Us: foreclosure menace ‘escalating'?
Foreclosures in the US have continued to be a major cause for concern over the last month.
According to research firm RealtyTrac, foreclosures more than doubled between April and June from the previous year. Figures also showed that one in every 171 US households was in the process of losing their home - up 121% on last year.
Meanwhile, sales of new homes fell 0.6% in June, according to the Commerce Department - the seventh fall in the figure in the past eight months. This now means that new home sales are down by 33.2% from a year ago.
Mortgage defaults by US homeowners have surged as millions of sub-prime loans are reset at higher interest rates, and the drop in house prices has pushed more homes into negative equity.
A spokesperson for Reality Trac commented: "The housing crisis is causing serious problems for the wider US economy. Almost 740,000 US homes entered the foreclosure process in the second quarter of 2008.
This includes receiving a default or bank repossession notice or warning of an impending auction.
"The worst hit areas were Nevada, California, Florida and Arizona, which had seen the biggest house price rises during the boom years, and the largest volume of sub-prime lending.
"Most areas of the country are seeing at least some levels of foreclosure activity. California has the most filings - 202,599 - which is up 198% from the same period a year ago.
Some help to homeowners may be available if the US Congress finally passes the housing bill, which aims to help hundreds and thousands of homeowners trapped in unaffordable mortgages.
The bill, if it became law, would allow these borrowers to refinance their mortgages with cheaper, fixed-rate mortgages backed by the government. It cleared the US House of Representatives this week and is expected to be passed by the Senate and signed by George W. Bush in the next few days.
But many analysts believe the housing market has not yet hit rock bottom, and falling house prices could put millions more at risk of foreclosure.