Foreclosures Skyrocket in August

"The jump in foreclosure filings this month might be the beginning of the next wave of increased foreclosure activity, as a large number of subprime adjustable rate loans are beginning to reset now," James Saccacio, chief executive of RealtyTrac, said in a statement.

October is expected to be a peak month for hybrid adjustable rate mortgages (ARMs) to reset, with the interest rates on some $50 billion worth of loans poised to go up dramatically.

With the market so tight, many consumers trying to unload those mortgages before October are having difficulty selling. That and the fact that it appears now that the Sun Belt is catching up to the Midwest and Northeast in the number of defaults may presage a truly horrible next couple of months for the housing industry.

Recent talk of the Fed cutting interest rates is welcome but may come too late to stave off a serious downturn nationwide. Some homeowners are caught in the terrible situation of owing more on their mortgages than their houses are worth thanks to the collapse of housing prices. And lenders just don't have the cash to work with those in trouble.

It might end up being a very long, cold winter for every part of the housing industry.