Increasing foreclosures: There are job losses everywhere around the globe.
People are either losing their jobs or finding their income reduced.
I have also read in an article that there is lack of staffing in the banks to process all the loan modification requests.
I am not sure if that is true or not.
But you need to remember that you have to act soon and prevent losing your home.
Allowing the foreclosure to happen will spoil your credit report.
Getting loans in the future would become hard if the credit scores go down.
You will only find heavy interest loans and would never be able to get the cheapest loans at least for 24 months.
Best way to avoid the foreclosures: There are two ways which you can use to stop the foreclosure.
They are:

1. mortgage forbearance,
2. refinance or loan modification - Obama's mortgage stimulus plan has made getting these solutions easier nowadays.
   

Which is a better solution? If the lender provides a mortgage modification,it means that he is either cutting off a part of the principal or reducing the interest rates.
So this means that there are losses involved for the lender.
Thus there are news stories in some websites that banks are not very reluctant to allow the modifications.
But you can get the forbearance easily if you convince the lender that your financial situation is definitely going to get better as time passes on.
But to make all these things happen,you need to provide a proper financial hardship letter and proofs for everything you claim.