Hold the phone. Or better yet, hold that $400 billion dollar check the Federal Government is about to mail out to cities around the country to buy foreclosed homes. This $400 billion dollar experiment with the taxpayer's money is just part of a proposal designed to prevent the mortgage "crisis" from getting worse. After all, foreclosures are still on the way up and we need to do something. Anything.

Realtytrac, the online foreclosure marketplace, just reported that foreclosures were up nationwide by 57 percent over the same period last year. 57 percent is a lot and is an indication that people are still hurting. Hurting because of all those subprime loans with adjustable rate mortgages that are resetting to higher rates causing people to default.

Wrong. And the numbers prove it.

Yes, foreclosures were up 57 percent compared to March 2007 but they were up only five percent from the previous month. And do you know what else? Foreclosures are actually down in many states where foreclosures were thought to also spiral out of control. Take Texas for instance. Foreclosures aren't up in Texas compared to the same time last year and in fact are down. Way down. As in 63 percent down! Texas isn't alone as New Jersey reports that foreclosure filings are down nearly 20 percent and New Mexico fell 32 percent.

Wait a minute! I thought the problem with all these foreclosures was that lenders made icky loans to people that couldn't afford to make the payments! Especially when those subprime adjustable mortgages reset to higher rates.

Were Texas, New Mexico, New Jersey, Hawaii and Delaware the only states that didn't have subprime loans? Or stated income loans? Or hybrids? Hardly! All of these states that saw a drop in foreclosure filings had their fair share of subprime and alternative loans.

That tells me that maybe it's not the type of loan that was issued that's the problem. I know everyone wants to blame somebody, but if it were the type of loan that was the problem then this latest foreclosure data is suggests they're wrong.

Perhaps it's simply an economic issue where people have lost their jobs or otherwise fallen behind on their payments and couldn't sell the property because home prices declined and they were "upside down."

Maybe the open markets are working after all. Maybe it was a situation where consumers felt compelled to buy real estate because if they didn't they'd be left behind. After all, home prices were escalating at nosebleed rates! Those consumers took out loans thinking that if something ever went bad they could always sell. Regardless of the existence of any subprime mortgage loan.

I say put a stop payment on that $400 billion dollar check. We might have been wrong all this time.

Published: April 18, 2008

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, a veteran Mortgage Banker, successful Real Estate Consultant and author of Your Guide to VA Loans, Mortgages 101: Quick Answers to Over 250 Critical Questions About Your Home Loan, Who Says You Can't Buy a Home!, and Mortgage Confidential: What You Need to Know That Your Lender Won't Tell You, is a former columnist and Contributing Editor with San Diego-based Mortgage Originator Magazine. Reed is President of CD Reed Mortgage Bankers, Austin, TX and is a Past President of the Austin Mortgage Bankers Association.