Not surprisingly, the number of foreclosures in the U.S. was up 24 percent from January 2009 through March 2009 over the same period last year.  The really bad news is that the number of foreclosures is likely to go even higher in the coming months.

Many lenders suspended foreclosures because of their political unpopularity, and in anticipation of a mortgage bailout plan from the White House.  However, in the next few weeks it appears banks and mortgage companies will be restarting foreclosures on those who do not qualify for bailout.  President Obama’s plan to slow foreclosures may temporarily keep the number low, but the long term answer appears to be consolidation in the real estate market.

Foreclosures, to those being foreclosed on, are a painful experience.  It feels like someone came into your home, forced you out on the street, and wrecked your credit in the process.  However, foreclosures are a necessary evil in the world of real estate financing.

For a variety of reasons, from irresponsibilty to downright bad luck, people at some point in there homeownership lose the ability to keep up the payments.  It isn’t necessarily a poor reflection on them, rather a reflection on their finances and the fact they were probably in over their heads.

So those who can no longer afford their mortgage give up the home and either buy a cheaper home, or rent. Renting is probably the best option, and gives those who have been foreclosed on time to lick their wounds, save a little money, and get back on their feet.  The foreclosed homes are then sold to new homeowners, or investors, and the risk to the lender is mitigated.  Though painful, this is really the only corrective action that works, long term.

How far are you willing to go to protect the value of your home? So far as to boost the value of your neighbor’s foreclosed home?  Apparently, that’s what some folks are considering around the country in an effort to help their houses retain value.

I recently read an article at The Passive Dad pitching the idea of a neighborhood protecting their home equity through collective sweat equity. In the article he mentions home values dropping 40% in his neighborhood, and foreclosures cropping up around his own home.  True enough, living next to a foreclosed home can cause make your own home a tough sell, but I’m not sure how far I’d be willing to go to help a bank push through a sale.

When a foreclosure occurs the bank itself is stuck with the home and often tries to sell it for enough to pay off the remaining balance, or at least a significant amount of it.  Any amount they cannot recapture via selling winds up being written off, much to the chagrin of shareholders.  Still, unless the house was dilapidated to the point that the disrepair crept onto my property, I’d be inclined to let it stay that way.

What I would be far more willing to do would be to help my neighbors avoid foreclosure in the first place.  If financial contributions are not feasible, I would gladly help neighbors make necessary repairs, cleaning, upgrades, etc. to help get the house sold.  Imagine how quickly a group of neighbors could paint a home if everyone grabbed a roller and a brush!  Amish communities pitch in to raise entire barns in the same time!

The article raises a good point–when the dust settles from the financial downturn, will banks be less respected because of their culpability in creating an environment where interest-only and adjustable rate mortgages were oversold to those unable to afford a home?  Or will politicians, or the consumer themselves, be held to blame?  It will be interesting to see how it all plays out in time.