* Concerns resurface over mortgage foreclosures
* Apple, IBM slide after earnings
* China raises interest rates in bid to cool economy
* Indexes down: Dow 1.7 pct; S&P 1.7 pct; Nasdaq 1.8 pct (Updates to afternoon)
By Edward Krudy
NEW YORK, Oct 19 (Reuters) - U.S. stocks declined on Tuesday as banks shares slid on fears Bank of America may be forced to buy back mortgages, while Apple and IBM fell after their results disappointed investors.
Bank of America shares fell 2.6 percent to $12.03 after a Bloomberg report, citing people familiar with the matter, said investors PIMCO and BlackRock as well as the New York Federal Reserve Bank were seeking to force the lender to repurchase $47 billion in mortgage bonds.
Concerns that mortgage lenders did not follow due diligence when securitizing mortgages have led some banks, including Bank of America, to halt mortgage foreclosures. The KBW bank index fell 1.1 percent.
"This is more octane for the sell-off," said Todd Schenberger, managing director with LandColt Trading in Wilmington, Delaware. "You would think all the financials may have to do this going forward."
The Dow Jones industrial average was down 185.05 points, or 1.66 percent, at 10,958.64. The Standard & Poor's 500 Index was down 19.64 points, or 1.66 percent, at 1,165.07. The Nasdaq Composite Index was down 45.13 points, or 1.82 percent, at 2,435.53.
Apple's shares fell 2.8 percent to $308.86 and, although well off the day's lows, weighed on the Nasdaq after iPad sales fell short of some analysts' expectations. Only the day before, Apple shares hit a lifetime high.
International Business Machines Corp was lower after it won fewer technology service deals than expected in the third quarter. Its shares were down 3.9 percent at $137.21, even though it announced stronger profits and raised its full-year outlook.
Another factor weighing on Wall Street was China's decision to hike interest rates, effective on Wednesday. Investors worry about the impact from the world's biggest fast-growing economy seeking to cool its growth. (Reporting by Edward Krudy; Additional reporting by Richard Leong; Editing by Kenneth Barry)