The crisis has broadened into the overall economy and is beginning to roll like a locomotive through more and more of the nation’s cities. The rising epidemic of foreclosures doesn’t appear that it’s going to stop for a number of years to most economists.

Critics charge the trap was set by mortgage companies, mortgage brokers and increased with fear on Wall Street as investors froze the pool of money that fed both subprime mortgages and many conventional adjustable rate mortgages long before the headlines were written regarding the credit crisis. SIVs, known as Special Investment Vehicles, were developed especially for hedge fund investors to reap 30% profits and higher.

There are an estimated 130-million home mortgages, and only 13% of those were made to subprime borrowers, indicating the mortgage crisis has broadly extended into conventional mortgages, most of which are adjustable rate loans. Slightly more than 50% in jeopardy of foreclosure are held by investors, many of whom are choosing to walk away from mortgages that are becoming too high to pay as higher payments become due with mortgage resets.

The crisis developed over years and was started on Wall Street with the participation of the nation’s lenders, who either didn’t care about whether mortgages could be repaid or stopped caring when their competitors offered loans they were not selling.

The crisis has developed into America’s worst financial disaster since the Great Depression, and experts say the majority of Americans don’t understand its depth. A line-up of academic professors who study high finance fear the worst is yet to come, saying the subprime crisis is not about subprime mortgages any longer. But instead about the increasing series of problems that plague the credit system combined with Americans need for material goods.

Seventy percent of the U.S. economy is composed of consumer goods. The nation that invented junk food has gained junk mortgages to boot.

The White House plan does not require mortgage companies to freeze interest rates on mortgages. The program is voluntary for lenders, and voluntary programs have rarely been successful in U.S. history related to business. An interest rate freeze will only be offered if borrowers qualify under a strict set of guidelines. According to Barclays Capital only an estimated 240,000 mortgage holders or 12% of subprime borrowers due to be reset in the following 17 months will qualify for the freeze.

Americans are clearly against a bail out of the subprime crisis. A Housing Predictor survey found 81% are against Congress from bailing out financial markets, and President George W. Bush is on record opposing such a plan.

Without further intervention the mortgage melt down will grow into a series of neighborhoods scattered all over the U.S. with homes that are left vacant to be vandalized and damaged. Neighborhoods will be blighted and decay. There are more than 18-million vacant homes in the U.S. now, according to the Commerce Department and the figure will only increase as foreclosures rise.

Congress has held hearings on legislation related to the crisis. However, emergency legislation is needed to freeze interest rates on adjustable rate mortgages in order to give Congress and mortgage lenders enough time to work out a plan to halt the foreclosure crisis.

As a consequence of the crisis home prices will be driven lower and lower in the majority of the country until buyers lack the fear that has paralyzed many housing markets, and only then will housing sales begin to move again as the markets balance with lower interest rates. Housing Predictor forecast that the Fed is in the midst of a series of interest rate cuts, which should last into at least 2008 in order to re-stabilize housing and financial markets. The financial toll could top more than a trillion dollars.

The enormity of the crisis is almost mind-boggling. Credit card and car loan companies are already seeing increased delinquencies and the delinquencies on mortgages are almost hitting 7%, an all time high. The number of foreclosures have already hit record highs and have doubled alone in the last year.

Congress and The White House need to work together in order to halt the epidemic of foreclosures before the nation suffers the worst economic disaster in history.