“The housing boom was a house of cards”

From Newsday:

U.S. foreclosure rate doubles in a year

U.S. homeowners entered the foreclosure process last month at more than double the rate of a year ago as tightening credit made it more difficult to refinance and a swelling supply of unsold homes made it tough to sell.

The number of homeowners in all three phases of foreclosure rose last month over the same period a year ago, according to Sacramento, Calif.-based Foreclosures.com, which gathers data from county courthouses nationwide. Those receiving their first notice of foreclosure from a bank climbed 127 percent, those with homes going up for sale by auction jumped 164 percent and those whose homes were repossessed by banks went up 40 percent.

Eight of 10 subprime loans, given to borrowers with bad or limited credit histories, adjust over time to higher interest rates, and many homeowners can no longer afford their mortgages. With existing home sales at a four-year low, it’s more difficult to sell because there are so many homes on the market.

“The housing boom was a house of cards,” said Alexis McGee, president of Foreclosures.com. “A lot of people who are living beyond their means and borrowing from Peter to pay Paul find that it’s starting to catch up with them.”

The number of foreclosure filings decreased last month in all three categories compared with March, Foreclosures.com said. Notices of default dropped 16 percent, auctions decreased 12 percent and bank repossessions fell 14 percent.

The March 2007 numbers compared with a year earlier were similar to the increases of April 2007 over April 2006. First filings increased 126 percent in March 2007 compared with March 2006, notices of auction climbed 121 percent and the number of bank repossessions grew 51 percent, Fore closure.com said.