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LOS ANGELES — Rosalyn Dalebout rents out space in her home to three tenants, has cut off her phone service and canceled her earthquake and life insurance — all to pay her mortgage every month.
So far, she's one of the lucky ones.
More than 1 million American households are likely to lose their homes to foreclosure this year, as lenders work their way through a huge backlog of borrowers who have fallen behind on their loans.
Nearly 528,000 homes were taken over by lenders in the first six months of the year. If foreclosures continue at that rate, the yearly number would eclipse the more than 900,000 homes repossessed in 2009, RealtyTrac Inc., a foreclosure listing service, said Thursday.
"That would be unprecedented," said Rick Sharga, a senior vice president at RealtyTrac.
Lenders have historically taken over about 100,000 homes a year, he said.
The surge in foreclosures reflects a crisis that has shown signs of leveling off in recent months but remains a crippling drag on the housing market and the economy.
Many homeowners struggling to make their monthly payments have had little success in negotiating more deals.
Dalebout, a manager of a recreation center who lives in the Salt Lake City suburb of Holladay, said her lender has refused to refinance her loan with lower rates and payments.
The monthly payments on her $240,000 mortgage take more than half her salary.
"I'm just running into a lot of brick walls," Dalebout, 58 said.
Banks seem to be creating two classes of troubled homeowners. Those who are falling behind in their payments are being allowed to stay in their homes longer because lenders are reluctant to add to the glut of foreclosed homes on the market. At the same time, lenders are stepping up repossessions to clear out the backlog of bad loans.
"The banks are really sort of controlling or managing the dial on how fast these things get processed so they can ultimately manage the inventory of distressed assets on the market," Sharga said.
On average, it takes about 15 months for a home loan to go from being 30 days late to the property being foreclosed and sold, according to Lender Processing Services Inc., which tracks mortgages.
The number of homeowners that received a legal warnings that they could lose their homes in the first half of the year climbed 8 percent from the same period last year. But the rate dropped 5 percent from the last six months of 2009, according to RealtyTrac, which tracks notices for defaults, scheduled home auctions and home repossessions.
About 1.7 million homeowners received a foreclosure-related warning, one of several steps in the foreclosure process, between January and June. That translates to one in 78 U.S. homes.
Nevada posted the highest foreclosure rate in the first half of the year. Arizona, Florida, California and Utah were among the other foreclosure hotbeds. But the problem stretches to all parts of the country.
Sherri Leu of Lino Lakes, a suburb of Minneapolis, is unemployed and stopped receiving unemployment benefits earlier this year.
"I burned up my savings," she said. "The best thing that's going to help me is a job."
The software engineer has been living on what's left of a $120,000 home equity line of credit she took out shortly after she bought her house in 2006.
Leu estimates she's got enough money for another five or six mortgage payments.
"I might try to put it up for sale," Leu said. "The other option is to let the bank have it, but then I'll end up walking away losing money I put down on the house."
Assuming the economy doesn't worsen, RealtyTrac's Sharga projects lenders won't work through the backlog of distressed properties until the end of 2013. More than 7.3 million home loans are in some stage of delinquency, according to Lender Processing Services. The fastest-growing group of foreclosures is coming from people who took out conventional fixed-rate loans.
The prospect of lenders taking over more than a million homes this year is likely to push housing values down, experts say. Foreclosed homes are typically sold at steep discounts, lowering the value of surrounding properties.
"The downward pressure from foreclosures will persist and prices will be very weak well into 2012," said Celia Chen, senior director of Moody's Economy.com.
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