After a 4.2 percent drop the prior month, Notices of Default, the initial step in the foreclosure process, rose by 11.8 percent to the second highest level on record at 45,691 filings. Year-over year filings increased by 10.0 percent from June of 2008.

No matter what anyone says, it looks as if this housing market is going to continue to wither.  President Obama is actually considering a housing plan in which banks own homes and the home owners who defaulted will continue to live in the house but pay the banks rent at a much lower rate.  I guess this is one way to keep people in their homes.  I am not sure what that does for the housing market or the economy though.

For quite some time I have reiterated that the housing market has not seen anything close to a bottom.  Eventually President Obama will realize that he should let the markets set interest rates.  This will increase mortgage rates but that will cause home prices to fall even further and just maybe we will flush out the bottom in this housing market.  It might be another 10% to 15% lower but at least free market capitalism will be at work instead of propping up a struggling housing market.  Tear off the band-aid; don’t gently peel it off.