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There were 179,599 foreclsoures in the month, 93% more than July last year. The figure was also 9% higher than that recorded in June.

A foreclosure occurs when a borrower defaults on a loan. The process typically begins when a lender files a lawsuit against the borrower and takes possession of the borrower's home. The home is then put to auction and sold to the highest bidder.

Foreclosure industry heavyweight RealtyTrac which tracks the information on foreclosures said Tuesday California, Florida, Ohio, Michigan, and Georgia accounted for more than half of the July cases.

Borrowers with sub-prime loans have been particularly hard hit.

With interest rates rising in recent times, prices of homes have been falling. Home owners have found it increasingly difficult to cope with higher interest costs while the value of the equity in their home has been falling.

Lenders have also found it difficult to maintain loans when their security has been contracting.

Exacerbating the problem has been the weakening of the subprime mortgage market which deals with loans to borrowers considered to be posing more risk than conventional home buyers.

The extent of the problem is unclear as many banks and other lenders have not disclosed, and in some cases discovered, the magnitude of their exposure. With prices continuing to fall, the housing market and the credit sector could be heading towards an implosion.




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