FINANCIAL “PERFECT STORM” BREWING FOR MIDDLE CLASS?

May 5, 2006

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A weaker housing market is the final element of a confluence of economic currents which, if left unchecked, may well lead to a financial debacle for America’s Middle Class Homeowner. This can be averted only with luck, or by timely action at the State and Federal Legislative and Regulatory levels.

New York, NY (PRWEB) April 30, 2006 — “A weakening housing market, together with other financial currents in the U.S. Economy, represents the potential final impetus to a ‘Perfect Storm’ brewing over the American Middle Class, and, without luck or prompt legislative action, may lead to disaster, especially for homeowners.” So says Warren R. Graham, a New York Bankruptcy Attorney. The other prevailing currents threatening to collide over the heads of an unsuspecting public, claims Graham, include rising interest rates, limited recourse to bankruptcy relief and the virtual elimination of usury and other restrictions on credit card issuers.

For many millions of Americans, who live “paycheck to paycheck,” the only thing defining their status as Middle Class, and differentiating them from the so-called “Working Class” is their ownership of a home, and the equity accumulated in it. Graham points out that that equity is being eroded by two factors: the first is the threat of declining home values, and the second is the propensity of homeowners, over the last few years, to refinance their homes or take out home equity loans at very low adjustable rates to pay off high interest credit card debt. Now, Graham says, the equity is at risk, because of the softening in the market, the fact that the adjustable rates have risen consistently (and are expected to continue to do so), and the reality that much of it has already been borrowed out to pay off credit card debt, and for other purposes, such as home improvement.

FINANCIAL “PERFECT STORM” BREWING FOR AMERICA’S MIDDLE CLASS?