The Foreclosure Deja Vu

Recently, I watched the CNBC special, "House of Cards" which provided a timeline of decisions and actions within the housing financial arena that culminated in the perfect storm of financial chaos we seem to be in right now. If you haven't seen it, take it in. You can see the airing times on their website http://www.msnbc.msn.com/id/29163182/

In the beginning of the special, they show the ugly side of foreclosures - the affected lives, the way properties are left behind, the impact on neighborhoods, etc. It brought me back to the days when foreclosing on homes was my job - back in the mid-80's and the early 90's. It has been almost a 20-year cycle since we have seen (at least here in New England) a large slew of foreclosures compared to the 8-year cycle from the '80's-90's. And in that 20 year period, we have raised a generation of young borrowers who received loans from lenders and a system that did not say no - they found ways & programs to say "yes". And everybody made money.

Here's my question about this current cycle - will there be a consequence to the borrower who has experienced a foreclosure? We know that when the bankruptcy laws changed in 1986 and these new loan programs came out in the mid-90's the consequences of filing bankruptcy went away. You no longer had to wait 7-10 years before you could borrow money again. Will those folks currently having trouble be able to get loans when "the credit markets open"?

If not, then this recession will most likely last a longer than current predictions. If they are able to get loans again in the near term, then can we at least try to protect ourselves from this happening again by emphasizing financial education to our kids?