US debt misery looms over White House race

UK Telegraph
Posted: 2007-11-09 20:32:48

It is a grim ritual being performed across America's heartland.

Wednesday lunchtime and in the lobby of the Sheriff's Justice Centre an auctioneer, lawyers, bank representatives and prospective buyers are gathered for the latest foreclosure sales.

This time, there are just four homes on offer, but an average Wednesday in Wooster, Ohio (population: 24,811) sees 14 houses auctioned off - a 400 per cent rise on the past four years.

"Sometimes you see a name and you kind of know the situation," said Alan Cheveney, the auctioneer. "There's a world of them out there."

The sales are part of a flood of sub-prime foreclosures engulfing Middle America, and causing untold misery to towns like Wooster.

If Bill Clinton's old adage - "it's the economy, stupid" - still holds good then foreclosures could play a decisive role in the 2008 presidential election.

Across Ohio - the most closely fought "swing" state in 2004 - deprivation and crime have risen as traditional industry has declined.

There were 1.7 million foreclosures in America in the first eight months of 2007.

The US economy has been rocked by financial institutions owning $1 trillion (£480 billion) of subprime debt, sending financial ripples across the world.

The Poseys in Wooster are just one of the estimated two million American families likely to lose their homes over the next two years. Carmen Posey, 38, and her daughter Candy, 15, are cleaning up their house in Robinson Road in preparation for auction in December - followed by their eviction in February.

"We were doing real good, making the payments each month but then my husband had to get surgery," said Mrs Posey.

"I was working as an assistant manager at Subway but my mother got sick and I had to look after her. It's sad, we've lived here for two years but now we've got to go."

The Poseys plan to move to Kentucky, where rents are cheaper. Mrs Posey's husband Kurt, 57, was already a bankrupt when he was given a mortgage in 2006 to buy the family home for $71,000. Records show it has now been assessed as worth $60,000.

For Mr Cheveney, there is more and more auction work but he takes no pleasure from it. "[The banks] were giving loans to just about anybody and anything," he said. "Now people are getting caught and the whole country is taking the hit."