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US saw massive 81% rise in property foreclosures in 2008

More than 2.3 million properties got a default or auction notice, or were seized by lenders, the figures from RealtyTrac, the California-based seller of default data show.

It is the highest in four years of recordkeeping. Nevada, Florida and Arizona continued to top the foreclosure table, followed by California, Colorado, Michigan, Ohio, Georgia, Illinois and New Jersey. December showed an accelerated rate of filings, increasing by 41% from a year earlier to 303,410.

It is hoped that president-elect Barack Obama may use part of the remaining $350 billion in funds from the Troubled Asset Relief Program to help reduce mortgage payments for people facing foreclosure.

Obama, who is sworn in as President next week, has said the country needs to prevent foreclosures to revive the housing market and economy. Up to $100 billion may be needed to deal with the situation.

'If we don't adopt a comprehensive national policy, we'll have 5 million to 8 million new foreclosures in the next three years. The single most important thing is to make credit available for the average person,' warned Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley.

So far foreclosure prevention programs offered by US banks and state laws that temporarily delayed property seizures have not had any real success in slowing down the rising number of foreclosures. One in 54 housing units, or 1.8% of homes, received at least one filing in 2008.

More than half, 55%, of loans modified in the first quarter of 2008 were 30 days or more behind in payments six months later, according to figures from the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

It is also feared that massive job losses will aggravate the situation. 'The biggest driver of the housing market has been the drop in home prices, but now it's the economic risk of the job market collapsing and consumer sentiment,' said Sam Khater, a senior economist at the Santa Ana, California-based mortgage data firm First American CoreLogic.

Lenders are also expected to put thousands of properties on the market this year which will add to the worsening situation.