centralization of market regulatory power in the hands of the Federal Reserve. It seems the American government has decided to take the path of enriching politically-connected corporations and impoverishing the average person.

It seems as though homeowners and communities have little or no choice but to accept the criminalization of the economy and try to do their best to stay on top of their mortgages, stop foreclosure whenever possible, and keep cities from becoming suburban slums. This is reflected in public opinion polls in the astoundingly low approval rates for both the President and Congress, as people have lost faith in a government system that serves only the richest.

However, people do have more power and choices than they believe, and even taking a few individual steps to remove oneself from the corrupt financial system can help bring persuade politicians and businesses to act more humanely. Of course, this is not easy and will require work on the part of homeowners and the rest of the public to extricate themselves from the current collapsing system and build a more sustainable economic environment.

The most important tool of the corrupt system is its control over the money supply of the country and the creation of this money as debt. Banks create nearly all of the money of America through loans; but the money comes out of thin air and only comes into existence at the moment the borrower promises to pay back the amount borrowed with interest. No actual money is lent -- the debtors promise to pay creates the money.

This, of course, indicates that it is the public who engage in capital transaction (operating a small business, buying a home, and so on) who actually create money out of their own promises to pay back a set amount. Banks just provide the illusion of lending a principal balance and collect interest on a loan for which they gave nothing in return to the borrower that he could not do himself.

This is not to say that homeowners should be counterfeiting their own money out of their garages, but the control over the money can be shifted from centralized private banks into community governments. (With the collapse and confiscation of the Liberty Dollar private money system, it may be better for local cities and regions to institute government-backed money until the debate over private currencies is resolved.) In fact, community currencies were a common occurrence during the Great Depression, and numerous cities now have their own monetary systems.

The benefits of such a system are numerous, the most notable being the fact that wealth remains and circulates within a community as the currency is mainly accepted in that small area. Local farmers, producers, and even corporations that move into the region may accept the community currency; but they will have to recycle it back into the local economy in the form of more purchases from area businesses.

Another benefit of local currencies is that community currencies often circulate interest-free, meaning it is not created by debt and the people are not forever chasing after too little money to pay back too much interest. When banks create money in form of loans, they only create the principal, leaving homeowners, individuals, or businesses to chase after other money to pay back the interest, which was not created; a perpetual shortfall is thus created, making the loan contracts impossible to perform on while pushing some people into bankruptcy and foreclosure.

It is estimated that half of the cost of everything in the world represents interest costs which go directly to the banks and financial institutions that create the money out of thin air and provide no products or services necessary to economies. This is an amazing revelation, and currencies created by local governments to stimulate community economies can experience huge increases in productivity and wealth while decreasing costs.

From mills in Pennsylvania to steel plants in Chicago to failed dot-coms in California, the nation is littered with the economic debris of globalization, privatization, and corporatism using the power of the nation's money to weaken the American people. Local currencies are one of the more useful tools which have already been tested and are now being used that people, through their local governments, may rely on to increase wealth in communities, stop foreclosure from turning suburbs into slums, and stop the outflow of capital from small business and individuals to multinational corporations and politically power financial institutions.

The ongoing slow collapse of the US economy and bursting of the housing bubble will present unique opportunities for small communities. While Congress is debating over the best way to present how they steal money from the general public and send it off to the banks, local neighborhoods on city and county levels may be able to ensure their own longer-term survival in some form than relying on the central government for assistance.

One such local plan is being enacted by Youngstown, Ohio, which has experienced a large decrease in population levels of the past four decades. CNN reports that whole blocks of abandoned homes are being torn down and the land used for parks and other green areas.

This is a very positive development and one that can be used in various neighborhoods throughout the country. In areas that saw artificial capital pumped in to build up new suburbs, but which are now sitting half-abandoned, turning the land back into land is laying the groundwork for more sustainable uses later on.

Parks and open areas can provide a much safer solution than allowing homes to sit empty, as well. Houses that have been abandoned are increasingly becoming targets of squatters and suburban raiders stealing copper pipes and other metal, or they become crack houses. Torn-down buildings and children's parks a less apt to draw crime.

But even the open space or park does not contribute to the overall wealth of the community. Razing abandoned houses that no one wants to buy will help keep up property values in other areas of the community, but turning the area into a nature preserve only covers up the emptiness with nature. It addresses the foreclosure crisis, but not any of the other economic collapses.

With food prices in some areas of the world rising by more than 75% in just a few months, and ongoing food price inflation in the US, the next crisis to hit may be the inability of people to feed their own families. Oil, natural gas, home heating, and other commodities are also becoming more scarce, but all concerns about the price of gasoline go out the window when a family can not afford enough bread or milk.

This is why some cities can take Youngstown's idea even a step further and create community gardens. The produce can be sold at local farmers markets to provide the people living in the surrounding area with affordable, locally-grown food. Many cities have more than enough unused land even without tearing down abandoned homes, but the more that can be produced and sold locally, the more wealth will be kept in the community.

Every community that is experiencing a net population loss, declining property values due to high foreclosure rates, or a surplus of abandoned homes should consider enacting some way to keep homeowners in the area. Opening up the city by establishing new parks is one way to keep out extra crime and prop up home values, while community gardens can also help address the crisis of food prices and generate wealth for the local neighborhood.

It seems more unlikely that a fast collapse of the financial system will plunge the world into economic depression. More likely, a slow burn will ensue, as centers of power gather as much wealth as they can on the downside of the market, while the public finances its own impoverishment and waits for answers from Washington. Taking some responsibility for their own communities and enacting public programs to serve the area may allow some people to increase their quality of life, even in an economic downturn.

One of the most effective methods of helping homeowners save their homes from foreclosure is becoming a local real estate investor. Starting with just one or two properties previously owned by friends, family members, coworkers, or acquaintances, new investors can help encourage communities to work together to help alleviate the damaging results of high foreclosure rates.

The process of buying a bank-owned property or one that had been purchased by a corporation at a county auction can be a bit different from a regular, arms-length purchase. Because foreclosed properties are usually not rehabilitated or maintained by their new corporate owners, potential buyers will have to deal with more complicated disclosures and contract addenda that are designed to protect the bank from future litigation.

Even in the property listings themselves, the language can be quite confusing to the average home buyer. The following are a few of the potential clauses that may tend to throw off the new investor. Most can be easily overcome, though, as they are mainly designed to protect the owner of the property from wasting time or having to deal with the damage done to a foreclosed home by previous owners of through general disrepair.

Corporate owned
This means that the bank most likely owns the home now that it has been foreclosed, or another investment corporation bought it at the auction. It is not owned by a private individual, in any case. Even if the original owners are still occupying the house, they will more than likely be evicted soon enough, as their ownership interest in the house has been extinguished. The bank that foreclosed on the house or a third-party corporation bought it at the county sheriff sale and is now listing it for sale on the open market.

Sold as-is
This is possibly the most self-explanatory clause, but potential buyers should be aware of all the implications of such a simple-sounding phrase. The owner is not going to do any repairs to the house before it is sold, so the buyers better do have their own inspection conducted by a competent inspector. It is safe to assume that, in any foreclosure house, some things are probably wrong with it, even if it has not been vandalized or stripped. The owner is just selling whatever is still sitting on that lot, whether it is a house in great condition or falling apart with damage on the inside and numerous necessary repairs.

Disclosures-addendums required
This clause means that the new buyers will have to sign off that they understand they will be buying a house that may be damaged and they agree to hold the owner corporation harmless for anything wrong with the house. Besides the normal sales contract, the addenda will have these disclosures that the house is a corporate-owned foreclosure property that has not been maintained since it was foreclosed and may be in a depreciated condition. They may as well be called "buyer really beware" disclosures, as this is the message they intend to convey.

Due to the condition, conventional rehab loans or cash only
By using this clause in a listing, the owner indicates it does not expect any buyer to qualify for a regular home loan to make the purchase. This is because many banks will not lend on a house in poor condition with city code violations and lots of damage to the structure. This does not preclude buying the house, of course, as individuals can get a rehab loan for such purchases, which the owner will accept. Otherwise, they have to pay cash for the house. "Conventional" in this context generally means from a regular bank or mortgage company -- no subprime loans, hard money loans, owner-financing, creative financing, or anything other than just a loan from a bank.

Prequal and/or proof of funds must accompany offers
When the potential buyers submit their offer to purchase the property, they must include a prequalification letter from a mortgage company stating how much money they are approved to borrow. The owner does not want people submitting offers for a house when they are not even prequalified for a loan to complete the purchase. It is a tremendous waste of time, obviously, to deal with individuals who will not qualify for a mortgage. In the case of a cash offer, the buyers will have to submit proof of funds, like a bank statement showing they have the cash and are able to pay the purchase price.

These are just a few of the more commonly-used clauses when banks list foreclosed properties on the market. Most of them are designed to protect their own interests and avoid any lawsuits in the future based on the condition of the house, as well as to prevent from wasting time considering bogus offers. Although most real estate investors may be familiar with such clauses, new investors with excess financial resources may enter the foreclosure market in order to help their communities avoid some of the worst consequences of neighborhoods turning into ghost towns. This can help create safer cities, as well as raise the general level of wealth in the area.

A not insubstantial number of homeowners in foreclosure, after saving or losing their home, realize that real estate can be a pretty good investment. Especially with their first-hand experience with the foreclosure process, these homeowners may get into the property management or investment business after taking a few years to reestablish their credit and maintain a savings account for emergencies and down payments. Real estate investing can be a great opportunity for previous foreclosure victims to help others in similar situations in their communities and make money for their own families.

The main difference between various types of foreclosure investment properties is that of pre-foreclosure properties and foreclosure properties. Purchasing a pre-foreclosure homes indicates that the original homeowners are still living in the house and may be looking for ways to stop foreclosure. They have not made a payment in some months, and are quite likely being sued for foreclosure by the bank and its attorneys, an experience previous foreclosure victims can well relate to. The house has not been sold at a county auction (sheriff sale) yet, though, so it is not considered a fully foreclosed property yet.

To buy a pre-foreclosure house, the potential buyer would negotiate directly with the owners of the property for the terms of the sale. The bank may have to accept a short sale if necessary or hold off on the sheriff sale if there is little time to make a deal, but the actual decision to sell or retain the property, and for how much to sell it will be up to the homeowners. Foreclosure victims who realize that they can not stop foreclosure any other way may be willing to sell the house for little just to end the process, which gives investors many possibilities to find good deals in the current real estate market.

A foreclosure house that an investor buys has already been through the entire foreclosure process in the county courts. The homeowners have most likely been evicted or have moved out, if they are not illegally continuing to occupy the property. Either way, if a new investor buys this type of property, the bank should guarantee in the sales contract that it will convey clean possession of it, meaning no one else living there. Great deals in foreclosed properties can also be found, as banks are watching houses sit on the market for months while property values continue to decline.

Buying this kind of home means that the bank (or a third party) purchased the house at the auction and is now the legal owner. This purchaser from the sheriff sale is the party the potential investor will negotiate with for the sale -- not the previous homeowners whose ownership interest in the house was eliminated by the forced sale of the property. Third parties often buy properties at local sheriff sales to rehab and sell or quickly flip, so they will be looking for as high and quick a profit as possible. Banks, though, would rather sell the house on the market and recoup some of their losses from the foreclosure process, which gives the buyer more leverage to negotiate a lower purchase price.

There is no one "best route" to go in buying a house in some stage of foreclosure. There are simply too many different factors to consider and parties to work with. Sometimes, homeowners will sell for very cheap to stop foreclosure from taking the home, and the bank will accept a low short sale offer. Other times, the bank will not accept a reasonable offer and the homeowners will hold out until the last second, hoping to find some magical way to avoid losing the house. In this case, the best deal might be had after they have left the house, but there is danger the property will be damaged or vandalized by resentful former owners. Either way, potential new investors should do as much research as is prudent to make they you are getting a good deal -- in a world of possibilities, it is impossible to know which is the best way, but a good route to go to help fellow neighbors in the area is better than not going any route and leaving them to the same depressing foreclosure situation.

If the potential investor buys the house with a large down payment, or buys it for substantially less than the market value, they will create instant equity in the house and protect it against future declines in value or foreclosure. These are really the best ways to obtain equity in a property right away, besides creating it slowly over time as the mortgage is paid off. Either get a good deal, or pay down the mortgage over time; just hoping that property values increase forever to create equity has been proven by the current real estate market to be quite misguided.

This article is not about former foreclosure victims becoming new real estate flippers and ending up back in trouble due to overextending themselves on numerous foreclosure investment properties. There have been numerous failed investors of this sort who attempted to make money through real estate rehabbing and flipping in all the hottest markets of the country. This was the wrong way to make money, as is evident from the fact that so many have now lost their investments and are losing their properties to foreclosure. But in the coming economic downturn, homeowners who have experienced the foreclosure process and have survived can provide valuable solutions to their communities based on their experience.

If a property on your block has gone into foreclosure and the homeowners have moved out, there is a likely chance that the property is sitting empty. The bank may have it listed for sale with a yard sign out front, but no other sign of life will be visible. If the house remains on the market for long enough, and the area is somewhat secluded, vandals may break in and cause damage, or squatters may move into the house and begin living there. These may be friends of the previous owners, taking advantage of the lack of security, or simply vagabonds who have finally found free shelter. In any event, you should take action to keep your neighborhood clean and prevent property damage to houses in the area.

The first contact that many homeowners will make is to the local police or sheriff's department. While this may be necessary if the property is being actively destroyed, there is a better way to go about reporting suspicious events. Before getting the authorities involved, which may create a further level of complexity, you should try and locate the current owner of the property and inform them of what is going on. This may involve calling the bank or the real estate agent listed on the sign hanging out front. They are the parties primarily responsible for the property after foreclosure, so it is in their interests to make sure it is taken care of. After all, a damaged property will sell for far less than one in normal condition, and neither banks nor real estate agents like settling for less money.

Thus, if the bank is the current owner of the foreclosed home, why not contact them before involving the police? If the bank does not express any real desire to fix the problem, and no damage is being done, then there may be no real problem. Since the lender owns the house, they have a right to decide how to dispose of the property, as long as they are not violating anyone else's property rights. This, of course, may not be much consolation to a neighbor watching his own property value decline due to the degradation of the community.

In the case of freeloaders squatting in the property, you really can not be sure they are there without the permission of the bank without speaking with the lender or its representative. There is an off-chance that one of the squatters is actually attempting to purchase the property and has been allowed in to inspect, make repairs, or stay in the property throughout the mortgage process. This may be a rare occurrence, but potential buyers are quite free to negotiate any terms they please with a lender when attempting to purchase a foreclosure property.

It is usually a better idea just to inform the bank of the presence of squatters or vandals and allow them to call the authorities. Many of them will contact the real estate agent or local police department and request that more care is taken to secure the area. Banks are not interested in seeing their properties damaged, because they will have to accept less of an offer on the open market to encourage a sale.

Properties that have been foreclosed are all too often subject to random acts of destruction, the moving in of squatters, and falling into disrepair the longer they sit on the market. If destruction is being committed or there is a possibility of trespassing, then you have to make a decision of whether to inform the owner or not. But, it is in your interest to do your part to ensure the security of all property owners and inform them of suspicious acts being committed that they are unaware of. Banks often find it difficult to sell properties after foreclosure, especially if they have been severely damaged, causing property values to fall throughout a community. By respecting every owners' property rights, though, and informing them directly of acts potentially violating those rights, we can all take care of our communities and help prevent more foreclosures.

In the quest to find some reasonable solutions to fix the foreclosure problem raging throughout the country, the usual avenues of power have been decidedly quiet. Yes, there have been numerous public pronouncements by the president and Congress that the problem needs to be fixed. But, these institutions have relatively little influence on the real estate market and economy in general. If foreclosure victims are to find any relief, it will have to come from decentralized, creative community solutions, rather than a one size fits all federal government program.

The president himself has very little direct control over the economy and is not able to affect homeowners unilaterally, besides offering empty statements of hope and accountability for predatory lenders, neither of which represent actual solutions. The Constitution does not give him authority to take money from some people and give it to others in need of mortgage payments, or suspend the collection of private loan payments, or to renegotiate terms of contract that are already in place. Even the Congress is kind of inadequate for many of the same reasons, and others that we have discussed previously, so the foreclosure crisis is our problem as citizens. Therefore, we have to focus on helping homeowners in our own communities as much as possible.

The most important question, then, should be the following: What have you done to help the homeowners on your street avoid losing their homes? If the answer to that question is nothing, then there is no real basis to complain of a lack of government service. Government is often far behind the people, who are the source the most solutions. Also, if community citizens are worried about the foreclosure problem in their neighborhoods, for whatever reason, but do not have any ideas for solutions, then the following list may be useful as a starting point. It is important to remember, though, that the list is just one set of ideas, and it does not take into account local circumstances. The people and the market can come up with a nearly endless supply of solutions, and the government serves to enforce laws and protect homeowners from having their property rights clearly taken advantage of, but does not provide solutions directly.

Maybe a social welfare program in the city/county to help homeowners in distress. If enough people vote for such a measure, it could be paid for by property taxes or a special assessment. Rather than property taxes going to pay for salaries of low-level clerks or to line the pockets of corrupt officials, a fund set aside to provide assistance directly to homeowners may be one of the few wise applications of a tax. However, the free market and citizens themselves can probably do much better and respond quicker to a quickly-changing real estate market.

Donations from local businesses and other private citizens to help local homeowners is possibly the most obvious starting point. One characteristic of the American people is their nearly endless generosity in charitable giving. Often these are donations to provide assistance to churches, the humane society, or people suffering in other countries. But it homeowners on our own streets are currently in danger of being thrown out of their homes, this charitable giving can be directed to our own communities. Citizens themselves may not have much to spare, as they are dealing with their own bills, but local businesses may see such a donation as a great marketing tactic, as well as keeping more wealth in the local community and ensuring they have a larger potential to do business in the future. A large number of foreclosure victims forced to move to another town or county will negatively affect the businesses left behind, as their pool of possible customers shrinks.

Small, local banks offering low rates to local homeowners could be another solution, if the banks have sufficient resources. Rather than watching the central bank of the United States bail out hedge funds and banks, citizens could work with the banks in their local business area. The banks may see this as an opportunity to expand their business and create loyalty with the customers they assist. Obviously, homeowners who simply can not afford their homes any longer would not qualify for a new loan, but ones that can prove stable income and that the temporary hardship is over may be a potential source of ongoing business. Foreclosure victims often learn financial prudence as one consequence of facing the loss of their homes, and they will be grateful to a local bank that allows them a second chance. This may translate into the same family transferring their investments or personal bank accounts to the local bank, as well as sending referral business.

Church charity drives to collect for foreclosure victims is another great idea, as are such simple matters like school bake sales or a concert in the park or local auditorium with local bands with all proceeds go to homeowners. Every little idea can be considered, even if it may not result in a large infusion of cash to the cause of helping homeowners in trouble. But a concerted effort by local families, business, and institutions can take on the problem and solve it through a number of creative methods.

Of course, these local efforts by private citizens will require much harder work in the short term than doing nothing or waiting for an eventual federal government bailout. But the government can only assist some people by hurting others, and forcing people to do what they would otherwise not want to do, while discouraging the more generous from giving more. Through taxing to help homeowners in need, or inflating the money supply by providing a direct bailout with newly-created money, the problem will only be postponed at best, or simply transferred around the country, at worst. Although some communities may be helped, others paying to help those communities would themselves suffer more.

Thus, the possibilities are endless for private citizens and businesses to positively affect the foreclosure crisis in their cities and counties. It also allows them to come together, help homeowners in need, and preserve the property values and spirit of the community. No other method of foreclosure assistance will result in such a potentially positive experience and create stronger local bonds between the homeowners and the local businesses through the charitable spirit of Americans.

Obviously, no one person or effort will be able to affect all of the homeowners in the country, but private citizens can effectively help the smaller number in their communities that are suffering right now. Then, other communities can learn from what is happening around the country, and create their own local solutions. This is not to say that it is wrong to place so little trust in the government to fix the foreclosure crisis, but is meant to emphasize the creativity and charity that are only present in private citizens and the market, who are able to design truly effective methods of providing compassionate assistance without the use of force.

The longer we rely on government to solve the problem of record foreclosure numbers throughout the country, the longer the problem will last and the more people will lose their homes. It is in every homeowner's best interests to do as much as they can to help other foreclosure victims and provide assistance to those in danger of losing their homes.

There are a lot of ideas that citizens and communities can implement to begin creating solutions to the foreclosure crisis now affecting so many areas of America. While the old media is busy discussing the latest plans being pushed through Congress that will not help homeowners stop foreclosure, lower-level governments and private citizens can do remarkable good work to help their fellow homeowners. There is a great reliance on the federal government for "bailouts," but few long-term solutions are ever offered. Instead, coming up with creative, local solutions will most effectively help foreclosure victims save their homes.

For instance, private citizens can donate some of their excess income to families in need of extra money to pay their mortgage every month. This may be in the form of an actual donation or a private loan that is secured through placing a lien on the property. If that does not help enough of the homeowners facing foreclosure (and any one citizen's resources are likely to be limited), the plan can be expanded exponentially. One idea would be to start a charity to solicit for donations from private citizens and local businesses to help donate to needy families. The same procedure can work by offering a direct donation, or providing a loan that all of the participants will be able to enjoy the benefits of when the homeowners are able to get back on their feet.

Local communities can also put together a coalition of local business owners or influential people in the community and meet with many of the local banks to discuss the problem of rising foreclosure rates. It is quite feasible that some of these banks would be interested in helping local homeowners find a solution to stop foreclosure, by providing terms without checking credit or creating new lending programs that are community-based, rather than credit based. These programs will keep wealth in the community and generate even more wealth, as local banks will now have the mortgages on properties in the area, instead of multinational banks and servicing companies collecting payments from homeowners located thousands of miles away.

The best part is that none of these example programs would raise taxes, which would hurt more homeowners who are living on the edge but are not yet in foreclosure. They are also local solutions, and if you communities are able to initiate a movement for better lending decisions and compassion towards homeowners in your community, then others can build on these ideas to create even more solutions in other areas of the country. With central economic planning, one of the problems is that the one-size-fits-all solution does not take into account all of the characteristics of local real estate markets. Only local solutions can adequately address the problems of the community and effect lasting change.

If what a concerned citizen means by "what can we do to help homeowners in foreclosure" is what can the federal government do to help bail out homeowners, then the answer is most likely nothing. In fact, the best they can do is nothing, and the worst may be causing even more foreclosures. If the federal government can keep out of the way and let citizens create local solutions, then there is a much better chance that they will not have any repeats of Hurricane Katrina ineptness on the part of the central government. Providing trailers that are unused and now sinking into the mud, and giving money to people who were not affected by the disaster will not be issues when local governments or private organizations work together to address that requirements of the region.

So, the best solutions to the foreclosure crisis will require that foreclosure victims, local governments, and private citizens and businesses get creative, start talking to neighbors, families, church groups, business organizations, and anyone in the town or locality that has any position of influence. There is much more power in the hands of private citizens when they do not transfer their remarkable problem-solving abilities to a distant federal government that will not be able to understand that dynamics of a local area.

Possibly the most overlooked way to stop foreclosure is for a friend or family member to purchase the property that is being foreclosed and allow the original homeowners to remain living there. In essence, this can follow the same process as using a private investor to save the home, but it is usually easier for foreclosure victims to trust their friends or family before they trust a real estate investor. Especially with the possibility of running into a foreclosure scam, using someone well-known presents a more secure option. There are a number of considerations before attempting this method of stopping the foreclosure process, all of which homeowners and potential buyers need to be aware of.

The first problem that any buyer will have to confront is if the family member that is purchasing the house out of foreclosure has the same last name as the foreclosure victims themselves. Lenders will often refuse to make a loan in this situation, as it is not a third-party, arms-length transaction. The parties are related and there is a pending foreclosure, so the purchase resembles a family bailout that is attempting to use a new mortgage to take care of a family member, rather than a buyer and seller getting together to complete a real estate transaction. Mortgage companies would like to avoid getting into the middle of homeowners' intra-family affairs, especially if there is a recent history of financial problems. So foreclosure victims will have to locate a family member who has a different last name or use a friend, if they wish to pursue this method of avoiding foreclosure.

Secondly, if the friend of family member does not have a down payment or excellent credit, it will be very difficult to qualify for the loan to purchase the house out of foreclosure. Currently, the real estate market provides some great deals, because all of the foreclosures have depressed home values in certain areas. This makes many homes much less expensive. In fact, some areas of the country are experiencing decreases of over 50% year-to-year, while values are stagnant or slightly declining across the board. The foreclosure victims may find that they owe much more than their home is currently worth, and the possibility for a short sale may present itself, if the lender is willing to work out a solution.

However, despite the fact that the market is currently favoring buyers due to the lowering of prices, this is also a difficult time for home buyers who need to borrow money to finance their purchase. Many lenders have gone out of business now, while others are following more strict lending guidelines and loaning far less than even six months ago. Qualifying for a mortgage with no money down and less than excellent credit is simply no longer an option. If the foreclosure victims and friend or family member have a savings fund or can liquidate other assets to save the house from foreclosure, though, they will have a significantly better chance of getting a loan with a competitive interest rate.

If this option is open for homeowners facing foreclosure, and they are able to find a compassionate family member or friend who can help them stop foreclosure, it is wise for all parties involved to put together an insurance plan to prevent foreclosure from happening again. Just a few lessons that homeowners can take include saving up an emergency fund to pay the mortgage in the event of a financial hardship, not refinancing the property every few years and treating the house as an ATM, and considering the house as a place to live rather than another bank account. In the event of a future financial crisis, it is also vitally important to contact the mortgage company as soon as the problem begins and inform them of any late payments. Also important is gaining as much knowledge and foreclosure advice as possible from the current situation, so that it will be much easier to respond quickly if problems come up again.

There are a number of important benefits that using a friend or family member as a real estate investor can give the foreclosure victims. These include the possibility of keeping the house, finding a trusted source to help out in a financial hardship, and not having to pay real estate commissions. The problems that homeowners have in this situation, such as finding someone with a different last name to help out, and getting the home buyer qualified for the new mortgage, may be difficult to overcome, but the rewards are being able to stop foreclosure through a secure solution with fewer worries of being taken advantage of. Homeowners in foreclosure need as many options as possible to keep their homes, and this can provide one of the most mutually beneficial solutions, and is in keeping with the local solutions we have recommended before.

There are no easy answers for homeowners and families facing foreclosure. The threat of losing a home, combined with the specific hardship the family faced that caused them to fall behind on their bills, can lead to even more stressful situations and prolong the financial recovery for many homeowners. Unfortunately, the financial system that is in place in America encourages this type of hopelessness and alienation at the expense of homeowners who would otherwise be able to take strength and support from their local communities and families.

Banks and mortgage companies are often faceless entities that collect payments from homeowners but do little else. If they do anything beyond collecting money, it is usually to pass around the right to collect the homeowners' money, as loans are packaged, sold, transferred, bought, sold again, unpackaged, transferred again, ad nauseum. The homeowners who have these mortgages often do not know anything about the companies that service these loans, and do not know what their payments are being used for. Very often, mortgage payments end up in the accounts of the same banks that finance the companies that outsource American jobs overseas, thereby creating the situations that cause many other homeowners to face foreclosure. In effect, some homeowners finance their own destruction and unhappiness.

The entire financial and social system is predicated on the alienation of people from those they do business with, their neighbors, and even their families. Banks know they will not keep loans, so there is virtually no reason to provide service to the loan applicants after the mortgage has been closed. They also know that they can take the wealth out of their clients' communities by providing mortgages in states where none of the payments they collect will be reinvested (except, perhaps, for advertising). This adds nothing to the local community except the injection of a parasite that sucks the wealth from the homeowners and gives it to large banks that care far less for their clients than they do for their shareholders and the media coverage they receive.

In situations such as foreclosure, it is active community involvement that can solve the problem, rather than one family begging a multi-national corporation for pity. Homeowners will be able to stop foreclosure, if they can find a reasonable solution, but these solutions often involve furthering their dependence on this wealth-destroying financial system. Foreclosure victims may agree to pay outrageous amounts of interest on their defaulted payments through a forbearance agreement, or they may get another loan to stop foreclosure through another mortgage company, often at a higher interest rate. It is important for homeowners to address the immediate problem and save their homes, but the foreclosure situations should also give these same families a much-needed incentive to do some critical thinking about the circumstances that led them into foreclosure.

Without a real plan to stop foreclosure and voluntary financial and emotional support, homeowners will continue to lose their homes in record numbers. Communities, local banks, local investors, and families should have a stake in the wealth that they are bringing into a given community. No matter how wealthy the individuals in a community are, if there is a massive sending out of money to banks that will provide no local investment in return, then everyone will get poorer, foreclosures will continue to increase, and banks will be able to take even more from the wealth and property of families.

An overlooked method of stopping foreclosure is the use of a private investor or lender to purchase a home and work out an arrangement with the former homeowners to allow them to remain living in the property. If a repayment plan is unaffordable, the homeowners do not qualify for a loan modification or foreclosure loan, and do not wish to pursue bankruptcy to stop foreclosure, working with a private individual can be a remarkably flexible and affordable plan. These types of agreements can be structured in several different ways, with the homeowners retaining more or less of their ownership rights after the transfer.

With a standard lease or rental agreement, the homeowners will sell their homes to an investor to stop foreclosure. The investor will then put together an agreement for the former foreclosure victims to rent the property for a specified period of time at a specified payment. Usually, the rentors will have the option to purchase the home back from the investor within a set period, usually one to two years. In this type of plan, the homeowners do not have many legal rights in the property, because they are considered tenants. A lease agreement is a very effective way for the homeowners to stop foreclosure and end up with a reasonable payment.

As an alternative to this plan, the investor may give the foreclosure victims a land contract, which protects the former homeowners' property rights in the property. A land contract acts very similar to a mortgage, in that the foreclosure victims would be able to deduct their yearly property tax payments, and would be able to refinance the property, using their land contract payments as proof of on-time mortgage payments. The investor would be the owner of record, but the foreclosure victims would have all rights and responsibilities that are attached to the house. In terms of a program to stop foreclosure, the land contract is a great option for both the private investor and the former homeowners. The investor gives away the responsibility of managing the property, and the foreclosure victims have more legal rights and protections.

One of the main drawbacks of this type of plan is the potential for shady, criminal investors to take advantage of homeowners in desperate situations. Unfortunately, there are a lot of horrible stories of homeowners who have been scammed by investors who are only out to steal a home, strip the property of its equity, and move on to the next homeowner, leaving behind a trail of evicted families. This makes it vitally important for homeowners to consider and evaluate the possible investors they may work wth. In this type of situation, where the property will be sold to stop foreclosure and the foreclosure victims will have a limited time frame in which to purchase the property back, the agreement must not be set up for the homeowners to fail. The private investor's experience and compassion will mean all the difference between the homeowners understanding all of the terms of the agreement and making it through the plan successfully, and being taken advantage of before they knew it.

Using a private investor to stop foreclosure is one of the most flexible and affordable options to save a home. Avoiding foreclosure scams is paramount to making this work, along with a general understanding on the part of the foreclosure victims of how the agreement will be structured. However, homeowners who use this option can effectively save their homes and their credit, and have the most affordable payment possible. When a foreclosure loan, mortgage modification, or bankruptcy is not an option, then consider using a private investor to stop foreclosure.

One of the best ways for homeowners to stop foreclosure and begin the process of getting their life back on track is to use a local private equity investor to buy the house and arrange a mutually beneficial way for the foreclosure victim to stay in the property and the investor to profit. In this way, the investor and homeowner create a miniscule economy that is dependant only on the local environment for its health. While the relationship will have regional, national, and global issues affecting it, it is an essentially local strategy for keeping wealth within the community.

This arrangement is in stark contrast to the common myths of homeownership, which rely on the belief that consumers should become the customers of large, multinational banks to obtain money for a home purchase. The results of this kind of debt-financing puts the control of the local housing market more and more in the hands of lenders who, 1) are not a part of the local community, 2) most often sell the loans to groups of international investors who have no interest in the well-being of the community on a local or national level, and 3) have no incentive to disproportionately form a relationship with one community over any other that the lender operates in.

For these reasons, many homeowners who have poor credit or are facing foreclosure may want to turn to a party who has a more local view of the housing community. Direct private investing in real estate can bring home buyers closer to the investors who finance the loans. Mortgages originated by large banks are sold to investors in the secondary market anyway, so it makes much more sense for homeowners to know who is investing in their property, get to know the individual or group, and feel assured their concerns will be met if a hardship situation develops. The investors, as evidenced by the popularity of these securities, can make a healthy profit by engaging in these deals. As well, the community, by creating and nurturing a local economy, can increase its self-sufficiency and reduce its reliance on investment from outside the locality.

One of the great sites on the internet now for more information on creating local economies is run by Catherine Autin Fitts, whose previous positions include working with Dillon, Read & Co., Inc., a large Wall Street investment firm, and as the Assistant Secretary for Housing-Federal Housing Commissioner at HUD. Her website, Solari, examines the current state of economic world affairs, and proposes an increasing self-sufficiency of local economies as a means of increasing wealth and well-being for the community and the world at large. She has a free seminar offered on Google Video, titled "Safely Navigate the Falling US Dollar." Her work is definitely worth checking out for both homeowners attempting to stop foreclosure, as well as private investors interested in helping foreclosure victims and investing in communities.

The real goals of every homeowner in danger of losing their home should be twofold: find a way out of the situation, while keeping realistic expectations for remaining in the home or selling outright, and decrease the reliance on debt financing for any good or service.

Use a foreclosure situation to examine the benefits of equity financing instead of debt financing to stop foreclosure.

As more stories come out every day about the sinking housing market and rising interest rates, the amount of homeowners who have missed more than one mortgage payment is increasing by large numbers. It is in an environment such as this that both homeowners and investors can pool their resources to accomplish two things that debt financing never will: stop foreclosure by putting the homeowner in a better position, and make an investment in the community that is not relied upon by debt.

Many homeowners will try to refinance their homes when they begin missing payments, in the mistaken belief that they can find a “magical” new loan program that allows for missed payments, low credit scores, and very little income. Unfortunately, it is doubtful these types of programs exist for any homeowner who has failed to pay their mortgage. Even the most generous hard money or conventional loans will have high interest rates (11-20%), high origination fees (5-7%), and require low loan-to-value (LTV) ratios to exist (50-65%). All of these factors will stack up against the homeowner, who is constantly told by mortgage brokers that they will keep working on looking for programs that are simply not available.

And even if the foreclosure victim does manage to obtain a conventional mortgage, how long can he expect to pay the loan before missing another payment? The high monthly payments on the new loan will prevent the homeowner from being able to establish any kind of emergency fund to begin saving in the event of another hardship. Although possible, it is unlikely that anyone, let alone a former victim of foreclosure, will be able to establish the means to last 2-3 years without needing to fix a leaky roof, have a car repaired, or fight off a medical condition. Addressing any of these situations will be nearly impossible if the situation is compounded by a high mortgage payment and no emergency fund.

Homeowners who have plenty of equity and are able to qualify for new debt in the form of a mortgage are also more susceptible to mortgage servicing fraud, a topic too broad to cover here. However, high equity, high payments, and low credit scores are all contributing factors to this type of fraud, and homeowners should be very careful to watch out for signs of it.

Most of these problems can be lessened or eliminated with the use of equity investing, as opposed to using debt to obtain a mortgage loan. Equity investing requires a private investor, usually located in the same geographic region as the property, using his own cash or means of getting cash to invest in the house. Many private investors, even within a few years of beginning a serious plan of real estate investing, can self-finance homes out of foreclosure.

Using equity investing to help a homeowner stop foreclosure has a number of benefits over a homeowner obtaining more debt.

First of all, the investment by the private lender will keep money in the community. A self-financed investor can purchase the home out of foreclosure and do with it what he will. This can include allowing the original homeowners to live in the property and purchase it back from the investor over time. This creates a mini-economy in the community and decreases the homeowner’s and investor’s reliance on debt financing. The investor will reap a benefit from the monthly income from the property, and the homeowner will be able to stay in the home.

Another benefit is that homeowners may have more freedom after using equity financing than using debt financing. If a sudden hardship occurs, and the homeowner can not afford the house, the responsibility of paying hundreds of thousands of dollars is not present because there is no loan. Many homeowners are now finding themselves trapped in their homes, unable to stop foreclosure due to little equity, unable to afford the current payment due to the hardship, and unable to sell due to falling home values. Conceivably, no homeowner wants to be trapped in a house due to a debt that is almost impossible to pay off.

One final benefit of equity financing over debt financing is the obvious personal relationship that is achieved between the previous foreclosure victim and the investor. Problems with payments may no longer be met with spending twenty minutes on hold with a mortgage company or mortgage servicing company, only to reach an interchangeable human being, different from the last time the homeowner called, and who will not be the same one to "help" the client the next time they call. Swift foreclosure and aggressive collections tactics may be lessened, as well. And, in general, having a human face on a housing payment responsibility, rather than the mechanical facelessness of a corporation, can help all parties involved come to a mutual understanding in the event a pressing circumstance arises, such as a hardship that will result in a missed payment.

In conclusion, the homeowner in foreclosure who wants to save the home and stop foreclosure is presented with two options. In the first, by using debt financing to obtain a new loan, the mortgage obligation is left with a faceless company with no interest in the benefit of the community and which has a prime opportunity to prey upon the recent hardship situation of the borrower via mortgage servicing fraud and other sinister, cunning tactics. In the second, by using equity investing from a local private lender, a benefit is felt among the community, as people work together to keep money in the local economy and achieve a mutually beneficial situation, where mortgage obligations and property ownership responsibilities are shared by all parties, rather than lain at the feet of a trapped borrower who has no way either to escape the trap or even to cause it to loosen its tightening grip around his neck.