Home foreclosures doubled in second quarter (Roundup)

Jul 25, 2008, 16:39 GMT

Washington - US home foreclosure filings more than doubled in the second quarter compared to the year-earlier period as plunging housing prices have continued to threaten mortgage-holders across the United States.

Nearly 740,000 households, or one in 171, entered some stage of foreclosure - receiving a mortgage default notice, being foreclosed on, or warned of the pending auction of their home - during the April to June period, according to RealtyTrac Inc.

The figure is up 121 per cent from the second quarter of 2007 and 14 per cent from the first quarter of this year.

The report comes as the Senate is considering a major housing bill that could help some 400,000 struggling homeowners refinance into government-backed loans.

Majority Democrats in the Senate announced a vote would take place on Saturday, after the House of Representatives passed the same legislation earlier in the week.

The bill would also approve a government emergency plan for struggling lenders Fannie Mae and Freddie Mac, which together manage about half of the 12-trillion-dollar mortgage market.

President George W Bush this week dropped his earlier opposition to the legislation and is expected to sign it into law next week.

While a select few states have been hit particularly hard, including Nevada, California, Florida and Arizona, RealtyTrac said that 48 of 50 states and 95 of the 100 largest metro areas have seen foreclosure rates climb in the past year.

Falling housing prices since early 2007 have forced a record number of homeowners to default on their mortgages, prompting financial firms to write off nearly 500 billion dollars in mortgage- related assets.

A total of 1.5 million properties are currently facing foreclosure or are bank-owned, according to RealtyTrac. Bank repossessions accounted for 30 per cent of all foreclosure filings in the second quarter, up from 24 per cent in the first quarter.

Defaults on subprime mortgages - loans to people with a poor credit history - have been at the heart of the US housing crisis, and the higher bank repossessions suggest the market is slowly 'purging the problem loans' before stabilizing, according to James Saccacio, chief executive officer of Realty Trac.

But Saccacio warned that a second 'surge' in mortgage defaults was possible in the second half of the year, which could 'refill the foreclosure pipeline and prolong the recovery.'