Want more proof of the meltdown in the real estate market?

Bloomberg News is reporting that foreclosure filings jumped 12 percent in February from a year earlier, the second-highest increase since 2005.

That's troubling for many reasons. For one thing, it's a huge increase. Secondly, we're not even half way done 2007, which makes me wonder what's down the road.

Remember that mortgage companies want to avoid foreclosures at all costs. It's a costly, time-consuming process and will likely lead to them losing money, which makes any significant rise in them troubling. RealtyTrac says foreclosures may rise by one-third this year if current trends continue, according to Bloomberg.

Maybe the subprime lenders are pulling the trigger faster now than they would have earlier because they know that the credit-challenged borrowers won't be able to afford their payments on their adjustable rate mortgages. Congress is sure to take up the issue.

No matter how you look at it, things are going to get much worse in the real estate market before they get better. Those that are looking to sell or refinance their homes in the coming months have my deepest sympathies.

The Federal Reserve today admitted that it could have done more to avert the meltdown among subprime lenders. I guess 20-20 hindsight is everything.

Senate Banking Chairman Chris Dodd, D-CT, pressed the Fed to take a harder line at a hearing in Washington today, according to Bloomberg News.

"Regulators were supposed to be the cops on the beat, protecting hard-working Americans from unscrupulous financial actors," said Dodd, a candidate for president. "Yet they were spectators for far too long.''

An executive from Countrywide Financial Corp. (NYSE:CFC) urged Congress to "be careful about an overcorrection" that would cut access to credit for people with bad credit histories, Bloomberg said.

Fat chance of that happening.

Life is going to get much harder for subprime lenders. They have managed to unite the Democrats and Republicans against them, no small feat in the current political climate.

Interestingly, New Century Financial Inc. (NYSE:NEW) was a no-show at Dodd's hearing.

Delinquency rates on subprime mortgages are their highest levels since September 2002 and foreclosure rates are their highest levels since 2004,

Guess what? Subprime loans are not the only shaky loans out there.

You don't want to be around when that other shoe drops.

The only way this market can get out of its funk is with a tough love pep talk from television's Dr. Phil. If he can convince self-involved narcissists of the errors of their ways, imagine what he could do to boost consumer confidence. Something needs to be done.

Consumer confidence is down from a 2 1/2 year high. Is anyone surprised? Gasoline prices are rising. Mortgage defaults are rising and there was that recent slump in the stock market. Wall Street is clearly on edge this morning as investors wait the February jobs report, an update on the trade deficit and speeches from officials from the Federal Reserve. Stock futures are trading down following a mixed day in Asia.

In corporate news:

AT&T Corp. (NYSE:T) wants to overhaul its partnership with Yahoo Inc. (NASDAQ:YHOO), according to the Wall Street Journal.

Applebees International Inc. (NASDAQ:APPB) said an activist investor group lead by former SEC head Richard Breeden rejected its off fer for two seats on the board of directors. Breeden Capital Management LLC wants four and some three-course combo meals to go.

China is forming a company to invest its $1 trillion in foreign currency reserves. According to the Associated Press, economists say Beijing might put as much as $200 to 400 billion to the new company, creating one of the world's largest investment funds. Wall Street bankers are chartering squadrons of private planes to Beijing as we speak.

Troubled subprime lender New Century Financial Corp. (NYSE:NEW) has stopped making loans and analysts are expecting the company to file for bankruptcy protection, according to Bloomberg News.

Will the housing market rebound this year?.

Sure, housing sales declined in 40 states during the fourth quarter. Nevermind that as the Wall Street Journal (subscription required) points out that this was the first time that data from the National Association of Realtors has shown a decline in the majority of cities.

NAR Chief Economist David Larish said in a statement that "hopefully the fourth quarter was the bottom of this current business cycle."

Here's why, according to NAR spokesman Walt Molony, the group is optimistic:

• Over the last two years, there have been 4 million jobs created underscoring the strength of the economy;
• Immigrants are buying homes as they settle in the U.S;
• Interest rates remain at historic lows
• The children of the baby boom generation are starting to settle down in their own households;
• Increasing numbers of minorities are also buying homes;
• October and November sales rose and the supply of existing homes peaked in July;

One reason why the market is picking up is that many sellers are lowering their prices and offering incentives to buyers like paying for closing costs. The NAR doesn't keep statistics on how many sellers offer such deals but anecdotal evidence of the trend abounds.