Foreclosures Up 24 Percent

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.