Detroit 'has most repossessions'

Sub-prime crisis in graphics Detroit's desperate struggle

The Detroit area had the highest rate of homes entering the repossession process in the US in 2007, a study by mortgage research firm RealtyTrac says.

Several cities in California followed close behind, the analysis suggested, highlighting growing problems in some previously prosperous areas.

The number of homes facing action which could lead to repossession rose in 86 of the 100 largest metropolitan areas.

The problems largely stem from homeowners with sub-prime loans.

Unemployment factor

The US sub-prime mortgage sector offered higher-risk loans to people with a poor credit history.

See map of highest US repossession rates

Analysts say that sellers often neglected to properly explain to the borrowers - usually on low-incomes - that the new sub-prime mortgages would "reset" after two years.

The reset mortgage could be at double the original interest rate, and this has led to many homeowners falling behind on payments.

Falling sales and decreasing prices have made it harder for homeowners who have hit difficulties to sell their homes and clear their debts.

Last month, RealtyTrac said that across the US there were 2,203,295 foreclosure filings - which include default notices, auction sale notices and bank repossessions - up 75% from 2006

Detroit's rising unemployment level, triggered by Michigan's economic downturn, has been blamed for people falling behind on repayments.

About 4.9% of households in the Detroit metro area were in some stage of repossession, or foreclosure, during 2007, the RealtyTrac study said. The rate represents a 69% jump from 2006.

Stockton, California was ranked second at 4.8% with the Las Vegas metropolitan area third at 4.2%.

California had four metro areas in the top 20 places in the table.

1. Detroit, MI 2. Stockton, CA 3. Las Vegas, NV 4. Riverside--San Bernardino, CA 5. Sacramento, CA

6. Cleveland, OH 7. Bakersfield, CA 8. Miami, FL 9. Denver-Aurora, CO 10. Fort Lauderdale, FL

Source: RealtyTrac

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