Banks in China are foreclosing on a growing number of apartments after homeowners could not pay their mortgages, as the country’s housing crash threatens the financial system.

       The roster of homes seized and listed for auction leaped 43 percent last year, according to official data. Numerous Chinese banks have disclosed increases in mortgage defaults during the first half of this year. The downward spiral in apartment prices has since accelerated.

       The legal system is struggling to keep up with evictions. In some cities, like Qingdao, foreclosed apartments are being sold at auction before the occupants have moved out. The buyers must persuade them to leave, finance and foreclosure specialists said.

       The increase in evictions and foreclosures, although still modest by American standards, piles onto pressures on China’s banks. They face other losses related to the real estate meltdown, including on loans to local governments, property companies in default and buyers of unfinished apartments that developers never delivered.

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       To make matters worse, corporate borrowers in China have long posted real estate holdings as collateral. Bank managers are finding that the collateral is worth much less than when the loans were extended.

       The Chinese government is urging banks to lend more to real estate developers and other borrowers as part of its economic stimulus measures since late September. But the lenders themselves face difficulties.

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