WASHINGTON — The number of households caught up in the foreclosure crisis rose more than 5 percent from summer to fall as a federal effort to assist struggling borrowers was overwhelmed by a flood of defaults among people who lost their jobs.
The foreclosure crisis affected nearly 938,000 properties in the July-September quarter, compared with about 890,000 in the prior three months, according to a report released by RealtyTrac. That puts foreclosure-related filings on a pace to hit about 3.5 million this year, up from more than 2.3 million last year.
Unemployment is the main reason homeowners are falling into trouble. While the economy is likely out of recession, the unemployment rate — a 26-year high of 9.8 percent — isn’t expected to peak until the middle of next year.
Lenders sometimes allow unemployed homeowners to defer three to six months of payments while they are looking for a job. But there’s little else they can do.
“The sheer scale of the problem is preventing the loan-modification programs from having the kind of impact we’d all like,” said Rick Sharga, RealtyTrac’s senior vice president for marketing.
Last week, the Obama administration reported that 500,000 homeowners have received mortgage help since the program was launched in March. But new defaults are still exceeding the number of borrowers getting help.
Mortgage companies have slowed down the pace of foreclosures as they evaluate whether borrowers qualify for the administration’s program.
