Sept. 18 (Bloomberg) -- The number of Americans who may lose their homes to foreclosure more than doubled in August from a year earlier as subprime borrowers with adjustable-rate mortgages saw their monthly payments rise, RealtyTrac Inc. said.

U.S. economic growth is slowing as the two-year housing decline worsens amid the surge in foreclosures and the collapse of more than 100 mortgage companies, said David Berson, chief economist of Fannie Mae, the largest mortgage buyer. The Federal Reserve today lowered its benchmark rate to 4.75 percent, the first cut in four years, saying the ``tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth.''

Lenders sent notices of default to 108,716 homeowners in August, double the 42,144 a year ago and up 50 percent from July, RealtyTrac said today. California had 41,714 new foreclosures in August, the most in the U.S., and Florida was second with 26,203, the real estate data company said.

``This is just the beginning of a wave of new foreclosures,'' Rick Sharga, executive vice president of marketing for RealtyTrac in Irvine, California, said in an interview. ``There are lots of people who bought homes they could only afford at the teaser rates, and now have very few options.''

Subprime loans, given to borrowers with limited or tarnished credit histories, often have so-called teaser rates that can cause monthly payments to double at the end of two or three years, he said. When the loans adjust, the financing charges usually are 2 to 3 percent higher than prime rates.

Auctions, Repossessions

A subprime borrower who got a $150,000 adjustable mortgage in 2005 with an initial fixed period of two years at a teaser rate of 2 percent would see monthly payments double to $1100 this year from $554 if the loan adjusted to 8 percent.

A prime homebuyer who in 2002 got a so-called 5-1 hybrid mortgage, a loan that adjusts annually after an initial fixed period of five years, will see monthly payment rise $309 on a $300,000 loan when it beings adjusting this year. The U.S. average adjustable rate was 5.7 percent last week, according to Freddie Mac, the No. 2 mortgage buyer.

The total number of U.S. foreclosure filings, including defaults, scheduled auctions and bank repossessions, rose 115 percent to a 243,947 in August from a year earlier, the highest ever in the RealtyTrac study that goes back to 2005. The total foreclosure filing number can double- or triple-count homes in default if they have more than one legal filing against them in a month.

The foreclosure process typically begins when a borrower is more than 90 days late on mortgage payments and the lender files a notice of default. If the borrower doesn't pay what's owed, the property goes to auction. If bids don't reach the loan amount, the lender takes ownership of the house.

Nevada, California

Nevada had the highest U.S. rate, with one foreclosure filing for every 165 homes, three times worse than the national average of one for every 510 properties. California was No. 2 with one filing per 224 households and Florida had the third-highest rate.

Massachusetts ranked No. 12th, with 4,527 foreclosure filings, or one per 594 homes. New York was 28th, with 5,498 filings, or one per 1,428 homes, up 21 percent from a year earlier.

U.S. banks reported owning residential property valued at $4.24 billion in the second quarter, typically houses and condominiums seized in foreclosures, according to the Federal Deposit Insurance Corp. That's up from $2.29 billion a year earlier.

Standards Raised

About 14 percent of domestic banks have raised standards for mortgages to their best-rated customers and 56 percent have made it more difficult for subprime borrowers to get loans, according to a Federal Reserve survey of senior loan officers in mid-July.

Adjustable-rate mortgages to subprime borrowers account for 7.3 percent of all home loans and 44 percent of all new foreclosures, according to Mortgage Bankers Association in Washington. The 15 percent of all mortgages that are prime adjustable-rate loans -- granted to borrowers with good credit histories -- represent 15 percent of new foreclosures, the bankers' group said Sept. 6.

U.S. economic growth probably will slow to 2.3 percent this year from 2.6 percent in 2006, Fannie Mae's Berson said in an interview. The median price of an existing home probably will fall 2.1 percent this year and 3.1 percent in 2008, he said.

`Likely to Slow'

``The odds of a recession have gone up because of the liquidity problem in financial markets and what appears to be another downturn in housing activity,'' Berson said. He said there is a 40 percent chance of a U.S. economic recession this year.

Defaults on subprime mortgages will continue driving up foreclosures through 2009, Sharga said, citing pending interest increases on adjustable-rate loans homeowners took out in 2005 and 2006.

``There are probably two more major resets -- one next year, and the other in early 2009,'' Sharga said. ``If lenders raise their standards too high, and people can't refinance out of bad loans, it will only make matters worse.''

To contact the reporter on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net.

Last Updated: September 18, 2007 15:51 EDT