Mortgage Default Notices Climb in August

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The number of homeowners who received an initial default notice -- the first step in the foreclosure process -- climbed 33 percent from July to August.

The increase is a nine-month high and the biggest monthly gain in four years, the listing firm RealtyTrac, Inc. said Thursday.

"This is really the first time we've seen a significant increase in the number of new foreclosure actions," said Rick Sharga, a senior vice president at RealtyTrac. "It's still possible this is a blip, but I think it's much more likely we're seeing the beginning of a trend here."

Mortgage experts say a pickup in foreclosure activity also means a potentially faster turnaround for the U.S. housing market. They say a revival isn't likely to occur as long as a glut of potential foreclosures hovers over the market.

There are about 3.7 million more homes in some stage of foreclosure now than there would be in a normal housing market, according to Citi analyst Josh Levin.

"This bloated foreclosure pipeline now presents the greatest obstacle to a housing market recovery," Levin said in a client note this week.

Banks are now on track to repossess some 800,000 homes this year, down from more than 1 million last year, Sharga said.

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