US foreclosures soar by 71%

Misery swept through the American property market as the number of houses facing repossession shot up by 71% in the third quarter of the year, leaving more than 750,000 homeowners in danger of eviction. As the credit crunch tightened its grip, many more people fell behind on mortgage repayments. A million foreclosures are expected by the end of the year, amounting to a third of properties for sale. Figures from the research firm RealtyTrac showed that previously booming markets in California, Florida and Arizona were the worst hit. But there was a shaft of light as foreclosure filings slipped by 12% in September, largely because of legislation slowing the process of repossession. Each repossession has a knock-on effect as vacant properties attract vandalism and fall into disrepair, lowering the value of neighboring homes. The federal deposit insurance corporation has calculated that, on average, a foreclosure cuts $220,000 off the value of nearby property. Top of the table for foreclosures is Stockton, a city east of San Francisco, where banks filed repossession documents on 3.69% of properties during the third quarter. The rise in foreclosures emerged as the US government reported the sharpest monthly drop in home prices for 17 years. There was further evidence of the gloomy American economy in falling profits at the parcel delivery company UPS and the hotels firm Starwood, which owns the Sheraton chain.