June 12, 2007 -- In another sign that the housing market is taking a major tumble, Americans across the country are getting foreclosure notices at a record pace.
New data released this afternoon indicates that one in every 656 homes in the United States went into foreclosure during May.
Irvine, Calif.-based RealtyTrac says more than 176,000 people got foreclosure notices last month. That is the highest figure they have ever recorded in their monthly report and is 90 percent higher than the numbers from a year ago.
"Such strong activity in the midst of the typical spring buying season could foreshadow even higher foreclosure levels later in the year," said James Saccacio, CEO of RealtyTrac, in a release accompanying the data.
Experts say the boom in foreclosure was expected.
Millions of Americans with poor or undocumented credit were given mortgage loans during the height of the housing bubble, and now that their adjustable rates are resetting higher, many face the prospect of losing their homes.
Six of the nation's largest lenders who specialized in these high-risk borrowers filed for bankruptcy earlier this year after investors lost confidence in the $600 billion subprime market when default rates started to rise.
For the past six months economists have been watching the mortgage market closely, attempting to gauge the impact of the shakeout in the subprime mortgage market.
"The principal source of the slowdown in economic growth that began last spring has been the substantial correction in the housing market," said Fed Chairman Ben Bernanke in a speech in late March. Bernanke has said the downturn in the housing market has shaved 1 percent off the nation's overall economic growth in the past year.
But the shakeout in the market is far from done.
First American CoreLogic analyst Chris Cagan said he believes about 1.1 million Americans will lose their homes to foreclosure in the next seven years because they cannot pay the increasing monthly mortgage bills after a reset.
Banks have started to tighten lending standards, making it harder for subprime borrowers to get a loan, but housing analysts say the damage has already been done. Several years of easy-to-get financing deals attracted many people into the market even though they would not have traditionally qualified for a home loan.
A RealtyTrac spokesman tells ABC News the nation's foreclosure rates will remain at elevated levels for at least another year.