Aug. 15--Indiana's high jobless levels could be behind an unhealthy jump in mortgage foreclosures in the state last month.

Lenders carried out 5,186 foreclosure filings last month in Indiana, an 8.4 percent upswing from the same month last year, according to a report from RealtyTrac, a California seller of distressed properties.

Indiana's rate of foreclosure filings now ranks it 17th on RealtyTrac's national list. That's far better than Indiana's top 10 showings several years ago.

But the July jump suggests the state still faces a foreclosure problem that hasn't lessened in intensity.

The latest data show "in the Midwest we have a (foreclosure) problem . . . based strictly on the economy," said Tom Dinwiddie, a spokesman for the Indiana Mortgage Bankers Association.

In other states with worse foreclosure rates, such as California, Nevada and Arizona, a boom-and-bust market caused by homebuying speculation was behind much of the rise in foreclosures, he said.

"The biggest issue that we're dealing with is job loss," said Amanda Wilkerson, housing program coordinator for Momentive Consumer Credit Counseling Service in Indianapolis, which offers advice to homeowners in foreclosure.

Indiana's unemployment rate hit 10.7 percent in June, up from 10.6 percent in May. The state has lost 100,000 factory jobs in the past year.

A year ago, Wilkerson said, many homeowners needed help to cope with interest-rate jumps on adjustable rate and subprime mortgages while still holding jobs.

Now more people who come to Momentive for help are struggling to make house payments with little to no income because they've been laid off or forced into lower-paying jobs, she said.

Homeowners who lose jobs often aren't even eligible for mortgage modification programs. Under the federal government's Making Home Affordable plan, mortgage payments can't exceed 31 percent of a homeowner's gross monthly income in order to qualify, said Nancy Norris, a spokeswoman for Chase bank, a major lender in Indiana.

Despite growing efforts to keep people in their homes through loan modification programs, the truth is, "it's not always possible," she said.

In the Indianapolis metro area, 21 percent of all properties with a mortgage are in negative equity, which sometimes is also called being "underwater" or "upside down" on a mortgage, according to a study released this week by First American CoreLogic of Santa Ana, Calif.

The large number of mortgages in negative equity puts many homeowners at risk of foreclosure in the coming year, the First American study notes.

Call Star reporter Jeff Swiatek at (317) 444-6483.

Star reporter Nicole Blake contributed to this story.

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