More than two million American homeowners received foreclosure notices last year, according to RealtyTrac. It's an epidemic that's rapidly spreading through all neighborhoods, from those in the inner city to the wealthy suburbs.

Some of those foreclosure notices went to house "flippers" left holding unsold condos or subdivision houses. But most were sent to young families, middle-aged couples and first-time homebuyers, reeling from the shock of losing their piece of the American dream.

Some point the finger at "greedy speculators" who hoped to make a quick profit in the housing boom. Others blame mortgage brokers, who made big bucks by offering quirky, adjustable-rate mortgages. Some say banks are the problem. They were eager to lend, but can't be reached by phone now that borrowers are falling behind.

It's time to stop blaming and act sensibly. If we don't, the foreclosure crisis will eventually touch all Americans.

I spent the past week with three families who lost their homes to foreclosure. None of them were real estate speculators. All three desperately wanted to keep their homes, and were willing to sacrifice to do so. But they were trapped in a system that doesn't consider each family's circumstances.

One family avoided its lender, out of fear. Another took on the system, and won. The third tried to make sense of a policy that encourages borrowers to fall behind on payments to get ahead.

All were caught in an unfeeling and irrational bureaucracy that belies this tsunami of tragedy. Here's what's really wrong:

Bureaucratic confusion: Government programs sound inspiring, but policy makers don't work in the loan modification departments at lenders and servicers. Many people who work at these companies don't understand the rules of older programs, much less the latest foreclosure prevention plan from the Obama administration. And there aren't enough trained people who are empowered to make sensible decisions quickly.

Economic disincentives: First, it's easier and cheaper to turn defaulted mortgages over to foreclosure attorneys, whose business is booming. The banks can write off the loans and move forward, wasting little of their employees' time.

Second, many of those loans carried private mortgage insurance, which protects lenders, who are no longer worried about taking losses at foreclosure sales. Perhaps the $1,000 the government plans to pay mortgage-servicing companies for each loan they adjust will offset these disincentives.

Shifting burdens: When a home falls into foreclosure, its residents must move. Often, they have nowhere to go. The number of homeless families is on the rise, putting the burden of the housing crisis on taxpayers. Meanwhile, foreclosure sales leave houses empty and vulnerable to vandalism, which saps property values even in nice neighborhoods.

I believe in free markets. But the free market in housing ended when Congress pushed banks to lend to unqualified borrowers and forced Fannie Mae ( FRE) and Freddie Mac ( FNM) to underwrite questionable mortgages, and when the Fed kept interest rates artificially low and inflated the real estate bubble.

Those actions fed the housing boom, and ensured that Congressmen were re-elected.

There's been a lot of discussion in recent months about who "deserves" to endure the consequences of foreclosure. But who will be the judge? If this recession continues, how likely is it that more unsuspecting homeowners, maybe some in your neighborhood, will be caught in this sinkhole?

It's time for leaders in Washington to stop blaming lenders, borrowers and everyone but themselves. We need a sensible system that aims to keep people in their homes until the economy turns around. And that's The Savage Truth.

Terry Savage is an expert on personal finance and also appears as a commentator on national television on issues related to investing and the financial markets. Savage's personal finance column in the Chicago Sun-Times is nationally syndicated. She was the first woman trader on the Chicago Board Options Exchange and is a registered investment adviser for stocks and futures. Savage currently serves as a director of the Chicago Mercantile Exchange Corp.

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