U.S. home foreclosures doubled in September from a year earlier as subprime borrowers struggled to make payments on their adjustable-rate mortgages, RealtyTrac Inc. said.
There were 223,538 foreclosure filings last month, including default and auction notices and bank repossessions, the research company said today. California had the most with 51,259 and Florida was second with 33,354. The national foreclosure rate was one for every 557 households, according to RealtyTrac.
Foreclosures are deepening the U.S. housing recession by pushing more homes onto a market where sales and prices are dropping. The glut of unsold homes makes it difficult to sell or refinance without losing money. As many as half of the 450,000 subprime borrowers whose mortgages will re-set through November may lose their homes because they can't afford the higher payments, according to a report by Credit Suisse Group.
``The truth of the matter is that borrowers are going into default as soon as they hit their adjustments,'' said Rick Sharga, executive vice president of marketing at Irvine, California-based RealtyTrac.
The WSJ has an article today that highlights the breadth of the problem:
To examine the surge in subprime lending, the Journal analyzed more than 250 million records on mortgage applications and originations filed by lenders under the federal Home Mortgage Disclosure Act. Subprime mortgages were initially aimed at lower-income consumers with spotty credit. But the data contradict the conventional wisdom that subprime borrowers are overwhelmingly low-income residents of inner cities. Although the concentration of high-rate loans is higher in poorer communities, the numbers show that high-rate lending also rose sharply in middle-class and wealthier communities.
The Journal's findings reveal that the subprime aftermath is hurting a far broader array of Americans than many realize, cutting across differences in income, race and geography. From investors hoping to strike it rich by speculating on condominiums to the working poor chasing the homeownership dream, subprime loans burrowed into the heart of the American financial system -- and now are bringing deepening woe.
The WSJ article is in the free section of the paper and includes a really good interactive map. I highly recommend it.
The bottom line is pretty clear.
1.) This problem will be with us a long time.
2.) A lot of people are gong to get hurt in this.