With Election Day behind us, you can count on seeing more and more media reports like the one appearing in HousingWire on Nov. 13, written by reporter Brena Swanson, “RealtyTrac: Foreclosures increase for two months straight.”

No need to delight in saying, “I told you so,” but, hey.

In her story, Swanson states that foreclosure filings, which include default notices, bank repossessions and scheduled auctions, increased 15% from October, according to RealtyTrac’s October Foreclosure Market Report.

While this is down 8% from last year’s levels, as Swanson noted, this is the largest month-over-month increase since March of 2010 when foreclosure activity peaked in the U.S. following the housing crash.

Other statistics commented on in her story clearly show a rise in foreclosure activity. Many analysts, including myself, believe that these recent increases, coupled with other indicators demonstrate that this rise is due to much more than a seasonal pattern. Among these indicators are the following:

  • Housing prices rose in many markets because of artificially created demand – in some of these markets price increases have stalled or have even begun to fall.
  • Some Institutional investors are pulling out of many markets, demonstrating their bearish attitude toward the housing market (today) – some of these investors are now posting quarterly losses.
  • Despite the recent drop in interest rates, which is quite temporary and no doubt tied to the election cycle, rates will definitely rise as a result of the Fed discontinuing Quantitative Easing, thus impacting many consumers’ ability to qualify for loans.
  • First-time buyers are not entering the marketplace in the numbers required to push move-up buyers in the direction they want to move.
  • Federal agencies are once again focusing on loosening credit qualifications for low-income buyers. Despite claims that underwriting guidelines and other measures will mitigate defaults, once “loosening” begins it is only a matter of time before the pendulum swings too far... again.
  • The FHA has been making a much larger percentage of new mortgage loans with low down payments – This is the “new sub-prime” market and there is a bubble forming.
  • While the “magical” unemployment numbers continue to drop, there are still millions of people who are working in jobs that pay less than the ones they used to have, are working part time, many haven’t had a decent raise that kept pace with inflation, and still others in large numbers are no longer counted in the workforce.

In addition, while intended to be “good news,” the Mortgage Bankers Association Builder Application Survey data for October 2014, as also reported in HousingWire, indicated that mortgage applications for new home purchases increased by 8% compared to the previous month. This isn’t necessarily as good as it may appear. Remember, these are “applications.” How many of those applications turned into actual sales?

And the MBA’s data indicated that estimates of home purchases picked up in October, particularly for higher-priced homes. This is an indicator that even more potential buyers in the entry-level market are being squeezed out already. Increased interest rates will not help this segment of the housing market.

The company with which I am affiliated, RIO Software Solutions, will be watching very closely over the next several months to see if actions will be taken by the government to improve the job market by removing obstacles that have greatly hindered the private sector from bursting out of the malaise of the past six years.

There is no great secret to how we can improve the economy in general and the housing market in particular: Have government get out of the way and unleash the power of the American people. Unshackle small businesses, the real backbone of this country and promote self-reliance. And in so doing, begin to help more Americans break away from an entitlement mentality. For starters, create policies that return us financial sanity.

The policies followed over the past several years have clearly not worked for middle-class citizens. If we do not reverse course I believe that not only will we continue to see foreclosure activity rise, we will finally experience the looming financial calamity that so many economists have been warning us about. Our deficits  and debt can no longer be kicked down the road by Washington.