Debt Relief, the Credit Crunch and Our Foreclosed Culture – By Bryan Dornan

First the “subprime mortgage meltdown”, then the foreclosures, then the government announce the $750 billion dollar bailout and finally the stock market tanks.  After watching the 3 presidential debates and listening to a few of their mortgage foreclosure speeches, in which both candidates promised financial assistance to homeowners while blaming the “big banks”, I realized – this country is in denial.  Like an alcoholic claiming “they just like a few glasses of wine with dinner”, Americans have a spending problem. Think about it – every year credit card debt breaks the previous year’s record and somehow people who don’t even have jobs are watching big flat panel TV’s and walk around in expensive “name brand shoes.”  

Now I’ll step down off my soap box, and be real.  Let begin by apologizing to those of you who have worked hard, saved your money and come into some financial misfortunes that were not your fault.  For the rest of us – Let’s look ourselves in the mirror and admit that we have spending problems.  We simply spent more than we made, because for so long the equity in our home always seemed to bail us out.  According to mortgage data, debt to income ratios continues to rise while the average incomes for Americans have actually been declining slightly.  After a decade of lavish spending, 2006 will be the year remembers because the mortgage companies started going bankrupt and the housing bubble finally bursted.  Home values have continued to drop rapidly because so many homeowners had adjustable rate mortgages and mounting credit card debt that they could no longer afford.  Homeowners no longer had the luxury of refinancing the home loans and unsecured debt and people began losing their homes.  The lending tightened with a credit crunch and it has ultimately become a foreclosure epidemic of the greatest proportion since the Great Depression.  The problems swam upstream and now the banking institutions began to fail because with the increasing home loan defaults created a liquidity problem that prevented banks from lending to each other.   The only option became loan modifications where banks would restructure a mortgage that had already been securitized, bundled and sold on Wall Street.  This will have a ripple effect on our economy for many years to come.

Now American consumers are trapped with credit card debt and home loans that significantly exceed the value of their assets. Homeowners can longer borrow to consolidate debt.  For all intensive purposes, second mortgages have vanished and new wave of debt relief has arrived.  Debt settlement is all the rage, because it completely legal and there are millions of testimonials throughout the neighborhoods in America that will tell you that it worked.  Debt settlement provides the opportunity for consumers to eliminate their debt without filing for bankruptcy.  Debt negotiations often provide a fresh start for people who have truly been struggling with credit card debt. 

My solution is for the credit abusing crowd to get together and make a pact that we will be more responsible and stop spending money we don’t have.  So let’s meet at Jimmy house on Saturday and we celebrate the beginning of a new era where we borrow less and save more!