A rising number of Americans — particularly those who took out riskier adjustable-rate and subprime mortgages — are increasingly defaulting on their loans, according to figures released this week by RealtyTrac, providing striking evidence that a growing number of borrowers are at risk of losing their homes.

Foreclosure filings jumped 42 percent nationwide in 2006, accelerating a trend that began in 2005 as home sales started to cool. Last year, 1,259,118 U.S. properties entered some stage of foreclosure, up from 850,000 properties in 2005, according to RealtyTrac research.

Many economists and analysts are not worried about the recent increase. But if the number of defaulting ARMs and subprime loans continues to escalate, it could trigger a rise in foreclosure filings and drag down home values.

The Center for Responsible Lending predicts that one in five subprime mortgages initiated in the past two years will end in foreclosure, leaving more than 1.1 million borrowers homeless. Since as much as $1.3 trillion in risky ARMs and subprime loans are due to reset this year, this could spark a skyrocketing surge of delinquencies and foreclosures.

"As more and more of these loans re-set this year, we may see a rise in foreclosure filings," said James J. Saccacio, chief executive officer of RealtyTrac. “It’s true that foreclosures could have a negative impact on the housing market if they continue to increase at this rate.”

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