The crisis in the US housing market continues to grow and overnight we got a strong reminder of the extent of the crisis, and the chilling fact that it is worsening, not stabilising. In fact the way the industry is continuing to slide could very well drag the US lower, in spite of whatever action the Fed might take.

US home foreclosures doubled in September, compared to September 2006, and Countrywide, America’s biggest mortgage lender, said late payments rose.

RealtyTrac said in its monthly report on housing figures that the number of foreclosures jumped to 223,538 last month, 99% higher than the number last year, though 8% lower than in August. California had the biggest number of foreclosures (51,259) with Florida second (33,354).

The news came just before Countrywide Financial said delinquencies as a percentage of unpaid loans had risen to 5.85% from 4.04% a year ago.

New loans issued by Countrywide fell 44% last month as home sales slowed and pending foreclosures as a percentage of unpaid balances more than doubled, from 0.51% to 1.27%.

Showing the extent of the slowdown, Countrywide said it’s overall mortgage loan funding totalled $US21 billion in September, down from $US38 billion in September of last year. Daily mortgage loan applications dropped 39%, driven by the weaker market conditions and tougher underwriting standards as the company moved away from subprime deals.

Countrywide is still in business, thanks to the support of a $US2 billion equity injection from Bank of America and $US12 billion of standby loan facilities, but CEO Angelo Mozilo, has been sprung changing the rules on authorised share sales to suit himself, meaning he sold around $150 million worth of shares in December and February on the eve of the subprime mortgage problem erupting. Those sales are being investigated by authorities.

And a separate transaction this week saw Mozilo exercise options for 139,918 shares for $US9.94 apiece, then sell all of the shares on the same day for $US18.74 each, generating a $US1 million profit.

RealtyTrac indicated it saw the situation worsening because the jump in foreclosures was in part due to subprime borrowers being unable to make payments after their interest rates were reset (on so-called ARM mortgages). Nearly half a million such loans will reset over the next month, and that is pointing to the problem deepening. A further 2.3 million such mortgages will reset from November well into 2008.

Ratings agency, Moody’s made a judgment on the outlook for housing by dropping its rating of three housebuilders Centex, Pulte Homes and Lennar (among the top builders) to Ba1, a non-investment grade rating. The rating agency said it did not foresee improvement in the housing market until 2009 at the earliest.

And the industry group for US real estate agents now believes this year’s decline in sales of existing home will be steeper than previously forecast. In its eighth straight downwardly revised forecast, the National Association of Realtors says existing home sales will fall 10.8% below 2006 figures. Sales of new homes are expected to finish 2007 at the lowest level in a decade.

The group’s outlook for 2007 homes sales has grown more pessimistic as the year has gone on: back in February it said sales of existing home sales would only fall 0.6% in 2007.

In its October report, the association says 5.78 million existing homes will be sold in 2007, down from 6.48 million last year. It would be the lowest annual figure since 2002, when sales hit 5.63 million. Next year, the group forecasts existing home sales to rise to 6.12 million, 2.4% down on its forecast in September.