Foreclosure filings jump

LOS ANGELES – U.S. foreclosure filings nearly doubled in October from the same month last year, the latest sign many homeowners are falling behind on mortgage payments and increasingly losing their homes, according to a mortgage research company.

A total of 224,451 foreclosure filings were reported in October, up 94 percent from 115,568 in the same month a year ago, Irvine-based RealtyTrac Inc. said Thursday.

The number of filings in October rose 2 percent from September’s 223,538.

The U.S. had one foreclosure filing for every 555 households in October, RealtyTrac said.

The filings include default notices, auction sale notices and bank repossessions. Some properties might have received more than one notice if the owners have multiple mortgages.

In all, 45 states saw an increase in foreclosure filings over last year.

While the number of filings is still up year-over-year, it has leveled off in the last two months after hitting a high for the year in August.

Efforts by lenders under pressure to modify loan terms for at-risk borrowers could explain the slower sequential increase in filings, but the trend is likely more a result of a lag in filings after interest rate changes on adjustable-rate mortgages, said Rick Sharga, RealtyTrac’s vice president for marketing.

“What we probably did was come out of a reset cycle, but (the filings) have leveled off at a much higher level than before we got to this point,” Sharga said.

It typically takes two to three months after a rate reset before a borrower who fails to make payments is considered in default.

Tighter lending standards and the ongoing housing slump are making it harder for homeowners who can’t afford their mortgage payments to sell their homes or refinance.

Many homeowners with adjustable-rate mortgages are also facing steep monthly payment hikes. Experts estimate some 2 million of the loans are due to reset at higher rates in the next eight months, which could lead to more foreclosures.

One alarming trend in October was an increase in the number of homes that were repossessed by lenders after they failed to sell at trustee auctions.

“About 35 percent of the total filings we collected this month were notices of bank repossession,” Sharga said. “Historically, on average, that number is more like 20 percent.”

That means more borrowers who entered foreclosure ended up losing their homes.