Sept. 2, 2007 (LPAC)--The mortgage foreclosure crisis now hitting with a vengeance, threatening to leave millions of Americans homeless over the next months ahead cannot be fixed with gimmicks, as Lyndon LaRouche emphatically said in an audio address to the nation on Sept. 1. The dramatic, but lawful, news on Aug. 27 from New York's U.S. Senator Chuck Schumer, that foreclosures had exploded by 1,000% in Manhattan in five months, February to July, points to the vector of economic unwinding that is now underway. Up to now most foreclosure headline news had come out of Massachusetts, California, or Detroit, Michigan. Suddenly, the foundation of Wall Street was shaking too.

What has New York Gov. Elliot Spitzer done up to now to deal with the crisis? A $100 million fund to help refinance defaulted mortgages has been established. Truly a gimmick, maybe well-meaning, but a gimmick nonetheless which fails to in any way address the magnitude of the social chaos looming if this foreclosure spiral is not halted in its tracks.

A look at their own numbers shows why mini-rescue funds cannot work. A survey released in August by New York state Sen. Jeffrey Klein (D) shows that $28.5 billion of subprime mortgages were originated just in 2005, statewide. Experts expect, the survey states, that over 20% of those subprime mortgages will go to foreclosure, roughly 28,493 home losses. (Subprime mortgages' rate of default is higher due to the delayed interest payments which balloon within 2-3 years of origination causing huge increases in monthly payments.) So, if 20% of the $28.5 billion 2005 subprime mortgages in New York state go to foreclosure that would be about $5.7 billion worth. A $100 million fund services a mere 1% of those expected to foreclose or about 285 homeowners.

Clearly, such rescue-to-refinance funds are folly in the fact of this impending explosion.