San Francisco - US home foreclosures doubled in the third quarter from a year earlier as subprime borrowers failed to make higher payments on adjustable-rate home loans, RealtyTrac said yesterday.
There were 635 159 foreclosure filings in the quarter, including default notices, auction notices and bank repossessions. This amounted to one foreclosure for every 196 households.
James Saccacio, the chief executive of RealtyTrac, which sells US foreclosure information, said: "Given the number of loans due to reset through the middle of 2008, and the continuing weakness in home sales, we would expect foreclosure activity to remain high and even increase over the next year in many markets."
Foreclosures are deepening the US housing recession by pushing more homes on to a market where sales and prices are falling. There is already a 10-month supply of unsold homes, the highest level in at least eight years.
RealtyTrac marketing executive Rick Sharga said the "absurd" number of subprime and adjustable-rate mortgages that were defaulting suggested that a greater number than usual of foreclosed properties would eventually go back to banks or be sold at auction. Historically, 40 percent of homes are lost.
Foreclosure filings in the three months to September increased 30 percent quarter on quarter.
Interest rates will rise this month for borrowers holding US mortgages worth $46.7 billion (R306 billion), according to data from Credit Suisse. Subprime borrowers, who have poor or patchy credit histories, account for $28.5 billion of those loans.
Adjustable-rate mortgages to subprime borrowers accounted for 7.3 percent of all home loans and 44 percent of all new foreclosures, the Mortgage Bankers Association said. Sharga said the monthly payments on adjustable loans could rise by 50 percent or more, sometimes doubling in size.
The foreclosure process typically begins when a borrower is more than 90 days late on mortgage payments and the lender files a notice of default.