The writing has been on the wall for some time, yet many have been hesitant to read what it says. Many Americans are sinking deeper into debt. Part of this problem likely comes from the expense of owning a home. For a rising segment of homeowners, the cost of home ownership is forcing a tough situation into an impossible one; creating a foreclosure crisis that will likely last quite some time.

Several months ago, current data released by the Government are showing an alarming upswing in the rate of foreclosures. In some areas, of all home owners who were extended sub-prime financing, the rate of default is as high as 14-20% when 4-6% is considered healthy.

This data has been all over the news the stock market has been in upheaval. Sub-prime loan officers traditionally specialize in extending financing to borrowers with credit issues, unable to verify income, job status or other factors that make them a poor fit for traditional financing. In the past few months, many major players in the sub-prime market have sought additional investors or in some cases simply closed their doors and gone out of business. Just as their clients were unable to afford the escalating expenses of homeownership, many sub-prime lenders found it impossible to absorb the foreclosure rate we are now seeing.

The backlash doesnt stop with the sub-prime market. Even traditional lenders are tightening purse strings and placing more scrutiny on the loan approval process. This makes us wonder: how did this issue ever happen in the first place?A good portion of the resons can be laid at the feet of the homeowners themselves. In this age of "big is best" many Americans see a large home as an indicator of success. This pushes many buyers into trying to purchase a larger, more expensive home without enough thought to being able to afford one. Often buyers push the levels of affordability and end up in a difficult situation or worse.

Blame can also be attributed to some financial institutions. Who is better qualified to know how much house debt a borrower can afford? The current debt-to-income ratios are either not working, or the types of loans that lenders are providing are poor choices. Loans like 28/2 and 27/3 loans with fixed teaser rates that adjust after 2 or 3 years with a balloon or margin are just a few of the loans that have caused borrowers to get into trouble. Of course the end result of this mess will be better qualified and better educated home owners but did things really have to go so far? We've seen foreclosre problems hit most of the large regions we work including Oswego real estate, St. Charles real estate, Geneva real estate, Plano real estate, Aurora real estate, Batavia real estate, Naperville real estate, Montgomery real estate and Yorkville real estate. Frankly, I sometimes think they did. Lately it seems like it takes a good deal of shock to get some things to go right. In the mean time, if you are thinking of purchasing real estate in the next few years, its important that you start talking with your local REALTOR or loan officer and make sure your finances and credit scores are in order before you continue with applying for a loan.