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Mortgage Notices Spike, and So Do Prices

The number of homes threatened with foreclosure jumped by 57 percent in January, compared with one year ago. And in another sign that the nation's economic troubles have widened, wholesale prices soared by 1 percent in January — more than double the increase economists had expected.

The Labor Department says the jump in wholesale prices followed a worse-than-expected report that consumer prices rose by 0.4 percent in January, as Americans paid more for groceries, gasoline and health care.

Over the past 12 months, wholesale prices have risen by 7.5 percent — the fastest increase since the fall of 1981, when the country was in a deep recession.


Food prices saw their biggest monthly increase in three years, rising 1.7 percent as the cost of beef, bakery goods and eggs jumped.

Core wholesale inflation, which excludes food and energy, posted a 0.4 percent increase, the largest rise in 11 months. The gain was led by a 1.5 percent spike in the cost of prescription and non-prescription drugs.

The news of rising prices came as new housing data indicated that the fallout from the subprime mortgage crisis isn't over yet.

Nationally, owners of 233,001 homes received at least one late payment notice last month, compared with 148,425 homes a year earlier, according to Irvine, Calif.-based RealtyTrac Inc. Nearly half of the total involved first-time default notices.

The Senate could vote as early as Tuesday on whether to begin debate on a measure backers said would make it easier for some homeowners to avoid foreclosure.


The bill would allow judges to modify mortgage terms during bankruptcy proceedings, even allowing them to reduce the amount of principal owed. Sponsors said the provision could help hundreds of thousands of borrowers avoid foreclosure.

Democrats have argued that the subprime mortgage crisis and a newly reported decline in sales of existing homes are evidence that some consumers need help hanging onto their homes, and that the housing industry needs a boost.

But lenders oppose the measure, saying it could actually increase costs for borrowers because lenders would have to charge more for loans with the risk that mortgage terms would be changed.

Lenders have Republican support, and it is uncertain whether Democrats can muster the 60 votes necessary to bring up the measure without making some changes.

From NPR reports and The Associated Press

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