Mortgage lenders repossessed more homes in August than in any month since the start of the housing crisis. The rise occurred as the number of properties entering the foreclosure process slowed for the seventh consecutive month, according to foreclosure listing firm RealtyTrac Inc.

Banks repossessed 95,364 properties in August, up 3% from July and an increase of 25% from August 2009. August marks the ninth month in a row that the pace of homes lost to foreclosure has increased on an annual basis. The previous high occurred in May.
 
More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007. The firm estimates more than 1 million American households are likely to lose their homes to foreclosure this year.

In total, 338,836 properties received a foreclosure-related warning in August, up 4% from July, but down 5T from the same month last year, according to RealtyTrac. That translates to one in 381 homes.

The firm tracks notices for defaults, scheduled home auctions and home repossessions - warnings that can lead up to a home eventually being lost to foreclosure.

Banks are repossessing more homes to clear a backlog of bad loans, eventually hoping to place the foreclosed properties on the market. But they can't afford to simply dump the properties on the market.

The number of properties receiving an initial default notice - the first step in the foreclosure process - slipped 1% last month from July, but was down 30% versus August last year, according to RealtyTrac.

There are concerns that a housing market recovery could stumble amid stubbornly high unemployment, a sluggish economy and faltering consumer confidence. U.S. home sales have collapsed since federal homebuyer tax credits expired in April. According to Rick Sharga, a senior vice president at RealtyTrac, that's one reason that fewer than one-third of homes repossessed by lenders are on the market.

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