Foreclosures in Sept. double year-ago total

Home foreclosures doubled in September from a year earlier as subprime borrowers struggled to make payments on adjustable-rate mortgages, RealtyTrac Inc. said yesterday.

Still, the 223,538 foreclosure filings last month were 8 percent less than in August.

California had the most, with 51,259 filings, and Florida was second, with 33,354. The national foreclosure rate was one for every 557 households.

New Jersey ranked 13th, with 5,162 foreclosure filings, a 60 percent increase from September last year. That represented one filing for every 667 households in the state. In Pennsylvania, filings rose 22 percent to 3,821 in September, or one for every 1,419 households, RealtyTrac said.

Foreclosures are deepening the U.S. housing recession by pushing more homes onto a market where sales and prices are dropping. There is a 10-month supply of unsold homes, the most in at least eight years.

As many as half of the 450,000 subprime borrowers - those with poor credit histories - whose mortgages will reset through November may lose their homes because they cannot 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 RealtyTrac, of Irvine, Calif.

Adjustable-rate mortgages to subprime borrowers accounted for 7.3 percent of outstanding home loans and 44 percent of new foreclosures, according to the Mortgage Bankers Association in Washington.

Separately yesterday, House and Senate lawmakers said they reached a compromise under which they would support legislation that permits Fannie Mae and Freddie Mac to increase holdings of mortgages and mortgage-backed securities by $74 billion each, or 10 percent above current limits of $735 billion, for six months. Eighty-five percent of the money will be used to help financially struggling homeowners.

The foreclosure process typically begins when a borrower is more than 90 days late on mortgage payments and the lender files a notice of default. If the borrower doesn't pay what's owed, the property goes to auction. If bids don't reach that amount, the lender takes ownership of the house.