Report: Foreclosures Spike in July

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A new report on foreclosures of homes in the U.S. shows a surge in July. Foreclosures spiked 9 percent higher than in June, and marked the eighth month in a row that the rate increased over that month the year before.

Overall, foreclosures were up 6 percent from last year.

The White House has promised $3 billion in aid to struggling homeowners. The Obama administration has said it will provide $2 billion to the 17 states hardest hit by unemployment. Another $1 billion will give homeowners zero-interest rate loans of up to $50,000 for up to two years. The money comes from the financial regulatory bill signed by the president last month.

"While we have fought back from the worst of this recession, we've still got a lot of work to do," Obama said. "We've still got a long way to go."

Currently, the five worst states for foreclosures are California, Florida, Illinois, Michigan and Arizona.

The foreclosures combined with 14 million Americans who are unemployed, makes it easy to understand why thousands of people have applied for a limited number public housing grants in Atlanta, Ga. Many of those applicants face foreclosure.

A firm that tracks notices for defaults, scheduled home auctions and home repossessions estimated that 1 million American households could lose their homes this year.

The foreclosure numbers follow a down day on Wall Street. The Dow dropped 265 points after the Federal Reserve said recovery would be more modest than it anticipated.

"I think people are worried that there is not much more they can do and it is really going to be up to the private sector," said Alec Young, equity strategist for Standard & Poor's.

The Federal Reserve's concerns about the economy will continue to affect interest rates. The Fed has said they'll remain low for an "extended period." 

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