PROVIDENCE — Mayor David N. Cicilline warned state housing officials yesterday that home foreclosures in the city have reached the level of a “crisis” that could spread to other communities.

“The success of Rhode Island as a state is inextricably linked to the health of the capital city,” Cicilline said during a board of directors meeting at Rhode Island Housing. “This crisis, if it were to grow, could reach other cities in a greater magnitude.”

The mayor addressed his remarks to a packed board meeting at Rhode Island Housing, the state agency which, together with a network of housing counselors around the state, are being flooded with calls from homeowners who cannot make their mortgage payments.

More than 600 houses in Providence have been listed for foreclosure sale during the last 12 months, comprising about 44 percent of the 1,362 home foreclosure listings statewide, according to data from the state housing agency. (Not all properties listed for foreclosure sale are actually sold at auction.)

The spike in foreclosures in Rhode Island, as around the country, comes as more and more homeowners who took out subprime mortgages during the run-up in housing prices are now unable to make their payments and defaulting. (Subprime mortgages are generally given to people with credit problems and carry higher interest rates that typically rise over time.)

Rhode Island Housing’s executive director, Richard H. Godfrey Jr., said that the state’s overall foreclosure rate remains at about 0.7 percent, but in Providence the foreclosure rate is between 2 percent and 4 percent, “with some neighborhoods around 10 percent.”

“While it may not be an economic crisis,” Godfrey said, “it’s certainly a neighborhood crisis.”

The spike in foreclosure sale listings reflects the increasing number of homeowners who are unable to keep up with their monthly mortgage payments and therefore are at risk of losing their homes. Lenders typically initiate foreclosure sales after three missed payments.

Cicilline told state housing officials that he is asking financial institutions that control 10 percent of properties in the city to meet with him to try to work out arrangements to keep the occupants in their homes. Otherwise, lenders who can’t sell a foreclosed property typically order the occupants to leave and then board it up.

“We’re at a critical juncture,” said General Treasurer Frank Caprio, who is a member of the state housing agency’s board. Caprio pointed to a map of Providence on which state officials had marked red dots for each house that has been advertised for foreclosure sale.

“The banks are ready to take the red dots and bundle them and sell them” to investors at a fraction of their value, Caprio said, which would amount to a “wholesale dumping of assets on the market” that could impact house prices.

Board member Perry Clough, of Barrington, said, “When will this reach a crisis? Is it a month? A quarter?”

Cicilline replied that “it is already happening today, in the early stages.”

Godfrey, the housing agency’s executive director, said that unlike Ohio and other states that have a glut of houses due to overbuilding, Rhode Island still has a shortage of housing. As a result, he said, demand is high — and that will help “keep the cost up, and keep neighborhoods more vibrant.”

On the flip side, Godfrey said, if home prices come down somewhat that would make homeownership “a little more affordable and offer an opportunity for people [who] before were priced out.”

Frank Shea, executive director of the Olneyville Housing Corporation, pointed to a house across the street from The D’Abate School, on Kossuth Street, which has been sold five times. The four-unit house was first sold for $35,000 in 2002, and five sales later its price had spiked to $350,000. The first three owners “doubled their money,” Shea said, but “the luck ran out on the last owner.” The house is now in foreclosure.

larditi@projo.com