Loose lending practices, unscrupulous lenders, rising interest rates (think exploding ARM's) and falling home values in many areas of the country have put 2.2 million families at risk of default.

The early 2000s saw the phenomenal growth of exotic mortgage products pervasively marketed to vulnerable consumers via the internet, telemarketing and mortgage brokers who set up shop on Main Street, U.S.A. to compete directly with local banks and mortgage companies.

A Foreclosure Market Report prepared by RealtyTrac, Inc. ranks Nebraska 30th in foreclosure rates among the 50 states based on court filings related to foreclosures.

The National foreclosure rate stood at 1.4 percent at the end of 2007.

In Hall County, the number of default notices has risen from 167 in 2001 to 243 in 2007. Many of those homeowners defaulting or facing default acquired mortgages that had front loaded costs, little or no down payments, balloon notes, and rates or adjustable rates forcing payments that could not be sustained.

Too many borrowers added second or third loans and fully exploited the opportunity to borrow against equity.

The sub-prime lending crisis has washed out many of the fly-by-night internet lenders and brokers who pushed the limits and, in the process, consumers have become wary of schemes that sound too good to be true.

New regulations will soon be introduced that will tighten credit availability and require more security to back up mortgage loans. Risk assessment will have a direct bearing on interest rates with credit rankings factoring importantly in lending decisions. Consumers with credit scores of 680 and higher will have an easier time securing favorable rates, those with scores below will pay more.

Even though home values are falling in many parts of the country, Grand Island remains one of the strongest home markets in the U.S. in terms of value retention. Home values have risen on average 3 percent or more in each of the past eight years with the average price in 2007 resting at $115,193. Home sales have remained robust with 641 homes sold compared to an average of 705 homes per year sold over the same period.

It is interesting to note that the monthly payment on $48,500, the average price of a three-bedroom home in 1984 was $806.19 at prevailing interest rate of 16 percent. The payment on today's $115,000, three-bedroom home financed with a 30-year note fixed at 5.75 percent is $987.68 a differential far lower than the annual rate of inflation.

The American dream can still be realized in Grand Island, but consumers should be advised to shop around and make thorough comparisons on all costs associated with mortgage acquisition. A good source of consumer advice can be found through the Nebraska Department of Banking and Finance at (877)-471-3445 or online at www.ndbf.org. The NDBF also has a searchable registry of all mortgage lenders and brokers licensed to do businesses in Nebraska.

Most borrowers facing default also do not realize that help is available through most lenders. Mortgage lenders do not want to see borrowers fall into default and in most instances will assist in exploring options to avoid foreclosure. Once in foreclosure, options are greatly diminished.

The Federal Reserve Bank also endorses a nationwide hotline through the NeighborWorks organization, a group that connects homeowners with local resources. The NeighborWorks number is 888-995-HOPE.