Home Foreclosures Almost Double in July as Rates Rise

Aug. 21 (Bloomberg) -- U.S. homes facing foreclosure almost doubled in July as property owners with adjustable-rate mortgages saw their payments rise and were unable to refinance because of the subprime crisis, RealtyTrac Inc. said.
Lenders sent 179,599 notices of default, scheduled auctions or bank repossessions last month, a 93 percent increase from a year earlier, Irvine, California-based RealtyTrac said today in a statement. California, Florida, Michigan, Ohio and Georgia accounted for more than half of the country's total filings.
An increase in foreclosures will add more homes to the market and further erode values. U.S. home sales dropped to a four-year low in the second quarter and prices fell in a third of U.S. cities, according to the National Association of Realtors. In June, a nearly nine-month supply of houses was on the market, double that of two years ago.
``Home equity has been a major factor in consumer spending, and the major concern is we'll go into a recession as that equity dries up,'' said Susan Wachter, professor of real estate at the University of Pennsylvania's Wharton School in Philadelphia. ``Consumer spending drove us out of the last recession in 1991, and we might see a reversal of that now.''
`A Little Worse'