NEW YORK, 23 August 2007 — Swamped by rising US mortgage interest rates, hundreds of thousands of home buyers are seeing their homes seized by banks in a wrenching drama behind the financial turmoil rocking markets.

Foreclosure filings doubled in July and a leading US senator says as many as three million Americans are at risk.

Amid falling home prices and tightening credit after the collapse of the housing market boom in early 2006, an increasing number of homebuyers are struggling, and failing, to make their mortgage payments.

The real-estate boom was in part fueled by loans to home buyers with poor credit histories, called subprime mortgages; adjustable-rate mortgages (ARMs), whose introductory low interest rates usually expire after two years; and lending practices that ignored due diligence in a rush for profits.

An expected peak period of ARMs adjustments to higher rates is beginning to kick in, further pressuring beleagured buyers who overreached in pursuit of the American dream of home ownership.

Foreclosure filings — including default notices, auction sale notices and bank repossessions — rose to 179,599 in July, a nine percent increase from June and 93 percent higher than a year ago, RealtyTrac, a leading foreclosure data firm, reported Tuesday.

Foreclosures affected one in 693 households across the nation last month, with Nevada, Georgia and Michigan the hardest hit, the firm said.

Nevada, for years one of the fastest-growing states in the country, had the highest foreclosure rate for the seventh month in a row: one in every 199 households. The rate was more than three times the national average and 215 percent higher than a year ago.

The plague of foreclosures covered nearly the entire breadth of the country. RealtyTrac said 43 of the 50 states had year-over-year increases in foreclosures in July.

And more than half of them were in just five states: California, Florida, Michigan, Ohio and Georgia.

A California company specializing in subprime mortgages said yesterday it was suspending new loans and cutting 1,600 jobs in response to the “ongoing turmoil” in the sector.

Accredited Home Lenders Holding Co., based in San Diego, said it would continue to service its loan portfolio of $8.4 billion but would curtail most other operations in response to the market turbulence.

“Substantially all of the retail lending business consisting of 60 retail branch locations and five centralized retail support locations will be effectively closed as of September 5, 2007,” the company said in a statement.

Five of the company’s 10 wholesale divisions will be shuttered as well, and it will halt new loans, effective immediately.

The company said its workforce would be trimmed to 1,000 from 2,600 as of June 30.

Accredited is the latest in a wave of companies feeling the pain from rising delinquencies in the mortgage market, especially in the subprime sector to persons with weak credit, which had seen an explosion during the US housing boom.

“These difficult decisions were made out of necessity in light of the continued and widely publicized turbulence in the mortgage and financial markets, but with a heavy heart,” said James Konrath, chairman and chief executive.

The company will maintain Canadian operations and continue servicing its existing loans.

“Accredited’s delinquency and loss numbers have historically been among the best in the industry,” Konrath said.

“Even though our servicing ratings have been downgraded over liquidity concerns in recent months, we intend to maintain the quality of our servicing operations and expect to continue providing the highest level of loan servicing for our bond investors.”

Detroit, Michigan, home of the struggling Big Three automakers, topped the list of 229 metropolitan areas tracked by RealtyTrac in July. Foreclosures in the Motor City jumped 70 percent in July from June, to one in 97 households, more than seven times the national average.

For the first seven months of the year, more than 1.1 million foreclosures were processed, up 60 percent from the same period in 2006 and representing about one household in 112, RealtyTrac said.

In California, whose economy would rank as the world’s sixth largest if the state were a country, foreclosures were filed for one in 57 households in the year to date.

The chief executive of RealtyTrac, James Saccacio, predicted last month the rate “could easily surpass two million” by the end of the year, which would represent a 65 percent increase from 2006.

Senator Christopher Dodd, the chairman of the powerful Senate Banking and Housing Committee, said Tuesday the foreclosure rate had hit a 37-year high.

“We may have as many as one million and (up to) three million people who could lose their homes ... because they got bad deals on mortgages,” he warned at a news conference after meeting with Federal Reserve chairman Ben Bernanke and Treasury Secretary Henry Paulson to discuss the real estate-related turbulence.

With the resetting of some mortgages, “that could push monthly payments up from $400 a month to as much as $1,500 a month if people in the typical subprime mortgage loan went out with teaser rates,” said Dodd, a 2008 Democratic presidential contender.

“So I urge the administration (of Republican President George W. Bush) here, to continue doing everything necessary to see to it that people can keep their homes,” he said.