Along U.S. Highway 380, where new subdivisions are filling with homes by the hundreds each year in and around Aubrey and Cross Roads, an undercurrent of uncertainty belies the bright picture of prosperity.

Both areas are among the top 10 cities recognized by Foreclosure Listing Service Inc. as having the highest percentage of residential foreclosures posted so far this year.

“We have reached a point in the development of residential real estate where the more development there is, the more there is a foreclosure issue that will come with it,” said George Roddy Sr., president of Foreclosure Listing Service Inc. “As the metroplex has grown, we’ve seen more foreclosures occur.”

Among cities in a 10-county area with between 30 and 100 residential foreclosure postings for the first half of 2007, Cross Roads topped the list with a 338 percent increase above foreclosures as of midyear 2006.

Following Cross Roads were Azle, Lake Worth, Princeton and Red Oak.

The average assessed value of a home posted for foreclosure in Cross Roads during the first half of this year was $193,249, which was up 38 percent over last year’s average assessed value of $140,092.

Records show the number of foreclosures in Aubrey rose 53 percent from midyear 2006 to midyear 2007. Among cities with at least 100 residential postings in the first half of 2007 within a 10-county area, Aubrey ranked fifth after Mansfield with a 196 percent gain, followed by Midlothian (119 percent), Frisco (57 percent) and Saginaw (55 percent.)

A closer look at foreclosures in Aubrey and Cross Roads reveals a rising number of residential foreclosures in four special-district communities created since 2004.

None of those communities are within Aubrey and Cross Roads town limits.

For the four subdivisions of Providence, Savannah, Paloma Creek and Cross Oak Ranch, a total of 175 residential foreclosure postings were listed from January through October, up 20 percent from the 146 postings for the same period in 2006. The average assessed value of postings this year is $146,662.

The original loans are on average 3 years old, as are the homes, and the average size is 1,940 square feet.

The high-growth region along U.S. 380 is indicative of what Roddy says is happening in other high-growth areas in the Dallas-Fort Worth area.

“What has happened in the sub-prime market is with adjustable-rate mortgages and funny money loans going on in the last three to four years. It has added to the problem,” he said.

Roddy describes the residential foreclosure spike as a compilation of several issues, starting with layoffs in 2000 and early 2001.

“It started out as a jobs issue,” he said. “As the interest rates continued to drop over the years, more and more people got involved with either refinancing at a lower rate, home equity came into play and adjustable mortgages were more a part of the real estate market.”

The large number of loans brought a second wave of foreclosures into the market, Roddy said.

“People were getting into too much of a house,” he said.

Then, in a third part of the cycle, the cost of living went up. Higher gas prices, higher taxes and higher utility costs put some homeowners in a financial bind.

“All of these four facts have added up to some severe problems for a lot of people,” he said. “When the price of gasoline has almost doubled, the utility cost has gone to the moon — it’s the normal family who has not seen an increase or much of an increase in their living wages,” Roddy added. “Something’s got to give somewhere.”

While Texas has escaped the worst of the housing bust, the state will still see mortgage problems and a potential for overbuilding, according to David Seiders, chief economist with the National Association of Home Builders. While the state is suffering the effects of residential foreclosures and a slowing economy, it is still doing well compared to the U.S. as a whole, he said at a recent area home builders’ show.

“Housing prices in this area seem to be holding,” Seiders said. “You didn’t have the explosion in prices on the way” that many cities saw.

Seiders said that nationally the housing downturn is shaping up to be one of the worst.

While some see a possible recession in the country’s future, Seiders does not.

“I’m counting on the Federal Reserve to continue to manage monetary policy to keep us out of a recession,” he said.

Residential foreclosures continue to rise in a number of counties — a trend that records show has continued since 2000.

Denton County foreclosures as of midyear 2007 were the ninth highest among 10 counties in the Dallas-Fort Worth region, with a 9 percent increase above foreclosures filed by mid-year 2006. The 10-county region includes Dallas, Tarrant, Collin, Rockwall, Ellis, Johnson, Grayson, Parker and Kaufman. Parker County tops the list with a 56 percent increase from 160 in the middle of last year to 249 by the end of June 2007. Second and third consecutively are Ellis, with a 43 percent increase, and Collin, with a 33 percent increase. Lowest was Johnson County, which reported a 2 percent decrease in residential foreclosure postings with 326 reported as of midyear 2007 compared to the 334 at the same time last year.

Other changes in the market reflect increased numbers of foreclosure listings. One such marker is a weekly report from the Texas Workforce Commission, which lists companies planning layoffs as part of the Worker Adjustment and Retraining Notification or WARN Act.

Since July, at least five mortgage companies have filed notices of intent to lay off more than 450 employees in the lending industry.

Roddy said the immediate future looks like more of the same.

“We’ve seen the lessening of these goofball loans, and you can quote me on that,” he said. “A lot of them were goofball loans.”

As homeowners look to straighten out their home loans, some may find it impossible, Roddy said.

“Those people with the adjustable-rate loans adjusting and trying to refinance, they won’t be able to do it,” he said, referring to the tightening of credit and higher interest rates for jumbo loans.

With higher costs of living resulting from rising gasoline and utility prices, credit card payments and higher taxes, it could be quite difficult.

“In some cases, people are wanting to right a wrong, as far as the type of loan, and they won’t be able to,” Roddy said.

“What we’re left with is still problems relating to mortgages, plus we’ll still have a higher cost of living than we did four to five years ago,” he said.

The future?

“It looks like we have another year to 18 months for high foreclosures,” he said, barring any unforeseen market changes. “Past that point, if I told you what was going to happen, it would be a dream.”

Cities with the highest increases in Denton County are areas where new subdivisions have been sprouting up in the past five to six years, said Bonnie Brown, a spokeswoman with Foreclosure Listing Service Inc.

In Highland Village, Krum, Sanger, Oak Point and Pilot Point, where growth has been evident with new housing subdivisions, residential foreclosure postings increased significantly during the first half of this year compared to the same period in 2006. Highland Village posted a 55 percent increase; Krum was up 79 percent; Sanger, up 62 percent; Oakpoint, up 50 percent; and Pilot Point foreclosure listings rose 69 percent.

Other growing communities in and around Denton County showing increases in residential foreclosures for the first half of the year include Lantana, up 25 percent; Prosper, up 48 percent; and the portion of Frisco in Denton County was up 35 percent.

Officials say the perception that most foreclosed homes are in the middle price range is correct, but that higher-valued homes going through foreclosure are on the rise.

The average assessed value of homes posted for foreclosure during the first half of this year exceeded $500,000 in four North Texas cities.

The highest average assessed value of homes posted for foreclosure during the first half of this year was $677,750 in Bartonville. The second highest average was $599,760 in University Park.

“In the D-FW area as a whole and for Dallas, Tarrant, Collin and Denton counties — as of September — in the breakdown of postings by assessed values, generally we’ve seen in the past at least 90 percent of residential postings were valued at $0 to $250,000. We generally see about 80 [percent] to 90 percent, depending on the county,” Brown said.

“This time in Denton County, 79 percent of the postings were in that price range [of $0 to $250,000],” she said.

Records show that foreclosure postings of homes valued at $250,000 to $500,000 rose 35 percent; homes valued at $500,000 to $1 million rose 64 percent; and homes valued at $1 million and more shot up 83 percent.

“Where the growth is, percentage wise, is in the higher-level houses,” Brown said.

The hot spots for foreclosures appear to be homes valued at more than $250,000 and in areas where significant growth in residential development is evident, Roddy said.

The Dallas Morning News contributed to this report.