The spike in foreclosures that began two years ago in the subprime market was triggered by a halt in rising home prices. Once subprime borrowers couldn't use their magical equity that the bubble created out of thin air to refi into a better loan, they could no longer avoid the painful resets on their mortgage rates. So they began defaulting in droves. This led to more downward pressure on home prices as foreclosures starting hitting the market and adding to the growing supply of houses for sale. Problems in the subprime market have now spilled over into the prime market as the economy has taken a turn for the worse. Prime borrowers are defaulting now for more traditional reasons, such as the crappy economy. They can't refinance or sell their house because they are upside down on their mortgages. While subprime defaults may be peaking (although this too might be temporary due to various moratoriums), prime defaults are just beginning to pick up steam. Way more pain ahead on the housing front.
Here's the chart from the WSJ article: