U.S. foreclosure filings up 35 pct year over year

By Jim Christie

SAN FRANCISCO, April 25 (Reuters) - Underscoring the financial stress facing subprime mortgage borrowers behind on payments, foreclosure filings across the United States in the first quarter rose 27 percent from the prior quarter and 35 percent from a year earlier, online foreclosure marketplace RealtyTrac said on Wednesday.

RealtyTrac's top officer said delinquent subprime borrowers -- those with blemished credit who took on risky home loans during the housing boom and who are now struggling to make payments as interest rates reset higher -- propelled the increases and the filings are increasingly affecting homeowners of pricey properties and not just entry-level home owners.

Many analysts expect rising defaults will add to an already large inventory of homes for sale, slowing already sluggish home sales, weighing on home prices and cooling the broader economy.

"Certainly the surge in subprime defaults has contributed to the overall rise in foreclosures; we estimate that more than 50 percent of the foreclosure activity we charted in the first quarter was from subprime loans," James Saccacio, chief executive of Irvine, California-based RealtyTrac, said in a statement.

"However, it's not just low-end homes that are going into foreclosure; we're seeing a rising percentage of foreclosures with an estimated market value of more than $750,000," Saccacio said.

More than 430,000 foreclosure filings -- including default notices, auction sale notices and bank repossessions -- were reported nationwide in the first three months of the year, and at one filing for every 264 households, the first-quarter's foreclosure rate was the highest quarterly foreclosure rate in over two years, according to RealtyTrac.

"The rise in foreclosure activity was quite dramatic and widespread in the first quarter, with 37 out of the 50 states reporting year-over-year increases," Saccacio said.

Concerns about a potential wave of foreclosures has prompted U.S. and state officials to call for greater regulation of lenders and for efforts to help distressed mortgage borrowers.

A group of U.S. senators said on Monday the Federal Reserve has the authority to curb new subprime mortgage lending and should use that power to prevent abusive lending practices some analysts say is at the root of rising defaults on those loans.

Ohio has launched a program to rescue struggling homeowners and plans to raise $100 million through a bond sale to fund it. A California lawmaker has crafted a bill that would allow the state to tap a $2.9 billion housing bond to create a program to help subprime mortgage borrowers refinance their loans.

(For more stories on the subprime sector, please click on [ID:nN16195443])