Foreclosures are up to one filing for every 264 households, says a new quarterly report by RealtyTrac , an online marketplace for foreclosure properties. But following five years of record and near-record gains, is such a high number that unexpected?

For the first-quarter of 2007, in its 2007 U.S. Foreclosure Market Report, Realty Trac showed more than 430,000 foreclosure filings, including default notices, auction sale notices and bank repossessions were reported nationwide during the first three months of the year. That's up 27 percent from the previous quarter and up 35 percent from the first quarter of 2006.

"The rise in foreclosure activity was quite dramatic and widespread in the first quarter, with 37 out of the 50 states reporting year-over-year increases," said James J. Saccacio, chief executive officer of RealtyTrac. "Certainly the surge in subprime defaults has contributed to the overall rise in foreclosures; we estimate that more than 50 percent of the foreclosure activity we charted in the first quarter was from subprime loans. However, it's not just low-end homes that are going into foreclosure; we're seeing a rising percentage of foreclosures with an estimated market value of more than $750,000."

A total of 437,498 foreclosure filings were reported in the first quarter of 2007, up from 345,554 in the fourth quarter of 2006 and up from 323,101 in the first quarter of 2006.

Nevada documented the highest state foreclosure rate in the first quarter, one foreclosure filing for every 75 households -- 3.5 times the national average. The state documented a total of 11,514 foreclosure filings during the quarter, an increase of 66 percent from the previous quarter and more than double the total reported in the first quarter of 2006.

Colorado foreclosure filings totaled 16,435 for the quarter, or one foreclosure filing for every 111 households. That's up six percent from the previous quarter and 24 percent from the first quarter of 2006.

Georgia foreclosure activity in the first quarter decreased on a year-over-year basis, but the state's first-quarter foreclosure rate of one foreclosure filing for every 138 households still ranked third highest in the nation. The state reported a total of 22,391 foreclosure filings during the quarter, the sixth most of any state and a 10 percent increase from the previous quarter.

Other states with foreclosure rates among the nation's 10 highest included Michigan, California, Florida, Arizona, Ohio, Texas and New Jersey.

California, where about 10 percent of the nation's population lives, reported 80,595 foreclosure filings during the first quarter, the most of any state and accounting for more than 18 percent of the national total. The state's foreclosure activity increased 68 percent from the previous quarter and more than doubled from the first quarter of 2006, resulting in a foreclosure rate of one foreclosure filing for every 152 households -- fifth highest among the states and 1.7 times the national average.

With 45,156 foreclosure filings during the quarter, Florida ranked second among the states in terms of total foreclosure activity. The state documented a foreclosure rate of one foreclosure filing for every 162 households -- the nation's sixth highest and 1.6 times the national average. Florida's foreclosure activity was up 55 percent from the previous quarter and 52 percent from the first quarter of 2006.

Texas documented the third most foreclosure filings of any state during the quarter, 39,869, up 6 percent from the previous quarter but down by less than 1 percent from the first quarter of 2006. The state's foreclosure rate of one foreclosure filing for every 202 households ranked ninth highest in the nation and was 1.3 times the national average.

Other states with 2006 foreclosure totals among the nation's 10 highest included Michigan, Ohio, Georgia, Illinois, Colorado, New Jersey and New York.

Continuing a trend from 2006, Detroit documented the highest foreclosure rate among the nation's 100 largest metropolitan areas in the first quarter of 2007. The metro area, which comprises Wayne County, reported a total of 16,351 foreclosure filings during the quarter, a foreclosure rate of one foreclosure filing for every 51 households -- more than five times the national average.

Las Vegas registered a first-quarter foreclosure rate of one foreclosure filing for every 57 households, second highest among the nation's 100 largest metro areas and 4.6 times the national average. The metro area, which comprises Clark County, reported a total of 10,493 foreclosure filings during the quarter.

The Riverside-San Bernardino metropolitan area in Southern California reported a total of 17,499 foreclosure filings during the quarter, resulting in a foreclosure rate of one foreclosure filing for every 68 households -- third highest among the nation's 100 largest metropolitan areas.

Other metro areas with foreclosure rates ranking among the 10 highest were Sacramento, CA, Stockton, CA, Atlanta, GA, Denver, CO, Bakersfield, CA, Fort Worth, TX, and Dallas, TX.

While it's bad news for homeowners in trouble, there are some silver linings for housing overall:

• The Mortgage Bankers Association, in its testimony to Congress last fall, said that homeownership rates are at record levels, nearly 69 percent. It stands to reason that with more ownership, there is a higher rate of foreclosure.

• Delinquency rates typically peak 3 to 5 years after origination, which is in keeping with record home sales and record loans following 2001.

• Approximately one percent of all loans are in the foreclosure process, well within historical norms, says the MBA, and still down from the post-recession peak of 1.5 percent just four years ago.

• Three out of four loans that enter the foreclosure process will not wind up as a foreclosure sale, because the homeowner either cures the delinquency, works out a payment plan with the lender, or refinances, or sells the home.

• Non-prime borrowers are higher risks and have always had a higher delinquency rate than prime borrowers. Yet, only six percent of homeowners are nonprime borrowers with adjustable rate loans that are resetting to higher rates.

• Approximately one percent of all homes going into foreclosure are owned by subprime borrowers, and likely closer to 0.5 percent, says NAR Senior Associate Walt Molony. That's one home in foreclosure out of approximately 200, suggesting that high foreclosure rates are not just a subprime problem but due to a wide range of other causes.

But that doesn't mean housing is out of the woods yet.

NAR's chief economist advises Realtors to be part of the solution.

"Over the last few weeks, you've likely seen media coverage publicizing the poor performance of subprime and Alt-A mortgages (including hybrid ARMs -- 2/28s and 3/27s, payment option ARMs, interest-only mortgages, stated income underwriting, and 80/20 mortgages)," says Lereah. "These reports have covered efforts by federal regulators and Congress to develop new regulations and laws to prevent abusive subprime lending practices."

"While some in the media have perhaps over-dramatized the situation, the basic facts presented have been accurate. A number of subprime lenders that made problematic loans have gone out of business," he explains. "The delinquency rate for subprime loans is more than 13 percent and 4.5 percent are in foreclosure. Wall Street investors are now requiring better underwriting and increasing the pricing for subprime loans. Federal and state banking regulators have issued guidance to tighten the underwriting standards for nontraditional mortgages and recently proposed similar guidelines for subprime mortgages. Finally, Congress is holding hearings that may very well result in the development of new laws to protect consumers."

Lereah advises, "As a Realtor® you should explain to your clients what's happening. The bottom line is that the poor performance of some subprime and Alt-A loans (particularly 80/20s -- no downpayment loans) has triggered stricter underwriting standards and higher costs. The new rules, accompanied by increased scrutiny by federal and state regulators, are causing some contraction within the mortgage markets that will limit the ability of some borrowers to qualify for a mortgage."

"As a Realtor®, you should offer these borrowers information about conventional products like fixed rate and traditional ARMs that may be good choices for first-time homebuyers -- both prime and subprime. Responsible nontraditional mortgages and hybrid subprime mortgages may also be the right choice for borrowers who can afford them, now and in the future. In addition, FHA and VA have recently made significant improvements to their programs that can be valuable financing tools for many homebuyers. You should also be aware of lenders in your area offering these products. Finally, if you are associated with a full-service real estate firm, you should consider recommending to your clients the mortgage firm affiliated with your company. Many of them are experienced and knowledgeable conventional and government lenders."

He also suggests that Realtors offer their clients NAR's brochures to help clients understand their options. "The NAR "Shopping for a Mortgage? Do Your Homework First" consumer education brochure series is perfect for homebuyers with less-than-perfect credit. The publications include "Specialty Mortgages, What are the Risk and Advantages?" and "Traditional Mortgages: Understanding Your Options,"" says Lereah. "In addition, there are new brochures that (i) describe recent changes to the FHA program that can benefit your clients and (ii) help consumers avoid predatory lending. NAR issued the FHA brochure in partnership with the Federal Housing Administration of HUD and the others in partnership with the Center for Responsible Lending."

Editor's note: Links to all of the brochures can be found here by clicking on the "learn more" tab for each brochure. You can download them for free or order them from the REALTOR® Store.

In addition, keep abreast of solutions forthcoming in your state or local community. According to an excellent article by Les Christie of CNNMoney, "Subprime Bailouts: How They Work," some states such as Maryland's Department of Housing and Community Development are launching programs that allow certain borrowers to refinance their high-risk mortgages into affordable fixed rate loans. Called "Lifeline," Maryland's program is aimed at preventing defaults and foreclosures thereby protecting homevalues for other homeowners. It works by allowing participating lenders to bundle the new loans and sell them back to the DHCD, which in turn uses cash from a bond issue to buy the bundled loans. Interest paid by the borrowers pays off the bonds.

Last, check with lenders to see if they have new loan programs that could be helpful to borrowers in a volatile housing market. For example, Washington Mutual Inc. has just announced a new combination mortgage/home equity line of credit that allows customers to reset interest rates or switch between fixed and adjustable rates up to twice a year without having to refinance. The first reset is free, and $250 afterwards, but this kind of thinking allows borrowers to weather temporary financial storms.