The number of homeowners who lost their homes to foreclosure reached a 10-year high in Rockingham County last year.

More than 250 homes were seized in the county's 38 towns in 2006, almost triple the number of foreclosures in 2005, according to Cathy Stacey, Rockingham County Registrar of Deeds.

Officials blame popular "exotic mortgage offers" - offers that are affordable for a few years, then skyrocket out of a homeowner's price range - for the growing number of foreclosures in the most expensive housing market in the state.

Homeowners who depend on falling interest rates when they refinance or take out the increasingly popular balloon loans or adjustable rate loans were struggling to make their mortgage payments last year, according to Jane Law, spokeswoman for the New Hampshire Housing Financing Authority.

Stacey said 253 homes were foreclosed in the county last year, but that doesn't include hundreds of homes that are at risk of foreclosure or petitioned for foreclosure.

State officials said they don't know the number of petitions filed by mortgage companies last year, but they do know the list is growing.

Some of those homes are on the list for two years, because homeowners make small payments or progress enough to stop immediate foreclosure proceedings. But the majority of them will eventually go through foreclosure, according to James Kenney, president of Foreclosures NH, a foreclosure notification service.

In Massachusetts, state mortgage lenders reported there were 18,926 petitions to foreclose on homeowners last year, compared to 11,155 in 2005.

Granite State officials said there is not one particular demographic that is highest at risk of foreclosure. Rather, it's those who take out mortgages they know exceed their ability to pay, but they find lenders willing to grant them anyway.

Some of those families refinanced in 2003 and 2004, when interest rates were lower, in the hopes of becoming more financially sound in the future, Kenney said.

"The unfortunate reality of that is, the median home (in Rockingham County) is $300,000," Stacey said. "With a young family, you really need two incomes. Heaven forbid something happens and someone is out of work. That's a pretty big nut to crack."

Other homeowners were investors who may take out a balloon loan, which offer small payments for the first few years but require the balance of the mortgage to be paid off at the end of a five-year period. The idea is to resell the home before the balance is due.

"But that doesn't always happen," said Law, of the state housing finance authority. "If you've taken out a balloon (loan) and you're in the home for five years and haven't moved out, it's going to catch up to you."

But the majority of homes that are foreclosed on belong to homeowners who take out adjustable rate mortgages, according to Kenney. With those loans, a low interest rate is secured for two years, but when the interest rates go up, they're required to pay anywhere from $300 to $500 more each month, Kenney said.

"Sometimes, even an increase of a percentage point (in interest rates) can kill people," Law said. "Especially if you're in the end of the market price you can afford; it can make all of the difference."

Stacey said it often breaks her heart to see foreclosures, but other times she wishes prospective buyers would just smarten up.

"Quite honestly, people need to learn to say no, but (lenders) make it so hard," she said. "It's just like people getting inundated with credit cards - something needs to change because we're a growing nation of debt."

Law said the price of New Hampshire homes is expected to stabilize for at least for the first quarter of 2007, after climbing steadily for the past six years.

"We're not in a huge booming market that will zoom up and then crash," she said. "We were at a reasonable incline in price, so we don't expect at all to have anything but a slow decline."

But, she added, foreclosures are increasing because people are getting in over their heads, not because of the housing market. She and Stacey agree that unless lenders stop advertising inflated offers and the public stops falling for them, the foreclosure rate will likely climb again.

Foreclosures in Rockingham County

Year%Number of homes

2006%253

2005%92

2004%75

1996%311

1991%231

Source: Rockingham County Registrar of Deeds

Rockingham County foreclosures in the past 60 days

Town%Number of homes

Chester%1

Danville%2

Derry%12

Hampstead%3

Kingston%3

Londonderry%8

Newton%2

Salem%8

Sandown%1

Source: Foreclosures NH