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Foreclosure filings hit record in 1st half of year

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Bloomberg News / July 13, 2007

SAN FRANCISCO -- Mortgage foreclosures in the United States jumped to a record in the first half as rising interest rates and falling home prices battered homeowners.

Almost 926,000 foreclosure notices were filed, 56 percent more than a year earlier and the most since Irvine, Calif.-based RealtyTrac started tracking the data in 2005. Foreclosures were the highest last month in California and Florida, where some home prices have fallen as much as 25 percent, and Ohio and Michigan, where the automotive industry fired more than 50,000 people in the past 10 years.

The jump in 30-year mortgage rates by more than a half a percentage point since May is putting a crimp on borrowers with the best credit just as a crackdown in subprime lending standards limits the pool of qualified buyers. Foreclosures also are increasing as the supply of unsold homes hit a record 4.43 million in May, according to the National Association of Realtors.

Foreclosure rates in "most states remained substantially above last year's levels," RealtyTrac chief executive James Saccacio said in a statement.

In June, defaults surged 87 percent to 164,644 from a year ago, said RealtyTrac, a seller of foreclosure data, yesterday. Last month's total was 7 percent lower than in May. California, Florida, Ohio and Michigan accounted for half the national total in June.

Homeowners are losing their property as the National Association of Realtors is forecasting the housing slump will persist into next year as builders curtail production. The group Wednesday reduced its sales forecast for the seventh consecutive month and said existing home sales will fall 5.6 percent.

US home prices will drop 1.4 percent this year and housing starts will tumble in 2008 amid higher mortgage rates and a glut of properties for sale, the realtors group said yesterday. The Chicago group said the median home price was $223,700 in May, a 2.1 percent decrease from a year earlier.

Nevada had the highest foreclosure rate in June with one filing for every 175 households, RealtyTrac said.

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