CNNMoney reports that in the first quarter of 2010 foreclosures spiked 7%. That is a 16% increase over last year at the same time. Why? Simply, government intervention. Government got involved last year, putting moratoriums on foreclosures, pressuring banks to modify loans (but not mandating it), implementing new programs every three months for banks to learn and train on, etc.
Despite kicking the can down the road, not much has changed. Very little homeowners have permanent loan modifications, 2nd lien holders and PMI companies continue to hold the short sale process hostage, and our recovery has been delayed with all the stall tactics mentioned above.
Is is bad that all these foreclosures are happening? Yes and no. Itis unfortunate that people are losing their homes, neighorhoods are being blighted, prices are declining. However the bright side is, once they are worked through then the market can really recover. We HAVE to work through the foreclosures. Shutting our eyes and pretending they are not there does not make it so.