The inflation and subsequent collapse of the residential real estate market was facilitated by the Federal Reserve over nearly a decade. From the late 1990's when the technology bubble burst until early 2007 when investors began to realize how much bad debt had actually been created in the housing market, interest rates were kept artificially low, while capital poured into suburban sprawl and subprime mortgages.

The leader of the Fed and manipulator-in-chief of the economy during the primary boom years was Alan Greenspan, who once believed in things such as the gold standard, the impossibility of sustaining a housing bubble, and speaking to Congress in riddles and financial jargon. His main adversary in the Congress was Ron Paul, who still believes in things such as the gold standard, the impossibility of sustaining any manufactured market bubble, and is a master riddle-solver himself with a strong Austrian economics background.

One of the great mysteries of the Greenspan legacy has been his rumored doctoral thesis for New York University, compiled and written in 1977. Certain revealing parts of the 180-page thesis have been reported on by Barron's news organization. The parts reviewed by Jim McTague at Barron's show that Greenspan most likely understood and could have predicted all of the events he was putting into motion by inflating a massive housing bubble.

A most intriguing quote from the article shows how the master manipulator knew what would happen when the dotcom bubble burst and all that capital needed a new home in residential housing. "Greenspan also broke new ground in the introduction to his thesis, where he noted that homeowners were refinancing for larger amounts than their original mortgage, in essence monetizing increases in their home's market value and spending the excess cash on goods and services or putting it into savings." This was long before double-digit rises is home values, subprime mortgages, no-doc loans, Home Equity Lines of Credit (HELOCs), and inflatable-value McMansion-burbs, but is a perfect representation of what happened during the real estate boom of the late 1990's and early 2000's.

Ron Paul, as well, understood the consequences of the housing bubble. In a speech made into the Congressional Record on September 6, 2001, he stated, "Refinancing especially helped the consumers to continue spending even in a slowing economy." The same monetization of rising property values that Greenspan was concerned about became Greenspan's policy when looking for a new bubble.

Neither Paul nor Greenspan believed that a continual cycle of rising home prices and refinancing could continue, however. As Greenspan himself claimed in his doctoral thesis, "There is no perpetual motion machine which generates an ever-rising path for the prices of homes." Paul, in the same entry into the Congressional Record as referenced above, agreed: "This, too, will burst as all bubbles do." And the more inflated the bubble became, and the more capital was misdirected into it, the greater would be its fall.

Who, though, could have predicted such a large crash of the real estate market, with property values falling to lower than the replacement costs of the buildings? Well, Greenspan, for one. A "break in prices of existing homes would pull down the prices of new homes to the level of construction costs or below, inducing a sharp contraction in building," he wrote in the thesis that earned him a well-deserved Ph.D; well-deserved due to his uncanny ability to predict the consequences of policies he would set in place and disclaim responsibility for later on.

Paul also knew that malinvestment caused by government intervention in any sector of the economy would lead to disaster. Making a statement before the Financial Services Committee of the House of Representatives in September of 2007, Paul said, "The housing boom was caused by the Federal Reserve's policy resulting in artificially low interest rates. Consumers, misled by low interest rates, were looking to consume, while homebuilders saw the low interest rates as a signal to build, and build they did." The larger the bubble, the more malinvestment would occur, and the more severe the correction would have to be.

Most joking aside, the example of Alan Greenspan as Federal Reserve chairman should serve as a strong warning against putting anyone in power who believes they understand how the economy works. Greenspan understood and believed in libertarian ideas of economic manipulation and Austrian economics, and then spent nearly two decades at the Fed working against every one of those principles.

It is not so much that he went back or overturned what he believed in to become the most successful bubble-inflator in history -- far worse than that, he used his understanding of how a free market can work in order to further the cause of socialism. In fact, it would probably have been far less destructive to have someone in charge of the Fed who had admittedly no understanding of how markets work at all, rather than someone who understands free markets and the prosperity they help engender but psychopathically worked in the opposite direction.

Ron Paul, on the other hand, stood by his principles and had the audacity to challenge supposed libertarian and Austrian economics advocate Greenspan. For this and his continuing adherence to traditional American beliefs of individual liberty and free trade, and his opposition to government manipulation and corporate welfare, he has been marginalized by mainstream media and colleagues in Washington.

Using the economy as a laboratory of how to turn a firm understanding of the economy on its head and foster socialism and corporatism, mad scientist Greenspan has further impoverished us all to enter into and direct the economy from the sacred halls of the financial elite. Paul, by advocating true freedom and less government, has been shunned by the government-corporate media and the brainwashed masses, but his ideas and influence are being embraced by an ever-expanding group of people waking up to the evils of government manipulation and psychopathy of power.

Consumer and civil rights advocates are fighting for legislation to pass in Congress designed to help foreclosure victims save their homes and avoid eviction with the help of the bankruptcy courts. This bill making changes to existing bankruptcy laws and the power of judges is supported by many consumer advocacy groups, such as the Center for American Progress, the American Association of Retired Persons (AARP), the National Association for the Advancement of Colored People (NAACP), and the Service Employees International Union, just to name a few.

The new legislation would allow bankruptcy courts to reduce the debt owed on a homeowner's primary mortgage. This could help balance the 8% decline in the property values in the housing market in the last year. After being turned down by the Senate, controlled and funded by the banking industry and mortgage company interests, these hopeful groups have petitioned the House and are very optimistic of a successful outcome for the proposed legislation.

Currently, a Chapter 13 bankruptcy can be used to stop or delay the foreclosure process, but the courts have never had the ability to eliminate any portion of the debt owed on a first mortgage. A Chapter 13 bankruptcy helps the victim to establish a legal payment plan under the supervision of the courts, where a Chapter 7 eliminates unsecured debt altogether through discharge. As the law stands now, though, a Chapter 7 bankruptcy can not eliminate the debt of a mortgage or other secured credit.

Parties against the new legislation (banks, mortgage companies, and their politically-connected representatives) claim these changes would only raise mortgage rates for everyone across the country and are lobbying against the changes with the slogan “Now is NOT the time to change the bankruptcy law and make things worse for consumers”. Many consumers are feeling the pain of lower home values and higher interest rates and with 20,000 new foreclosure filings every week, many people facing the loss of their homes in coming months would welcome this type of change.

As the housing market continues to worsen, foreclosures will grow and more and more families will need help, either from their lenders, bankruptcy attorneys and courts, and other third part companies. But two of the questions surrounding this proposed change to the bankruptcy law are should the government be obligated to provide foreclosure help and is doing it through the bankruptcy courts the right choice? While the debate is far from over, it seems that a change of this nature would be more welcome to the American people than indiscriminate monetary bailouts made by the Federal Reserve or Congress to the banking system.

Homeowners who have fallen behind on their bills are often in a state of stress and high anxiety, with worries of foreclosure, bankruptcy, and repossession creating a sense of paralysis. This can often lead them to postpone taking any useful step towards saving their homes until it is too late and the possibility of recovering financially is almost nonexistent. The inability to move towards a goal of stopping foreclosure, though, is often caused by any number of irrational fears, all of which may be overcome.

One of the most common fears affecting everyone, but heightened in foreclosure victims, is the fear of rejection. This fear has to do with humans' affiliation needs, such as the need to feel appreciated, loved, or accepted. Homeowners may often be afraid to pick up the phone and contact their mortgage company because they worry about the possibility of being told there is no help for them. Instead of calling the mortgage company, people suffering from this fear often accept the foreclosure as inevitable and resign themselves to the possibility that they will have to lower their standard of living after losing their home.

Closely connected to the fear of rejection is the fear of looking foolish or making a mistake. In this case, homeowners may fear calling their bank to discuss plans to avoid foreclosure because they feel they do not know enough about how foreclosure works in order to speak intelligently about options to stop the process. They may feel their negotiating skills are not strong enough and that the bank's representatives will take advantage of them and laugh at their misunderstanding of foreclosure, or that they will mistakenly agree to a program that is not in their best financial interests.

Another very common fear is that of people; it is actually very possible for homeowners working in large cities and living in modern suburbs to feel very anxious when speaking with people they do not know. Combined with a fear of looking foolish or being rejected, being irrationally afraid of people can cause homeowners in foreclosure just to avoid dealing with their financial troubles at all. Even in such specialized situations as calling a mortgage company for help to stop foreclosure, many homeowners may feel uncontrollably anxious and have a problem initiating contact.

Several other fears, including those of failure and success, can have lasting impacts on homeowners attempting to save their homes. The end result of any of these fears, or a combination of them, is often that foreclosure victims procrastinate until the justified, rational fear of losing their home and being evicted is so immediate that it overcomes any of the irrational fears. Irrational fears, though, create psychological problems because there is no actual danger present. After all, the possibility of the bank turning down a repayment plan is nothing compared to the eventual pain of being evicted from a home.

Unfortunately, irrational fears often feel very real, even though they are not grounded in any concrete danger, and most often lead to avoidance behaviors instead of positive change. For example, homeowners who wait until the last minute to seek help can avoid the possibility of being rejected or failing, while homeowners who project blame for their financial hardship into a spouse, boss, or other person do not have to take responsibility for fixing the mortgage and become victims of the outside world.

The more homeowners engage in avoidance behaviors to hide from their irrational fears, the more adept at avoiding pain they will become. And the higher their sense of fear and the more fears they have, the more they will justify their avoidance behaviors as actually being productive. In effect, people create problems for themselves which are only symptoms of the real anxiety-producing fears, but they work on solving these symptoms instead of getting over their fears. This helps create neurotic spirals and reinforces the irrational fears and avoidance behaviors while giving homeowners an excuse to avoid taking any meaningful step to stop foreclosure on their properties.

Confronting and getting over these irrational fears as quickly as possible is one of the most important actions homeowners can take to ensure they have the best chance to save their homes. While a fear of losing a home is entirely justified if the owners have not paid their mortgage for a few months, fearing just picking up the phone and talking to the lender to discuss possible mortgage modification options is irrational. Controlling anxiety is such situations is most vital and the first step is simply recognizing these fears when they begin to manifest themselves in avoidance behaviors and high anxiety symptoms.

Another of the mortgage industry bailout plans proposed by Congress and the President has been to use the Federal Housing Administration (FHA) to guarantee loans for homeowners to avoid foreclosure. While this has been one of the lesser-discussed options to solve the housing crisis, it represents another plan by the government to take money from the general public in order to help out corporations and banks, and infringe on the civil liberties of Americans entering into this program.

The FHA plan involves the government securing new mortgages for nearly nine million homeowners having trouble making payments on loans that are larger than the values of their properties. Homeowners would be able to refinance into a mortgage backed by the FHA, and lenders be required to forgive part of the current loan. This plan would effectively force banks to offer short payoffs to homeowners in return for the opportunity to get these bad loans off of the bank's books.

What may be most disturbing about this proposal is that it would require the newly refinanced homeowners to live in the house for a period of time after obtaining the new loan. Whether this is some kind of prepayment penalty or a prohibition against selling the house, it is debatable if the government should be restricting the movement of homeowners and limiting their ability to sell or refinance their homes.

Even worse, the FHA is already on the brink of insolvency, and the Department of Housing and Urban Development (HUD) is considering having to ask Congress for direct subsidies to meet a $1.4 billion budget shortfall in 2009. For the first time in its 74-year history, the FHA will face a deficit due to its own exposure to the housing bubble and high rates of foreclosure and mortgage payment delinquency.

So, it seems that the FHA will be encouraged to take on more bad loans and allow struggling homeowners to refinance, but the agency itself is facing its own financial crisis. Thus, homeowners and the general public will have to subsidize the FHA so that the FHA will be able to subsidize mortgage companies and help them remove bad loans from their balance sheets.

These bad loans will be made slightly better, but an FHA that is already suffering from high foreclosure rates will be taking on underwater loans from homeowners who may end up walking away anyway if property values keep declining. But the FHA will come up with some part of the program that uses government force to require homeowners to remain in these homes for an unspecified period of time.

If anyone still doubts that government only intervenes in the economy to protect itself and reward politically-connected corporations, the ill-named Foreclosure Prevention Act should dispel any lasting misconceptions. The proposed bill would essentially steal money from homeowners and the general public in order to reward corporations and make the foreclosure process easier and more profitable for lenders.

Possibly the most corrupt part of the bill, though, is the large list of tax breaks that will be enjoyed by various industries -- but not homeowners actually facing foreclosure. Banks, mortgage companies, home builders, automobile companies and even the airline industry receive tax breaks and incentives.

For the builders, one of the provisions of the bill would allow them to go back in time to record current losses against their massive profits made during the boom. As these home building companies face bankruptcy due to the slowdown in the market, they will be able to claim tax refunds against past profits. This is a direct subsidy by government to corporations, allowing them to backdate losses they are experiencing as a result of the housing bubble they helped inflate.

Tax breaks for airlines and automakers make even less sense in the context of a bill ostensibly said to help families stop foreclosure. Both General Motors and Ford Motor Company will be able to collect nearly $40 million in tax credits. How this fits into a plan to prevent more homeowners from facing foreclosure is unexplained, especially as this provision of the bill allows the automakers to claim credits they would otherwise not be able to take because they did not pay enough in taxes in recent years to qualify.

The Foreclosure Prevention Act is little more than another example of hypocrisy by legislators to reward the same corporations who are most responsible for causing the housing bubble. After reaping record profits during the inflation of the market, they are now using money stolen from the people by the government to increase their profits on the way down.

When homeowners are attempting to put together some plan to save their homes, one of the key pieces of information they need to gather is how much they owe the bank in total. Without knowing this figure, it will be impossible to refinance the house, sell for a reasonable price and not owe anything later on, or even put together a short sale with an investor.

The best way for homeowners to get a payoff figure is to request the figure specifically from the lender or its attorneys. That will give them the most updated information on how much is currently needed to satisfy the mortgage in full and stop foreclosure. Payoff statements usually have a "good through" date of up to thirty days on them, and an estimated "per diem" interest charge for every day after the payoff expires.

In addition to requesting a payoff statement from the mortgage company, there are a few other ways for owners to get a rough idea about how much the bank is asking for, but these will not be as accurate. Out of date payoff statements, monthly mortgage balance statements, and public records searches can be useful tools to provide estimates if the lender is not being responsive to requests for updated payoffs.

Out of date payoff figures can give homeowners a very good idea of how much the bank will be looking for in the future to pay off the mortgage, but even a per diem interest charge will leave out other potential future charges. Attorneys fees may increase, or the bank may add a property tax payment of several thousand dollars to the total payoff, which may drastically increase the amount needed to stop foreclosure by paying the loan in full. If the statement is not too far out of date, though, it may be a good estimate of the current due.

Many homeowners still receive a bill every month from their mortgage company that indicates the total amount due on the loan. Usually this is just a balance of the total amount of principal left to pay off and does not include late fees, interest charges on late payments, and the attorney and court costs involved in the foreclosure process. A monthly balance statement should probably never be relied on for any actual payoff numbers, but they are useful resources for bank contact numbers which can be used to get a more accurate payoff, if nothing else.

One final way to get an estimate of the total amount owed on a mortgage is to search the public records in the county in which the property is located. Usually, the history of the mortgages/deeds of trust will be available online (or the owners or any other interested party can just call the county recorder and request the information), which will tell them when the homeowners got each mortgage and how much it was originally for. Again, this will not include changes from the time the mortgage was issued, including the charges listed in the previous paragraph and any payments the homeowners made on the loan.

Searching the title will also give homeowners, real estate agents, mortgage brokers, or potential investors a good idea if there are more liens than just the first mortgage. The bank may be willing to take less on a short sale, for example, but if the owners or investors have to come up with more money to pay property taxes, and more to pay off a second mortgage, and more to pay IRS liens, and more to pay utilities liens, then there is a strong possibility they will not end up with a very good deal that will stop foreclosure. Of course, investors could negotiate down these liens as well, but that's more time spent dealing with lenders who may not cooperate in the end.

In any event, if the bank is still able to provide payoff statements on a mortgage, that means the homeowners are still living in the house and it has not been sold at the sheriff sale yet. The best bet for anyone interested in helping foreclosure victims or buying foreclosed houses may be simply to ask the current owners to request a payoff from their mortgage company. They can give anyone they like a copy and any parties interested in working with homeowners will have the information they need to make an offer or work on paying off the loan and ending the foreclosure.

When the buyout of Bear Stearns by JPMorgan Chase was announced, it was no stretch to assume that some amount of fraud had been perpetrated on the investment community, employees and clients of Bear, and the American people. The shotgun wedding late on a Sunday night in mid-March 2008 was arranged by the Federal Reserve in an effort to allow the large financial institution to fail.

Now it is being reported by John Olagues at OptionsForEmployees.com that the entire buyout was fraudulent from top to bottom and an exercise in enriching insider traders betting on the collapse of the company. The entire article makes for very interesting reading as a case study of how investors are able to manipulate markets and use even larger financial institutions to arrange fire-sale buyouts and leave the losses at the feet of taxpayers.

These inside traders were even able to keep up the propaganda war in the days before the surprise collapse and merger, with the media and investment advisers in print and on television denying any problems with Bear Stearn's liquidity and recommending investors hold onto the stock. The rumors of a liquidity crisis seem to have been used as justification for the bank's collapse, while the recommendations to keep money in the firm allowed inside traders to profit from the stock price's collapse.

Of course, without the Federal Reserve, none of this would have been nearly as easy. JPMorgan was allowed to finance its purchase of Bear Stearns with capital from $55 billion in loans guaranteed by the Fed. Collapse the company, let the inside traders take enormous profits, then let the American people pay for the rescue of the company; that seems to have been the plan from the beginning.

"The bail-out is a great deal for J.P. Morgan, the illegal insider short sellers got a great deal. Bear Stearns stock holders and employees got a very bad deal and the sellers of puts sustained large losses."

The benefits to JPMorgan Chase are especially noteworthy, as it is one of the corporations with the largest exposure to the derivatives market, as well, which has been inflated to nearly $700 trillion. With the credit crisis and subprime meltdown contributing to capital markets at risk of systemic collapse, $55 billion stolen from the people would be a welcome gift to any bank.

So, Bear Stearns will become a part of JPMorgan Chase and be allowed to continue their fleecing of American homeowners through mortgage servicing fraud, hedge fund manipulations, and moral hazards rewarded with free money. This widespread fraud, though, is only a natural outgrowth of the complete control of the money supply by private banks and the creation of money through debt loaned to the people and paid back to the banks.

More and more people are calling for an end to this system of deception and theft by proposing the Federal Reserve be shut down. If this were to be done and the control of money given back to the people in forms of local currencies or contracts denominated by gold or silver, a better monetary system may develop, in time.

Unfortunately, though, shutting down the Fed and keeping all of the power centralized will only result in a shuffling of papers and a name change; a new department controlled by the banks will be established and the current system of money creation and inflation will continue. The Bear Stearns deal, along with similar insider trading schemes used to collapse currencies, countries, and companies over the decades of the Fed's existence, is only one more sign of far too much power in the hands of central government.

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 results of the fallout of the housing market, fueled by years of easy credit, nonexistent lending qualifications, and desperate attempts to pump and dump residential real estate have led to a crisis in the American economy. There is now one choice being presented to the people of the country, the so-named Paulson Plan, which is offered by the same financial power centers that created the foreclosure crisis and have benefited most from it.

The Paulson Plan, named for US Treasury Secretary Henry Paulson, former CEO of Goldman Sachs, represents a further consolidation of power in Washington and its surrogate/master financial institutions. Existing groups will be given further power, such as the President's Working Group on Financial Markets and the Federal Reserve, while new departments to regulate the loan origination industry will be created.

The Federal Reserve, more responsible for the housing crisis and collapse than any other party, will be given vast new powers under the proposed plan, all in an ostensible effort to regulate markets and prevent a repeat of the housing bubble. Some of these powers include being able to conduct on-site examinations of financial institutions attempting to borrow money from the Fed, expanding access to Federal Reserve loans, supervision of state-chartered banks, and oversight of payment systems.

The Fed would become the "market stability regulator" of the American economy, as if a free market system required regulation to give it stability. In fact, it is the presence of the Fed and other regulatory agencies that are the primary tools used to create bubble, pump capital into inflated markets, and then dump their positions at the top of the market, then proposing even more regulatory power and taking profits on the downside of the bubble.

All of this means that the largest centers of financial power in the country (and the world, by extension) will be able to profit directly by their expanded control of government regulatory agencies. It bears repeating that the Federal Reserve is not a part of the federal government, being instead a consortium of private banks which have been given monopoly authority to create the nation's money and determine the cost of capital.

The Fed's new powers under the Paulson Plan will allow the Fed, working with the President's Working Group, to determine the cost of capital to every business and person acting in the economy and control all of the country's payment systems. Already on one side of every financial transaction in the nation due to its control of the money supply, the Fed is now trying to insert itself directly into the middle of the economy by total control of capital costs.

The net effect of this will be that the cost to borrow money will be set at the whims of the people in power for reasons other than creating free market conditions (think political manipulation during election years, and financial corruption profiteering the rest of the time). Small businesses and individual borrowers will find it difficult to compete with the largest corporations who can be given below-market rate loans, while the costs of the system are transferred to the American people through taxation or inflation of the money supply.

Homeowners who have been affected by the foreclosure crisis have been calling on the government for help in holding the private financial institutions accountable for their predatory lending decisions. In return, the people have been offered a plan that gives a private financial institution, the Federal Reserve, near absolute control over the economy, and some politicians have stated that even this plan does not go far enough.

The meltdown of the housing market is a perfect illustration of the government and corporations working together to create market bubbles, profit from them, and then crash markets. Scapegoats are found while the government is offered more power, which it then uses to extend protection and more profit-making opportunities to the largest corporations, all at the expense of the people who suffer most from the economic crisis.

There has been such a backlash against the subprime mortgage market that even homeowners in foreclosure have realized the fraud that has been perpetrated on them. In such times of economic crisis and blatant corruption, government representatives have little choice but to pretend they are protecting the public from greedy mortgage companies and bad loan products.

It is in this environment that some homeowners have begun to contest their foreclosures and have actually had some lawsuits thrown out of court until the bank can prove its case. The two most publicized cases have involved the ownership of the mortgage paperwork and the lender having standing to sue for foreclosure, and the underlying fraud of the loan contract invalidating the entire agreement.

The first type of case, in which the homeowners ask for proof that the foreclosing bank has the ability to sue, has certainly been a temporary blow to the banks. One of the main reasons for inflating the subprime market was so that loan originators could sell the mortgages to financial institutions or other banks which could then sell the rights to the monthly mortgage payment income to investors and transfer the responsibility to collect these payments to specialized mortgage servicing companies.

The problem with this approach is that it has resulted in the slicing up of the mortgage contract, with no party really having ownership of the original paperwork. When homeowners fall behind, the servicer or trustee tries to initiate lawsuit proceedings to sell the house at a foreclosure auction, but judges are beginning to realize that neither of these parties originated the mortgage and can not prove that they own the loan.

In order for a second bank or financial institution to have standing to bring a foreclosure lawsuit into court, they must have been assigned the mortgage. Because this was not done in many cases where mortgages were originated and quickly sold off in large loan packages, banks do not have signed assignment paperwork; and with the collapse of the housing market, many of the subprime lenders have gone out of business, making it impossible to contact the originating mortgage company.

This puts these mortgage loans into a kind of limbo, where the homeowners are not making their payments but the banks can not prove they have any rights to those payments anyway. Homeowners who argue this case have met with some level of success so far, with the banks being forced to stop foreclosure proceedings on the house until they can prove they were assigned the loan from the originating company.

The only drawback to this victory for the homeowners is that these cases are being dismissed without prejudice, meaning that the bank can begin the lawsuit again if they can prove ownership of the mortgage. The judges are not ruling on the merits of the case (whether the owners are behind and their home must be auctioned to satisfy the debt), but only on the lack of standing to sue -- if the bank can get an original assignment, they can begin to foreclose again.

But in a mortgage environment where so many homeowners were given bad loans that they did not deserve and banks are being bailed out by the public for bad loans they never should have made, it is only fitting that the owners should score a handful of victories in the courts. In the future, there is a good possibility that judges will argue that banks do not need to own loans to foreclose on houses, thereby erasing the legal standing defense of people against corporations; but for now, homeowners have one more defense they can use to stop foreclosure.

As more people fall behind on their mortgages and see their home's value decrease to less than what they owe the bank, some homeowners are simply mailing in the keys to the house. Instead of the mortgage payment, they are giving the property back to the bank and walking away, allowing the house to go into foreclosure.

This action of sending in they keys to the house in lieu of the mortgage payment has been termed "jingle mail." Both homeowners in trouble or who do not want to overpay for their house as well as investment banks are increasingly turning to jingle mail to relieve themselves of large debt burdens.

There has been a lot of judgment and negativity directed at homeowners to do this, as people who were not taken in by the housing bubble see jingle mail as the latest indication that people do not take enough responsibility for their own financial decisions. Homeowners who bought at the top of the market hoping the market would go even higher, and are now sending in they keys because they do not want to pay for their gambling losses are obviously taking advantage of the situation.

But homeowners who send in the keys to their homes will face serious consequences long after the house has been foreclosed on. There is little chance they will be able to participate in the real estate market at all for a few years, except as a renter, and their credit will be scarred for nearly a decade.

Investment banks have also been engaging in jingle mail, a form more subtle than homeowners but also more costly. The Federal Reserve is allowing banks to use as collateral toxic mortgage debt in return for loans, which is allowing the entire banking system to get these bad loans off of their books and keep up an appearance of solvency.

Banking jingle mail is far more serious to the general public than the homeowner who sends in the keys to the house. In that instance, the previous owner has to face the effects of foreclosure and give up the real estate asset, while banks will be able to foreclose on the house and resell the property in the open market.

When banks send in nonperforming mortgages to the Fed in return for Treasury securities and loans, they are building up an edifice of financial fraud and sticking the general public with their bad mortgage debts. Inflation of the money supply leading to higher food and energy prices is one result, combined with the collapse of the dollar are foreign countries lose confidence in a currency backed by nonperforming real estate loans.

Homeowners who give up on their homes and send in the keys hurt only themselves and the lenders directly. The owners will lose the house and not be able to obtain affordable credit for years, while the banks will lose money on the interest they were expecting to collect from the mortgage payments. The general public is hurt indirectly in the form of higher mortgage rates and stricter lending guidelines.

But when banks engage in jingle mail actions with the Federal Reserve and hide the effects of their moral hazard, the general public is hurt more directly. Prices for all other goods and services, not just the cost to borrow money, rise as the money supply is inflated, while bankrupt financial institutions are allowed to continue robbing creditors and taxpayers.

Homeowners who no longer want to pay more for a house than it is worth reflects badly on the irresponsibility of the American people who are the greatest debtors the world has ever seen. But large financial institutions sending in jingle mail and sticking the American people with the bill is an even poorer reflection on the criminality, corruption, and economic manipulation of corporations.

With all of the discussion of the foreclosure crisis in the media and on business networks, there may be some confusion as to how bad is the situation in the housing market. The media has an admitted big-government bias, so it is often quite difficult to separate truth from propaganda, especially during times of economic crisis.

Unfortunately, the problem of foreclosures is actually quite a bit more serious than even the media is making it out to be. They are just focusing on the foreclosure crisis and how homeowners and lenders are being affected during the credit crunch, while ignoring many other, related problems.

The housing market was pumped full of inflated money and easy credit for at least the decade from 1997 until 2007, and it started accelerating after the 2001-2002 "mini-recession." A bubble was inflated in residential real estate to keep the party going after the tech stock collapse, and now there are no markets left to inflate.

The Federal Reserve has been lowering interest rates over the past six months, but this has not helped homeowners save money on their resetting Adjustable Rate Mortgages. Any money they "save" by having lower-than expected mortgage payments, but higher than they originally paid with the teaser rate, is not reflecting actual savings of money, but simply an opportunity cost. If rates had been kept higher, they would have to pay more, but the expiration of the teaser rate is causing them to pay more anyway, just "less more."

Furthermore, lower interest rates mean that the dollar is being devalued, and costs of imported goods (and anything made with imported goods as an input) will increase. Anything made with oil has been going up, such as plastic goods and items that need to be transported around the world and throughout the country. Trucking companies are feeling this pain especially acutely, as the price of diesel has been over $4.00 a gallon for a while now, with gasoline following closely.

Homeowners are also seeing food prices increasing in America and worldwide, with riots and general shortages in some Third World countries already happening, and rice shortages being reported in the US. The dollar is becoming worth less, so producers of real goods like food increase their prices or produce crops that are worth more as ethanol to feed SUVs than as food to feed families.

In this inflationary economic environment, homeowners with a mortgage payment that has increased by 50%, with the cost to feel their car up 30% in a year, and the cost to feed their family increasing at 20% in a year, may be running into some real problems. A total personal financial collapse is probably one job loss or medical emergency away for families already living on the edge.

But even if homeowners fall behind on all of their bills in large numbers, the banks and the government will not do anything to help the people -- in fact, quite the opposite has been happening. The Fed is bailing out banks with billions of newly printed dollars every week now, and this inflates the money even more, driving up costs even higher, pushing more homeowners into foreclosure as they struggle with rising food, energy, and healthcare costs.

But with the free money the banks are receiving, they have no incentive to work with homeowners to put together repayment plans, mortgage modifications, or other programs that will stop foreclosure on houses. The largest banks know they can sit back, do nothing, let the foreclosure process take over, and make up their loss with help from the Federal Reserve, paid for courtesy of the people they have stolen a house from.

It is bad out there in the housing market, and will continue to be bad at least through the summer of 2009, if not far longer, when the resetting mortgages will mostly have adjusted by then. But by that time, how much will gas cost? Seven dollars a gallon? How much will food cost? Will there be enough of it to feed everyone? And how will people be able to afford either transportation or food, when their mortgage payment has nearly doubled?

One of the predictable consequences of the collapse of the housing bubble and the foreclosure crisis is that property values are declining in many areas of the United States. As subprime loans go into foreclosure, more homes are listed on the market, driving prices down, and erasing equity that homeowners thought they had.

When this happens on a large scale in areas that were inflated by the era of easy credit, homeowners may find that they owe tens or hundreds of thousands of dollars more on their homes than they are worth. Nobody wants to pay more for an item, be it a house, car, or pair of pants, than it is worth, and the temptation just to walk away from these homes is growing.

But it seems that few homeowners realize that they were always going to have to pay far more for their house than it was worth, and paying anything could be considered too much based on how much they actually borrowed. First of all, a mortgage loan consists of a smaller portion of principal and a much larger interest charge; and second, the bank does not actually lend out any money that is not created out of thin air.

For example, consider a house that is purchased for $150,000 at 6% interest with a 30-year, fixed rate loan. Homeowners may feel like they have paid $150,000 for the house, but this is just the principal -- on top of the original $150,000, they will have to pay over $173,000 just in interest to the bank, with a total P+I cost of nearly $323,000.

With homes of higher values, the interest portion of the debt climbs even higher. On a home bought for $450,000 with the same terms as in the previous example, the homeowners will pay over $521,000 in interest, increasing the cost of their $450,000 home to nearly $1 million.

Thus, when a home declines in value, it is somewhat illogical for homeowners to consider abandoning the house on just that basis alone. They may feel like they are paying "more than what it is worth," but they had already planned to do this when they took on the mortgage loan and agreed to pay interest to the bank. Falling property values will not alter their bad deal, except make it slightly worse.

A decline of $100,000 on a $450,000 house is not a huge cause for alarm when the total outlay of money for the property will be close to $1 million. Homeowners should ask themselves as soon as they apply for a mortgage whether they want to spend that much on a house worth less than half that amount, which will most likely never appreciate to value the bank is charging for the home.

There may be many reasons to give up on a property, and currently declining values may factor into the consideration to walk away. However, homeowners should not consider lost equity as their main consideration in abandoning a house; after all, their mortgage supposedly binds them to pay two to three times as much for the house as it is worth -- losing a few ten thousand in value right now will not alter that in the least.

Suburban sprawl, increasing expenses for transportation, financial hardships, and rising crime due to the foreclosure crisis can be considered much more important reasons for homeowners to leave an area and let their home go into foreclosure. Feeling that they are "paying too much" for their house is not a good excuse, as they have agreed to pay too much just by applying for a mortgage when purchasing their home.

One of the more creative plans put forth by legislators as an effort to alleviate pain in the housing market and stop the rising tide of foreclosures has been to alter the bankruptcy code. This would allow bankruptcy court judges to reduce the principal balance on mortgage loans, bringing the amount the homeowners owe more in line with the current market value of the property.

For unsecured debts, such as personal loans and credit cards, as well as some secured loans, like investment property mortgages, judges already have this power. They can reduce the total owed to particular creditors and have the people filing bankruptcy to stop foreclosure pay back a lesser amount.

Ideally, when homeowners file bankruptcy, they will be able to reduce their debts to a more reasonable level, while also making good on the loans they have taken out. While the lenders may not receive all that they had been counting on, they will receive more than they would have if the bankruptcy filers had simply walked away from these debts.

Congress is now trying to extend the power to reduce mortgage balances on primary homes to bankruptcy court judges in an effort to allow them to help homeowners stop foreclosure and establish an affordable payment plan. Of course, there is a lot of opposition from the banking industry, and even the president has stated that the proposed idea will interfere directly in voluntary mortgage contracts.

But on the plus side, homeowners would be more inclined to stay in their home and seek bankruptcy protection if there was a chance their mortgage balance would be reduced. Instead of simply abandoning a home that they owe much more on than the property is worth, they may be able to negotiate down the balance and have an incentive to seek other options to save their homes.

The fact that bankruptcy court judges already have similar powers in other debts is also a positive for the proposal. Reducing the mortgage on an investment property is not very much different than reducing the balance on the primary home, after all.

Possibly the most important reason to support this plan is the speed with which it could be implemented, as opposed to tax breaks, economic stimulus checks, or creating new government agencies. The bankruptcy code could be changed within weeks and judges would instantly have the power to foster negotiations between mortgage companies and homeowners.

The proposal would also have the benefit of costing nothing to the general public, as it does not require more money to be spent through funding more government programs. Plans that involve additional costs to Americans only pushes them further towards the brink of financial ruin, and may cause more foreclosures than they solve; changing bankruptcy laws would not have that negative effect.

There are numerous drawbacks to this plan, though, not the least of which is that mortgage companies would have to increase their costs to borrowers if they knew there was a chance of the mortgage balance being reduced in the future. Interest rates on primary home mortgages are almost guaranteed to rise for all homeowners, which would have the effect of reducing how much people could afford to pay for a home.

Another problem would be that people with mediocre or poor credit, who have experienced financial hardships in the past, would not be able to get a mortgage at any decent rate. The banks may be far too worried about the possibility of bankruptcy and simply refuse to secure mortgages for anyone without pristine credit, locking large segments of the population out of ever becoming homeowners.

The proposal to change the bankruptcy plan may be quite a long-shot, but the developments are worth following as it seems to be the one proposal that involves actually helping homeowners directly. While other plans have involved bailing out the banks, homebuilders, auto companies, and airlines at the expense of foreclosure victims, altering the bankruptcy code may be the most positive plan yet put forward.

Because the plan does have the potential to assist homeowners to stop foreclosure before the bank makes money from the process, there is little chance it will pass in time. But with more than a year and a half left of resetting mortgage rates, legislators may eventually feel they have little choice but to provide some token benefit to the people in the midst of pumping out tax breaks and bailouts to the largest corporations.

Although there have been numerous proposals put forward by Congress in order to fix the housing crisis, most of them have so far proven ineffective or are blatant bailouts to corporations. The politicians have been churning out one propaganda piece after another under the label of "foreclosure help," the corporate welfare "Foreclosure Prevention Act" being only the most recent.

These programs, though, have been designed more to distract attention away from the real bailout going on. Debates about how many tax breaks to give to corporations to induce them to keep foreclosing on houses allows legislators to avoid looking at the bailout going on right in front their eyes, with the Federal Reserve funding the banking industry with taxpayer money.

This under-the-radar bailout is especially disturbing, as it is little more than a criminal leveraged buyout of the wealth of Americans, paid for by the people themselves. The US Treasury prints government bonds in order to borrow money from the Fed, which then trades these bonds to the banking system in return for bad mortgage debt.

In effect, the banks are literally using their bad loans to buy up America's government securities, transferring ownership of the government from the people to the Fed then to the largest banks (who, coincidentally, also own the Federal Reserve System). This has already been done with hundreds of billions of dollars, and the mortgage crisis is just beginning.

This whole scheme of bailing out lenders might have had a more positive effect if the government gave out loans to banks in order to bail them out but return the interest to the government and the people. But the government borrows money itself, from a private corporation with a monopoly; this makes the government a slave of the monetary system.

But with this unseen bailing out of the banks, politicians are able to focus on how they have been debating how to help homeowners, while distracting attention from the money Americans are paying to help mortgage companies. Semantical games to trick the people do not qualify as productive activity for legislators to spend all their time engaging in, but this is what they have been reduced to in an empire of debt that has gotten out of control.

Homeowners and the rest of the general public will be forced to pay for this bailout, possibly to the tune of nearly a trillion dollars -- there is a lot of toxic mortgage debt floating around already. The resetting mortgages have only begun with a second wave of them coming in the summer of 2009, along with worldwide food shortages and rising oil prices already affecting prices at the grocery store and the gas pump.

It is unfortunate that too few Americans understand that the current financial crisis is a direct result of government intervention in the housing market. An era of loose credit, inflation, and bubble creation at the Federal Reserve drove investment into real estate markets that would not have sustained such growth without the manipulation.

But now, there seems to be a wholesale reliance on government to help out homeowners in foreclosure while keeping predatory lenders accountable. It should be no surprise that Congress has done the exact opposite, putting together foreclosure help programs that are little more than public relations stunts while allowing the banks to be bailed out repeatedly.

Then again, it is not the members of the Senate or the House that will have to pay for these bailouts, and there will be little admission that representatives elected by the people are beholden to corporations. As usual, it will be all of us who fund the bailing out of the multinationals, with lower real estate values, currency debasement, higher gas and food prices, and economic collapse.

In nearly all cases of foreclosure, when the bank files its initial lawsuit, the homeowners have a chance to respond to the complaint and file their own answer. The problem is that, while mortgage companies hire local lawyers, the owners of the house may have little idea of how to go about filing an answer. While this is an extremely variable topic, with local, county, and state rules all coming into play, a small introduction may help homeowners find the confidence to take on the bank in court.

First of all, though, any specific contents that can be put into the answer should probably be discussed with an attorney to make sure the language is accurate and all court rules are followed, or homeowners can research these issues on their own. Every foreclosure case is a little different and individual circumstances can be addressed specifically in the homeowners' answer.

In terms of just filing the answer in the correct manner, homeowners should take a look at how the original foreclosure complaint is structured. The bank must send them a copy of the complaint (usually served by the county sheriff or sent Certified Mail). The case number and caption (Bank vs. You), and all of the "}" marks should be included in the foreclosure victims' answer to make sure they are using the proper form. Judges will throw out their answer if it is not formatted correctly and does not include all of the proper information.

Procedure and silly rules come before justice and the right to a fair and meaningful hearing, so homeowners need to read up a little on their local rules of procedure, as well as the state rules of procedure. They can usually just do an online search and find the rules; e.g., Michigan rules of court procedure, Cook County rules of court procedure. Those should inform the defendants of any other silly rules they will need to be aware of, such as if the defendant's answer has to be printed on blue paper or other such nonsense designed to make nonlawyers lose their cases on technical matters.

Once they have the answer formatted correctly and the content is to their liking, the next step for the homeowners is to file the paperwork with the county clerk of courts. There are two ways to do this: by mail or in person. In most counties, they can simply mail in the answer to the county courthouse and the clerk's office will file it with the appropriate court case. Otherwise, homeowners can go to the courthouse and ask for the clerk's office. Then they will need to ask to file their answer with the clerk. Also, most government employees have absolutely no familiarity with private individuals doing anything on their own, so homeowners may have to deal with mass confusion and incompetence at the courthouse before their paperwork is filed correctly.

It is also important that homeowners bring at least one extra copy of their answer with them, so they can have it stamped in the clerk's office and then sent to the mortgage company and their local attorneys. These parties need to be served with any documents the homeowners file, so they should be sent a copy Certified Mail with a return receipt. This way, the judge can not throw out the answer just because it was never seen by the lender or its attorneys. If they never saw it, let it be the bank's fault -- not the homeowners.

What I would do for the contents of my answer is simply file a Motion to Dismiss before anything else. That would be based on a lack of standing by the bank to sue for foreclosure and no jurisdiction of the courts over the matter. If I am presumed innocent of the foreclosure lawsuit, then the judge has to presume me innocent also of jurisdiction, which is an element of any justiciable controversy. Lenders (and everyone else) never prove with facts jurisdiction or standing to complain -- they just assume they have it based on their own legal opinions, which are backed by nothing. Far too often, people let the bank off on this point.

Let the banks prove what they want to prove; the burden of proof is entirely on the mortgage company and they can not prove anything with facts, which is why they hide behind complicated-sounding legal opinions. In the meantime, I would question and contest every single nonsensical legal opinion (and they are all nonsensical), and ask for the facts backing up their case. I do not want more legal opinions, since we all have those and I can not question an opinion like I can a fact. And if the opinion is not backed up by a fact that I can contest, then it is just as worthless as any other opinion, legal or otherwise.

Answering a complaint in any manner does not guarantee that the homeowners will get out of their foreclosure with their ownership interest in the house intact. In fact, they may do nothing more than enrage the judge and expose the scams inherent in the judicial system. This may set up the case for a longer process through the courts and then through an appeals process, depending on how many rules of procedure the judge allows the bank to violate. But when homeowners are trying to stop foreclosure or delay the process for as long as possible, using the courts they fund through their taxes should be one line of self-defense against fraudulent lenders.

It is becoming clearer by the day that the wave of foreclosures sweeping through parts of the country will forever alter those manufactured neighborhoods. Artificial money was pumped into newly-created suburbs, turning Green Acres into Asphaltistan, while large corporations moved in to suck the wealth out of communities before the collapse of the housing bubble. Increasingly, it looks as if the foreclosure trend will only continue, and every action taken by the government and banks so far only ensures a lasting effect on communities.

Although unfortunate, it should surprise no one that the government will do absolutely nothing to provide help directly to homeowners in trouble with their mortgages. They do not have the authority to do so under our system of government, but that has never stopped them in the past. No, this is due to the problem of spending public money on public projects, instead of corporate welfare schemes. So there will be no answers from Washington on how to use tax money to keep people in their homes. Foreclosures will keep increasing.

Congress will pass a few token pieces of legislation that are said to help homeowners while actually helping banks enrich themselves while impoverishing homeowners. Hope Now and Project Lifeline are completely voluntary for the banks to participate in. The new proposed $7,000 tax credit for buying foreclosed homes will go to banks who purchase properties at sheriff sales and get $7,000 for stealing millions of homes from people. All of these plans were sold to the people as helping them stop foreclosure and combating the foreclosure crisis.

In the meantime, while Congress debates what to do with homeowners and what bill will "go far enough," they will quietly be giving bailouts to the banks, paid for by the people in foreclosure and the rest of us. The Fed has already provided hundreds of billions of dollars to mortgage lenders and other banks exposed to the mortgage crisis so that they do not go out of business. This stealing from the people, though, goes largely unmentioned in the media, and people do not put together rising prices at the grocery store and gas pump with purchasing power being stolen from them by the elected officials.

But it really should not amaze anyone with a small amount of common sense that creating hundreds of billions of dollars out of nothing will debase the currency and prices will begin to rise. Well, prices are already rising and have been for years, but they will continue to rise and do so even quicker. Food and energy will become more expensive as the dollar sacrifices its value in order to keep banks healthier for a short while longer.

By bailing out banks, two more things will happen with long-term effects in the economy. First, the debasement of the currency will mean it takes more dollars to provide for one's family and oneself. More money being spent on groceries and gas to get to work means less money available for the mortgage payment. One small hardship and even more people will be in foreclosure, which will be used as another excuse for the Fed to steal more money and Congress to debate more about what not to do.

Second, if the banks know they will be bailed out by the Federal Reserve (and they have been bailed out of every financial crisis like Mexico in the 1990's, the Asian crisis in 1997, etc.), there will be less incentive for them to work with homeowners to stop foreclosure on a voluntary basis. Why bother spending money on programs, when you can sit back and complain about defaults and get free money stolen straight from the people you are stealing homes from? Working with homeowners is hard -- stealing their purchasing power turns out to be quite easy.

Inflation, currency debasement, moral hazard for the banks, ineptness in Congress, and national bankruptcy will all contribute to more foreclosures in the short-term and the long-run. People who have mortgages much higher than the values of their homes may decide to give up on them, rather than trying to pay them off. The artificially manufactured and preserved suburbs may turn out to be the new ghost towns of the mid and late twenty-first century, unless communities come up with better plans. So maybe the current foreclosure crisis will only result in a long-term financial collapse in the real estate market.

Hopefully, many of the people reading this blog are not waiting for foreclosure help from politicians. The destructive voluntary programs put forward by Congress, coupled with the active bailing out of the financial system, should dissuade most homeowners from believing that the government will be able to intervene and solve the foreclosure crisis. Unfortunately but not surprisingly, the government has done everything in its power to allow the banking system to keep taking advantage of homeowners and the people of the country.

The politicians, though, do not have much choice in the matter anymore, as they are just as enslaved to the debt machine as the public. With government debt and deficits in the trillions of dollars, there is simply not enough money to keep the system going without creating massive inflation. The government has made the mistake of borrowing money at interest, money which it could create on its own debt-free.

In fact, the nation is effectively bankrupt, being forced to borrow several billion dollars every day from other countries, mostly Asian. The banks have also begun to go bankrupt, but have been able to rely on the Federal Reserve to give them the appearance of solvency. Neither the banks nor the government, however, will long be able to keep paying their bills with dollars that are increasingly losing their value.

Trading in bad mortgage debt at the Fed for US Treasury securities will only keep banks in business a short time longer than if they were forced to keep the nonperforming loans on their books. In time, investors would have lost all confidence in the banks and would have taken their money out, either in the form of cashing in stock ownership or removing money from bank accounts. With the effective bankruptcy of the government, though, banks who have traded their mortgages for Treasury securities will only put off the crisis of confidence, not avoid it entirely.

By 2009, experts have reported, the ability of the US government to meet its own debt obligations will be thrown into question. With a deep recession in 2008, and several new programs put into place by the government to help alleviate the situation, the borrowing will go up even faster, more money will be created, and the government may become insolvent much sooner. Borrowing money and printing more dollars out of thin air can not last forever, and eventually foreign governments will realize their dollar holdings are worthless.

Politicians proposing giving more power to the Fed or offering tax incentives to prop up the banking system are not helping homeowners stop foreclosure. They are helping banks stave off bankruptcy so that the government itself can stave off bankruptcy for as long as possible. But their efforts to do this are actually increasing the danger in the future, as foreign countries are finding it more difficult to deal with the US defaulting on its dollar debts by devaluing the currency. Once other countries dump their dollars, the politicians will have run out of options.

The long-term value of all currencies backed by nothing is zero, and the US dollar has already lost 20% of its value in the past year, relative to other currencies (which are also backed by nothing). Going off the gold standard and allowing banks to create as much money out of thin air as they wish is bringing on a currency crisis and economic depression that could make the Great Depression look like the heights of the dotcom boom.

In the coming crisis, though, the government only has the debt standard to abandon, but maybe that is really the only long-term solution. A rolling back of government intervention in monetary affairs and a return to real money may start at the local level, but it may allow these neighborhoods to recover from the government's and Federal Reserve's institutionalized manipulations in the economy.

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.

The Senate's newest sham proposal to "help" homeowners facing foreclosure has come under heavy criticism from nearly everyone who is not a politician, and even some who are. The "Foreclosure Prevention Act" does little to provide assistance in helping people keep their homes; rather, it benefits banks and homebuilders who purchase foreclosures.

This may make it slightly easier for homeowners to sell, but does nothing to help those who are simply trying to save their homes. In fact, providing tax credits and other incentives for banks to buy foreclosures properties actually encourages mortgage companies to keep foreclosing on these properties instead of working with their clients to find solutions.

Although the bill has not yet passed both chambers of Congress and has not been signed into law by the president, some of these offensive provisions will most likely find their way into the final version of the act. The tax credits going to the banks and builders will most likely stay, as they are purported to help homeowners get out of foreclosure, when in fact they only promote more foreclosures.

Banks and builders will be able to report losses on properties back four years instead of two, as is the case now. In addition, these parties will be able to take a $7,000 tax break when they buy foreclosure properties. Since it is usually foreclosing banks that purchase homes at county sheriff sales, they may be able to take literally thousands of tax breaks just by foreclosing even faster on homeowners.

The builders, on the other hand, will be able to keep putting up homes no one can afford in areas no one wants to live in. Providing subsidies to builders to keep constructing or repairing properties only puts more houses on the market for sale, driving down home prices even further but allowing the homebuilding companies to stay in business at the expense of other members of the general public.

Not surprisingly, the $7,000 tax credit for purchasing foreclosed properties lasts only for the next 12 months, at which time it will expire if not extended. The largest purchasers of foreclosure homes in the next year will be the largest lenders, who are experiencing the fallout of lending to people who could not afford their mortgage payments.

Twelve months of foreclosures could potentially create hundreds of billions of dollars in tax credits for buyers, most of which will help banks offset losses on these loans. With the banks now writing down their valueless mortgages by tens of billions of dollars, it will be a welcome relief to offset those losses with hundreds of tax breaks they receive by stealing homes from property owners.

It should be little wonder why the Foreclosure Prevention Act has met with so much criticism. The market will find ways to help homeowners save their homes or leave them, but giving more tax breaks to the banks and builders that profited most from the real estate bubble, just to make sure they do not feel the same level of pain as the homeowners, will only lead to more unintended consequences.

Homeowners who know their banks are receiving hundreds of billions of dollars in direct subsidies and hundreds more in tax credits may be far less willing to give up their home peacefully. It is repeated government interventions on the side of big business at the expense of the public that helps foster the animosity that leads to properties being stripped of copper pipes, appliances, and other valuable fixtures.

It can be very hard to blame the homeowners for taking some psychological and physical revenge against the banks who not only steal their homes, but also benefit most from the foreclosure crisis. And all of this is paid for by the people who are losing their homes in record numbers throughout the country.

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.

Two common mistakes that homeowners can make while facing foreclosure are to abandon their home before the appropriate time, and transferring ownership of their property in the belief that it will somehow help their credit. Unfortunately, performing either of these acts may cause the bank to proceed with foreclosure even more quickly. Also, the homeowners will lose some of their power over the resources they have to save their house.

In the case of moving out of a foreclosed property before the entire process is complete, the homeowners run the risk of leaving the house in an abandoned state. If the bank finds out that the property has been left empty, then they may try to ask the county courts to have the sheriff change the locks. This could make it very difficult for the owners to regain entry, so they should take care that the house looks lived in and is being maintained and visited often. The lender will send someone (possibly a local Realtor or appraiser) to drive past the house from time to time to see if it is being damaged or left vacant and will try to secure the property if it is apparent no one is living there.

A second mistake, possibly more damaging than leaving the house, is for homeowners to transfer title to their home to a friend, family member, or third party. Many of the common foreclosure scams involve signing over the deed or otherwise executing a quitclaim deed to the house. Although they may be told that this will prevent the foreclosure from showing up on their credit, this is not the case at all. People in foreclosure can not transfer title to get the foreclosure off of their credit. In fact, the foreclosure has little, if anything, to do with who is on the title. It has everything to do with whose name is on the mortgage loan. Homeowners fall behind on payments for the mortgage, which does not have anything to do with who is on the title.

Transferring ownership will only reduce the homeowners' options to stop foreclosure, and may even trigger a "Due on Sale" clause in the mortgage contract. This might cause the bank to consider the transfer a sale of the property, and they will demand payment in full of the mortgage. If the house is already in foreclosure, they may try and accelerate the foreclosure process if the owners can not pay the entire amount of the loan. Signing over the deed to the house is almost always a bad idea when homeowners need to find a way to save their home.

Instead of relying on these false perceptions of leaving a house to avoid being kicked out or transferring title to preserve credit, homeowners should take more effective steps to prevent foreclosure. Their next step should be to find out some way of either paying back the amounts they have fallen behind on the loan, or working out a repayment plan with the bank, or disposing of the property. If they can save extra money every month and the bank is willing to work out a program, then they can probably get back on top of the payments, with a little financial discipline.

If they do not want to save the house, or it would cost more than they can afford to set up a forbearance agreement, then they can try to sell, or work out a short sale, or give a deed in lieu of foreclosure. Bankruptcy may be another option if they are running out of time and need to stop a sheriff sale, but it is always a good idea to talk to an attorney about filing Chapter 7 or 13, as well as other legal options to stop the bank from taking the home. But there are always more solutions available than homeowners are aware of, and banks will usually not inform them of all of their options to save the house.

One of the most difficult aspects of facing foreclosure is simply that there are so many false perceptions and bad ideas floating around as traps for homeowners to fall into. Leaving the house prematurely or transferring their ownership interest into someone else's hands may cause more problems than they solve, and actually make the foreclosure more difficult to stop. It is far wiser for people facing foreclosure to work on productive solutions and make sure they are receiving the most accurate foreclosure advice possible.

Most of the debate about the government "doing something" to help homeowners in foreclosure has focused on what it should do. What kind of program should be passed, what the role of the FHA should be, how the Fed can manipulate interest rates lower, and so on. But none of these arguments gets to the heart of the matter, which is what authority the federal government is acting under to help people save their homes.

In fact, the question should be, does the federal government even have any authority to help homeowners stop foreclosure? The answer is absolutely not. Where would the government get the authority to becoming involved in foreclosure proceedings and mortgage contracts? There is simply nothing in the US Constitution, the supposed supreme law of the land, that allows the federal government to be meddling in such affairs. Not surprisingly, the programs offered so far have done a terrible job helping homeowners.

But just because the federal government has no authority to get in the middle of voluntary mortgage contracts, that does not mean the individual states and local governments can not get involved in creating various creative help programs. As long as the states have such authority in their own constitutions, they can create legislation to offer relief to homeowners. How well their own programs will function is obviously debatable, and more community-based solutions would more likely be able to address local situations better than centrally-planned state efforts.

Because of the extra costs and lost efficiency of state and federal government involvement in the foreclosure crisis, it should up to local governments to get involved in the housing mess, if any level is involved at all. Of course, with the stunningly low quality of public schooling, both housing and education failures are related. This is reflected in the fact that so few Americans have any basic financial education, and do not understand how to balance a checkbook or make sure they can afford their mortgage in 3 years, not just in 3 months. Thus, more private and voluntary efforts may prove to be more effective than government intervention to alleviate foreclosures.

But, if one is to follow conventional wisdom, the people of the country granted only limited powers to the federal government through the US Constitution. Other powers they granted to their states through state constitutions. And any powers not given to the states or feds are retained by the people. Of course, any rights that an individual does not have can not be transferred to an authoritarian government, which will inevitably infringe on the rights of private individuals.

That means that homeowners and concerned community members should not wait for the federal government to "do something" about the foreclosure crisis. In the first place, they do not have any authority to do anything anyway, and in the second, homeowners and their neighbors have much more power to affect the foreclosure crisis than the feds have. Foreclosures will be most effectively dealt with at local levels, since all real estate is local, in the end.

Homeowners can stand up for their 10th Amendment rights and declare that the federal government has only a few powers, and all other rights are with them and their state and private institutions. Only by reclaiming some of the powers of the individual can communities can together their own plans to deal with issues such as schooling and housing crises. This will produce much longer-term solutions than waiting months or years for the federal government to reward banks and corporations and then call it helping the people.

Far too often, homeowners wait until very late in the process of foreclosure to begin thinking about methods that would save their home. By the time a sheriff sale has been scheduled, they may be so far behind on the mortgage that there is little chance of establishing a workout solution with the bank, and their credit may have deteriorated to such levels that there is no chance of qualifying for a new loan. But not all hope is lost even at this late date, as homeowners can consider filing bankruptcy as a last resort to keep their home from being lost to foreclosure.

Homeowners can file bankruptcy to stop foreclosure and it will put the process on hold during the length of time that the mortgage is tied up in the courts. Anyone considering this option needs to talk to a bankruptcy attorney very quickly, though, as some states now have mandatory waiting periods before people can file for legal protection. If it will take a week to get the paperwork together and complete any requisite credit counseling or other program, then the the homeowners should not expect they can file bankruptcy the morning of the trustee sale -- by this time, it will be far too late to seek the protection of the courts.

But if they file in time, the bankruptcy will automatically postpone the county auction and put the foreclosure process on hold. For homeowners who file in self defense, in order to get time to find another solution, they can usually get at least 30-45 days for the legal payment plan to be set up, and potentially more if they manage to make a few payments on the bankruptcy plan. The homeowners may go into bankruptcy knowing that it will be a short-term solution and they will not be able to complete the plan, but every month they make the payment, they will have bought more time to keep the house out of foreclosure.

There is really no downside to using bankruptcy in this manner besides the impact on the homeowners' credit. Obviously, their credit is bad enough with a bunch of late mortgage payments and a foreclosure already reflected. Can it go even lower with a bankruptcy? Absolutely, but probably not much lower. Either way, the homeowners will have a hard time getting a loan for a few years after this whole experience. It will be up to them to decide whether to take all the bad medicine now and get the worst of the credit consequences over with right now to avoid even more financial troubles in the future.

But after the owners miss a payment to the bankruptcy plan, the lender will have the house taken out of the plan so they can proceed with the foreclosure again. The clock will start ticking again immediately. At that point, the lender does not start all over again; it starts up the foreclosure from where it was left off before the bankruptcy filing. This means that they will only have to set up a new trustee sale and the house can be sold in a matter of weeks. So, when homeowners dismiss the bankruptcy on their own or miss a payment to the court, they will have to move very quickly to put together the final solution to save their home.

Despite waiting to stop foreclosure and having few options left by the time a sheriff sale rolls around, homeowners can rely on filing bankruptcy as their best chance to defend their property from being taken. Although they may feel guilty about procrastinating, the legal process of bankruptcy is designed to help people in such situations seek the protection of the courts to get a fresh start with their debts. Even if they know that the bankruptcy may not last long, homeowners may be able to use it to put together a more appropriate, longer-term solution to pay back their mortgage and begin repairing their credit.

With the passage of the poorly-named "Foreclosure Prevention Act," the somewhat-elected representatives of a small percentage of the people of the country have passed legislation that will only hurt more homeowners. Although ostensibly designed to provide more resources to assist homeowners in foreclosure, the bill actually rewards those parties (banks and homebuilders) who have profited most from the real estate bubble.

In fact, the bill actually provides tax credits to soften the blow of proceeding with a foreclosure. The lenders are now encouraged to keep foreclosing on houses, while Congress allows them tax cuts to make this more attractive. All the while, the banks claim they need more bailouts and the Fed needs more power to offer bailouts.

This line of thinking, rewarding those with money with the houses of the poor and middle class, reflects the popular thinking among the rich, which they have tricked the general public into believing that these policies are for the common good. To see through the deception, though, look no further than how Congress has done absolutely nothing to help any single homeowner in foreclosure.

But the banks get hundreds of billions of dollars from the Fed in below-market interest rate loans, and they can exchange defaulting mortgage debt for not-yet-defaulted US Treasury Securities. This is then defended as necessary to prevent the banking system, which has preyed upon the public for decades, from collapsing.

And banks and homebuilders now get tax credits to lessen the cost of foreclosing on homeowners. The new owners of America are the very same corporations that created the unsustainable suburbs and locked people into homes with large mortgages they can no longer afford.

The general public is getting stuck with these defaulting mortgage loans so banks can ignore the toxic debt and continue operating without having to work with homeowners to stop foreclosure. They have taken the policy of just ignoring the problem and hiding their bad loans at the Fed until the issue is no longer interesting to the media.

And of course, the media is proclaiming that the recession, which was not coming, and was not strong enough to be considered a recession, is now over. The Fed and the government stepped in to correct the problem, and rising food and energy costs and increasing foreclosure rates are not symptoms of problems in the economy.

Did people really elect their government officials to make it easier for banks to steal their homes? Probably not, but that is exactly what is happening now in the gifts given to the banking system.

Americans are being forced to pay through inflation for bailouts to the very same mortgage companies that are pushing them into foreclosure. And all Congress can come up with is voluntary plans for banks to maybe participate in to maybe offer solutions to homeowners behind on their housing payments. We have to keep the banking system afloat, but banks do not have to help anyone suffering from their policies of inflation and credit creation.

With the political power and the power of money in the hands of the banks, politicians, and even the homebuilders right now, why wouldn't the news and mainstream media encourage even more predators to get into the foreclosure business? It sure seems to be much more lucrative than helping anyone actually save a home from foreclosure, what with foreclosure victims and others paying hundreds of billions of dollars to help out the banks.

"Poor unfortunate credit victims" are the best consumers for the banks to prey on, and they have extended their tentacles into every aspect of the lending system. Subprime mortgages, adjustable rate mortgages, high stop foreclosure before the lawsuit proceeds. It may have the trustee's name or the contract information of the attorneys who are involved in the foreclosure lawsuit.

Homeowners can call either of these parties to find out more information about any pending foreclosure actions or if there is an auction scheduled for the property. If the trustee or attorneys do not have any information about a lawsuit against a particular house, it is likely that the foreclosure process is not being pursued currently on this particular property.

Alternatively, foreclosure victims can call their county courthouse to find out if a foreclosure lawsuit has been filed against them. The house could not be sold at a county auction if there was no lawsuit and judgment against the property. The bank simply would not be able to ask the county to auction the house without having gone through the actual legal process of taking a home through foreclosure.

As one last option, homeowners can call the county sheriffs department to find out if their house is listed for an upcoming foreclosure auction. If so, then this would indicate that the homeowners may not have been properly served with the foreclosure lawsuit. But if there is no auction scheduled, then there is probably little danger of the house being sold out from under the owners.

Foreclosing banks always make mistakes, and they hardly ever call their clients back to say that they have corrected those mistakes. Apologies in the banking world are few and far between. It would not be surprising for a bank to find out that the foreclosure process should not have been started against a house, or that notice was improperly given, but they will just ignore the situation, hoping that the homeowners do not figure out that they have been illegally targeted for losing their home.

This is one reason why there are numerous other sources of the same information that homeowners should check with. It is important to remember that the bank can not auction a house without the help of their attorneys, the county courts, and the county sheriffs department. If the bank is being nonresponsive to requests for information regarding the foreclosure, these other parties may be more useful.

With the rising numbers of foreclosures and mortgages behind in payments, it seems as if the banks are falling behind on pursuing owners of these properties. Banks have always been likely to help homeowners by giving them more time to work out a solution, as long as the owners are in regular contact with the lender. But now, even homeowners who have gone all the way through foreclosure and should have been kicked out by now are remaining in their homes.

As the number of properties behind in mortgage payments has risen, the length of time it takes banks to begin the foreclosure process has also increased. From a time period of a little less than forty days to begin the process in 2005, lenders are now taking nearly seventy days to foreclose on a house. This would seem to indicate that homeowners are being given more time to find a solution to foreclosure, but it is more likely that the banks are simply falling further and further behind. There is also a reluctance to take back properties that have been devalued due to falling home values.

The result of this is a backlog with lenders and county governments of properties that are in some sort of housing crisis limbo, and a distortion of how many homes are actually in the various stages of foreclosure. There is a difference between a home being in default of payments and actually having the mortgage company begin the foreclosure process. With this process being delayed by the banks, the situation looks far better in the short term, but far more disturbing in the long run.

The homeowners, if they have not moved out of the home, may be able to keep living there far longer than they think. Even though state foreclosure law dictates the general time-frames for sheriff sale and eviction, banks that do not pursue these steps put the process on hold voluntarily. Even in homes that have been auctioned, the bank may be wary of taking possession of the house and incurring more costs to maintain the property. In this case, the sheriff may just never show up to evict the former owners.

As most homeowners are aware of, keeping up on the repairs and maintenance of the house is not inexpensive. Even if the mortgage is completely paid off, there is still a need to pay insurance and property taxes, in addition to any other housing expenses. When banks own homes, they have the same expenses, and may need to pay for repairs if the foreclosed homes are damaged or ransacked by vandals. It is easier and cheaper to let the owners keep living in the property, even if they are not attempting to stop foreclosure in any meaningful way.

Allowing homeowners to keep living in foreclosed properties also gives the local real estate market a false sense of lower inventories of properties for sale. Banks are able to keep home values higher by keeping these houses off of the market, as well as removing them as targets of theft or damage. Banks may have had very high loan amounts on these homes, and do not want to do even more to drag down the eventual price by offering many homes for sale at once.

Homeowners will not be able to live in properties mortgage free forever, but banks have apparently begun to realize how much more it will cost them to evict people and begin managing the homes. In response, although they may be taking the homes to auction or preparing to initiate foreclosure proceedings, the foreclosure victims are being allowed to remain until the market is ready to accept more properties listed for sale. Homeowners who are behind should have some exit strategy for leaving the home before they are evicted, but no news may be good news from foreclosing banks and indicate that they have more time than they think.

The housing bubble and resulting collapse have signaled a large change in the banking system of the country. From secretly bankrupt banks to a complete takeover of the system by the Federal Reserve, banks have become the newest welfare recipients, cutting in front of Americans to feed at the government trough of taxpayer money.

The Fed used to act much more secretively to bail out lenders and hedge funds and create the conditions that lead to bubbles in the economy. In the new age of the internet, though, where so much information is available so quickly, it has become impossible for the Fed to manipulate the economy as easily as it was used to, and the scheme to impoverish the country is in the open, if not being stopped.

Hundreds of billions of dollars have been created out of nothing by the Fed in order to bail out bankrupt lenders at the expense of the general public. With larger than expected numbers of defaulting mortgages in the subprime market, banks have had to foreclose on more loans, wiping out cash receivables from their balance sheets in return for illiquid real estate assets. But this would only hurt the banks if the Fed was not there to take all of these bad loans and exchange them for US Treasury securities, allowing the banks to stay in business for a short while longer.

Cries have been raised by both banks and homeowners about the severity of the problem. Congress has been called on to act quickly to protect their constituents from predatory banks. Unfortunately for most homeowners, members of Congress have been advised and lobbied by the banking system for centuries, and it is more likely that the banks will be bailed out than any substantial action taken to help foreclosure victims.

This is already apparent in the programs that have been passed, ostensibly to help homeowners stop foreclosure and work with their lenders. From voluntary programs that involve a handful of banks, to tax cuts for the same business interests that benefited most from the housing bubble, to hundreds of billions of dollars of liquidity pumped into the banks by the Fed, the public has been robbed more than assisted by legislators.

The fallout from the housing bubble is just one more disturbing step in the process of privatizing the assets of America through a huge leveraged buyout of the economy. Banks and corporations have used Americans' own money to buy as much of the productive assets as they could, and have now raised interest rates and fees in order to steal even the country's real estate away from its people.

These same banks and corporations have also financed the impoverishment and wage slavery of the average American. People are locked into their low-paying jobs with threats of outsourcing to a developing country if the cost of labor goes too high, while their health benefits are tied to their employment. The fact that they probably would not receive adequate healthcare from their insurer does not make the threat of losing insurance any less disturbing.

Few homeowners or consumers ever realize that their jobs and their consumption go to finance their own enslavement, however. The large banks they have their checking account and mortgage with are the same ones that finance the large corporations to outsource production while replacing local businesses with big-box stores and franchise-heavy strip malls.

The general public works for the large corporations, which keep them as impoverished as they can without inciting riots. The low pay that the people receive that is not taken directly by the government is then spent or deposited back into the economy and ends up in the large banks. These institutions then lend the money back to businesses to finance more wage-slavery, while impossible-to-pay-back mortgages are sold to homeowners for the banks to rake up the last little bits of whatever money the public has left.

The housing crisis is, unfortunately, one of the last steps in the leveraged buyout of the country by the banking system, which controls and creates the money used by every person. The banks will either own the real estate, or they will have helped to inflate and crash the markets so that homeowners owe far more on their properties than they are worth or could ever pay back.

Homeowners in foreclosure are rightfully worried about not being able to save their homes and how quickly they will be evicted after the sheriff sale. Although the lender and various "experts" will threaten them with the sheriff showing up the next day to violently kick them out of the house, this is just not the case in foreclosure situation. The county sheriff and the eviction crew will not show up the next day after the sheriff sale, and homeowners should ignore the fear-mongering that threatens this possibility.

Owners should be aware of the implications of the foreclosure auction, though. The sheriff sale will transfer ownership of the property, and the foreclosure victims will not own the house after this point. But this does not mean that the eviction process will happen automatically right after the house is auctioned, as there are more steps that will need to be taken by the new owner.

The high bidder at the auction will most likely have to have the sheriff sale confirmed (this is not a specifically detailed step in every state). This can take from a few days to a couple of weeks after the auction, depending on how quickly the courts and new owner act. But this is generally just a simple step in the foreclosure process after the sale that involves the sheriff and judge confirming the auction was for a legal amount and that the deed has now been awarded to the new owner.

The new owner will most likely be the original foreclosing bank that the homeowners had been dealing with in the first place to stop foreclosure. About 95% of foreclosures end up being purchased by the lender, rather than a third party.

In order to evict former homeowners, the lender will have to request the court grant it possession of the property and order the county sheriff to evict any remaining people or personal items and change the locks. This is a legal process, though. Homeowners should not fear that a bunch of government thugs with badges and guns will show up at their house the day after the sheriff sale to kick them out. Of course, this is exactly what happens, but at a later date if the foreclosure victims do not move out in time.

But the entire eviction process can take up to a month after the sale; throwing people out of their homes is not a simple process before or after a county auction. The court will have no problem ordering the eviction (unless the former owners go and try to contest the sale, eviction order, etc.), but the sheriff's department will have to give notice of the impending removal. This can be as little as posting a piece of paper on the property with three days notice to move. Thus, after the sheriff sale, former homeowners better be prepared to leave on their own or work out another solution.

People facing foreclosure should not be overly concerned about being kicked out of a house with little notice. The sheriff will not just show up the next day or a few hours after the sheriff sale, as there is still a legal process that must be followed for a bank to take back possession of a foreclosed property. Homeowners probably have at least two weeks to a month after the sheriff sale date to arrange for a new place to move into.

In any event, homeowners are always encouraged to call the sheriff's department to ask them when then eviction will take place. Even more promising, they can also usually ask for a few extra days or a week in order to move everything out and give up the house peacefully. There is still a chance to negotiate with the local government for more time (courts and sheriff) so that the former owners are not taken by surprise by the eviction.

Thus, the banks and government officials will not evict foreclosure victims right away after the auction, but there is no time to spare, either. Having a couple of weeks to move out can give people a chance to find a place and move in at their own pace, but even a month-long eviction process will go by very quickly. If in doubt, homeowners should contact their local government officials and ask about the eviction -- the courts or sheriff will be able to inform them of the date and try to work out the most reasonable solution. They want as little trouble after foreclosure as the former homeowners do.

A few weeks ago, I wrote an article about large mortgage companies cutting back on the credit limits of home equity lines of credit (HELOCs). Homeowners who owe more on their various mortgages than the home is worth will not be able to borrow as much from their HELOCs, and some are being cut off completely from borrowing any more money using the equity in their homes. Unfortunately, it seems like this will only be the beginning of the drying up of credit for the average person.

Homeowners who may be edging towards foreclosure could have used these lines as a last resort, while others who were financing businesses or college educations will now face foreclosure in increasing numbers. The banks, though, get to avoid a greater loss now and start the process of taking back these properties, hoping to make more money on them in the long run through sales on the open market.

Apparently, the next target for the restriction of credit may be credit cards, and consumers in increasing numbers will be receiving notice that their limits have been severely reduced. Credit cards have been treated much the same as mortgages, in that they have been heavily securitized and sold off to hedge funds and other investors. Banks sell the right to third parties to collect the payments on the debt, which gives them more capital to show on their balance sheets, which allows them to make more loans with fewer questions, which they can in turn sell to investors.

Now that certain parts of the banking industry look as if they are failing, though, banks are attempting to limit their losses on consumer credit, like mortgages and credit card lines. They are already targeting the homeowners and general public to make profits through other methods since giving out more loans is likely to generate more defaults. Securitizing debt and selling it to pension funds and hedge funds is no longer as profitable, as these funds are becoming more nervous about the toxic debts they already own.

On the surface, the reason for cutting off HELOC and credit card lines is that the entire economy is experiencing a credit crunch. Banks are taking losses and writedowns on their mortgage debt, so they have less money to lend to consumers for smaller purchases. But this excuse is beginning to wear a little thin, as the Federal Reserve has been providing generous bailouts to the banks in the form of Treasury Securities, and allowing the banks to move their bad debts off the books and into the vaults of the Fed.

Banks are also able to create their own money out of thin air in the form of debt, including mortgages and credit card charges. Although there are some reserve requirements, most regulations are essentially worthless, and allow banks to create as much money in the form of credit as they wish. The money "loaned" for a credit card transaction does not even exist until the charge occurs; the bank simply creates the debt out of the consumer's promise to pay. So the excuse that consumers will be cut off from their credit card lines because the banks simply do not have enough money to pay is a specious argument and a fraudulent misrepresentation of how money works.

It should be no surprise that cutting off access to credit lines or reducing the amount of money available will cause many people to find themselves very quickly over the limit. Although they are over only the new, reduced limit, the banks will charge fees and increase interest rates on this debt. When simply creating loans and making money from collecting interest is no longer profitable, the banks have found that aggressively going after fees is a wonderful alternative.

Thus, the banks can increase the rates of current customers and generate more revenue through fee collection. Without having to make better lending decisions, or create any more money out of credit at all, the banks are attempting to increase profits at the expense of their customer base (which is, quite honestly, held captive by the process of creating money as credit out of nothing). Of course, the conditions that trigger these extra fees and push people further into debt servitude have been created by the lenders.

Consumers, especially homeowners already facing their own financial hardships, should do whatever possible to avoid falling into these kinds of traps. If they can pay off credit cards or reduce their limits to a manageable level, the tricks of their creditors may not be as devastating in the long run. But everyone should be aware that the banks, now that they are being burned slightly by the fallout in the mortgage market, will be coming after them more directly in the form of more fees, higher interest, and more aggressive attempts to bleed homeowners of any remaining assets.

Bankruptcy is often one of the last resorts that homeowners facing foreclosure rely on to get some relief. The social and financial stigmas that come with this method are often enough to scare away many people from filing. However, in the right situation, bankruptcy can be a powerful tool to get a short break from an accelerating foreclosure process and bring the mortgage lender and other creditors back to the negotiating table.

There is also a slight possibility that bankruptcy court judges may be granted more power to work out solutions in favor of homeowners. One proposal floating around Congress to fix the foreclosure crisis involves allowing these judges to reduce the total amount homeowners owe on a mortgage loan. Bankruptcy courts do not currently have this power, and the proposal is a response to the sharp declines in home values that have made some homeowners owe far more than their properties are worth.

Currently, homeowners who file Chapter 13 bankruptcy to stop foreclosure are unable to reduce the amount they owe on the mortgage on their primary residence through the legal process. Second homes, investment properties, or vacation homes are eligible for some additional relief in the form of debt reduction, but the mortgage company is protected on the primary residence. This is mainly what the proposal in Congress is attempting to address.

The bill, though, will not easily pass to become law. Even if the proposal passes with majorities in both Houses of Congress, the president has threatened to veto the bill as interfering with the right of homeowners and mortgage lenders to enter into voluntary contracts. If banks' loans could be altered later on through bankruptcy, they would be more inclined to raise interest rates to collect more money right away. Giving this power to the bankruptcy judges would also make it more difficult for borrowers with poor credit to get a mortgage at all, for fear of having the loan amount reduced.

There is also the very real possibility that, if the proposal looks like it will pass, more lenders will move towards foreclosure more quickly. They will attempt to have the properties sold at sheriff sale and get the property listed on the market as soon as possible, so the homeowners do not even have enough time to consider the possibility of filing bankruptcy. This would cause a bad foreclosure crisis to get even worse in a very short period of time.

There could be numerous benefits to the new laws, if the proposal had the potential to pass, and many homeowners currently deeply underwater in their loans no longer feel as great an incentive just to give up on the house. Negotiating a lower mortgage balance could persuade some of these people to stay in the house and pay a fair price for the right to remain in the home. And not all banks are willing to negotiate mortgage modifications, so the strength of a bankruptcy judge on the side of the homeowners may allow more people to stop foreclosure in the long run.

Unfortunately, it looks as if this one attempt to give the people more power over the banks will fail. And with all of the negative consequences of foreclosure and bankruptcy that will haunt homeowners for years after the fact, the mortgage lenders will continue to hold Americans hostage to expensive mortgages on overvalued properties. Filing bankruptcy to stop foreclosure can be a very welcome last resort for homeowners in danger, but it looks as if they will not be given the chance to negotiate in the courts to work out any better terms for their loans.

Just this week, it has come out in the mainstream press that the former head of the Department of Housing and Urban Development (HUD), Alphonso Jackson, had been giving preferential treatment to political insiders and political party sympathizers. What has been surprising about this is that it is being promoted as a victory of government over one corrupted official, and not representing the entire system of generally uncorrupted public appointees. But HUD, just like almost every other government agency, has engaged in contract bias for decades.

The fact that corruption was found in the Department of Housing and Urban Development in the midst of a housing and foreclosure crisis should not really be surprising to the vast majority of Americans. HUD has been run as an essentially corrupt organization for decades, giving out contracts to develop low-income housing, then assisting in the cleansing of these neighborhoods through drug raids. Handing out contracts to pump up an artificially-inflated housing market did not just start with the Bush administration.

It would be wise to remember that the origins of this current run-up in housing prices began after the 1997 Asian Crisis during the Clinton years. Alan Greenspan, former head of the Federal Reserve system, with the blessing of Congress and the president, began lowering rates and easing credit. Banks involved in the crisis were bailed out, and the largest hedge fund to go bankrupt in that era, Long-Term Capital Management, was bailed out by the private banks that own the Fed.

The Government-Sponsored Enterprises, such as Fannie Mae and Freddie Mac, also saw increases in investment pouring in. The banks were encouraged to make mortgages, even to people who could not afford to pay, and investors were encouraged to invest in mortgage-backed securities. The benefit was that these mortgages owned by the GSE's were backed by the government, which would take the fall if defaults occurred, thus guaranteeing a level of profits for the banks and investors. The seeds of the subprime crisis were nurtured here in the GSE's.

But the Department of Housing and Urban Development has always given out preferential contracts, just like every other government agency. Almost everyone who does not live in a cave (and even some who do) have surely heard of companies like Halliburton, KBR, Dyncorp, and other corporations that benefit from government welfar. These companies did not get no-bid cost-plus contracts to "rebuild" Iraq or provide other services because they proved they were the best company for the job -- they got them because of who they know currently in power in Washington.

So the preferential treatment afforded to some companies and political insiders has always existed; the trick is to keep it as quiet as possible. Thus, the egregious mistake that the outgoing head of HUD made was that he stated the obvious out loud. He said that he had removed a bid that had already been awarded to a company because a representative stated he did not like the president. His stating this out loud to a group in Dallas, Texas, was a political mistake of the highest magnitude, as it admitted gross corruption and political favoritism.

To be successful in political bribery and manipulation, a secretary of a department really has to be like another Alan Greenspan. The former head of the Fed was notorious for always talking in riddles and arguing about the definitions of words, rather than explaining things or answering questions. Apparently, semantics and shallow arguments with confusing banking and financial lingo, which many members of Congress are unable to decipher, is the key to remaining in power and looking like a genius while engineering a huge housing market bubble.

If Alphonso Jackson had been able to keep his cards a little closer to his chest, he would probably still be the secretary of HUD, handing out preferential contracts and talking about how to solve the foreclosure crisis in the housing market. But this act of rewarding politically connected corporations with preferential treatment and government contracts has been going on for centuries in America and across the world throughout history. Contracts to insiders has been an unfortunate constant of government.

A new plan proposed by Treasury Secretary Paulson has been making the rounds of discussion in Washington. The plan is ostensibly designed to further regulate the financial and mortgage markets, while giving great new powers to the Federal Reserve, which causes the stock market and housing bubbles and then finances the bailouts of preferred companies with the public's money. The whole scheme is being labeled as a "nationalization" of the banking system, but there are many more reasons to be concerned about such a set of proposals.

The main point is that the Federal Reserve is not contained within any branch of the United States Government. It is a consortium of private banks that was given a monopoly of creating the money supply of the country. Its accountability to Congress is nonexistent, although the Fed does grant periodic hearings to the banking commissions. Congress, though, has ignored its responsibility to regulate the Fed, and no independent complete audit has been performed.

Thus, giving the Federal Reserve even more power is giving up the power of the government to regulate the markets to a private central bank that is completely unaccountable. It is debatable whether or not the government should be regulating the free market, as this helps create malinvestment and thousands of pages of regulations often turn into thousands of pages of loopholes. But the Congress should not allow a private bank to regulate the market and shield this bank from any oversight or scrutiny.

The Federal Reserve, along with other agencies of the government such as the Office of the Comptroller of the Currency (OCC) and Department of Housing and Urban Development (HUD), was integral in creating the real estate bubble. They were also involved in the profit-taking that the bubble created, and are now involved in bailing out the nation's largest banks from the fallout of the crash. Colluding government agencies working together to create the foreclosure crisis deserve to be abolished, and their functions returned to the market -- not given even more power to inflate themselves into a new bubble.

Whether the Paulson plan goes far enough to address the inadequacies of regulation of the banking and mortgage markets is nearly an irrelevant debate. The question of the effects of the"Federal Reservation" of the markets is not being asked. Do we really want the government to give up even more of its oversight and regulatory responsibilities to a private system of banks owned by the very banks that assisted, along with other too-powerful government agencies, in creating the conditions that have led to so many homeowners facing foreclosure?

Since the meltdown in the real estate markets and the increasing foreclosure rates, several new websites have popped up offering free foreclosure help and marketing self-help packages and programs. Many of them do not describe much of the contents of their products, but similar ones have been around for years. They almost always consist of some sort of self-help package, with forms and instructions designed go guide homeowners along the path of avoiding foreclosure in several different methods.

For homeowners who want to try to stop foreclosure on their own, they can do a lot worse than buying a product that will guide them through some of the steps in the legal process. Several of these products also offer worksheets to help homeowners evaluate what options they may qualify for, as well as form letters that can be customized for a variety of purposes. These might include working with the mortgage company, explaining the foreclosure when applying for a new loan, or requesting the sheriff sale be postponed for a period of time.

Homeowners should not expect magic from any product or source of foreclosure help, though, unless they are willing to put in the hard work necessary to save their homes. Stopping foreclosure is not easy, it takes time, and the other parties in the process (banks, attorneys, courts, and so on) may not be entirely receptive. If the foreclosure victims pay for the self-help package, and then fail to follow the guides or instructions, there is a strong possibility they will lose the home, regardless of what products they have purchased. Unfortunately, when homeowners are unable to prevent foreclosure, they blame the product itself, rather than their efforts in putting it to its most effective uses.

Homeowners who are serious about saving their homes on their own could also probably find mostly similar documents that are used in the foreclosure help packages for free through various sources online, as well. Many websites now offer form letters, worksheets, and simple calculators to help foreclosure victims examine options that may be used to stop foreclosure. Of course, finding these tools online through many sources would extra take time to do the research, put together form letters and worksheets to match the situation, and would generally involve more work than just buying a kit, which has all of the information centrally located. But in either case, the homeowners will have to work with the information and their banks in order to make the most effective use of any program.

Many of these self-help packages are often relatively cheap, costing less than a few hundred dollars -- some even cost much less than $100, which causes some homeowners to suspect they will not be getting much for their money. But a low price does not necessarily mean the products are of low quality; instead, the relatively cheap price should indicate that working out the solutions to foreclosure will be entirely in the hands of the foreclosure victims, who will be solely responsible for putting in the work to save their homes. The owners do all of the work in negotiating with the bank or finding alternate sources of assistance, with minimal guidance from the providers of the information.

If they are expecting to have their hands held and for someone else to contact the mortgage company for them after paying for a self-help package, then they may be better off hiring a professional loss mitigation company or bankruptcy attorney. But if the homeowners really are willing to work on finding a solution on their own with the kit and some extra background information, then this solution can be very cost-effective in providing them with extra options to save the house.