More Utahns are losing homes to foreclosure

Falling into foreclosure

Utah Foreclosure & Real Estate News

Thousands more Utahns are falling behind on their mortgages this year than last and more are losing their homes to foreclosure, but the state's share of problem loans remains well below the national average, a new report shows.
    In the state, 3.81 percent of 431,570 mortgages were at least 30 days past due in the first quarter, up from 3.05 percent in the same quarter in 2007, the Mortgage Bankers Association reported Thursday in its National Delinquency Survey. Utah's delinquency rate remains well below the state's high of 5.3 percent in 2003 and is the nation's 11th lowest.
    Nationally, the delinquency rate is 6.35 percent, up from 4.84 percent in the first three months of 2007.
    In Utah, about 16,400 loans are past due, a 32 percent increase from the first quarter of last year when 12,424 loans out of 407,362 were at least one month behind on payments.
    The higher share of past-due loans reflects a variety of pressures on Utah families, such as the rising cost of gas and food.
    In some cases, adjustable-rate loans taken out years ago are just now resetting at higher rates and subsequently higher payments. Some people who had jobs related to Utah's homebuilding industry, which is suffering a sharp downturn, are unemployed.
    Because of the higher costs for gasoline, food and health care coverage, "If someone falls behind on theirmortgage payment, it's even harder to get back on track," said Jill Owen of the Association of Community Organizations for Reform Now, the consumer advocacy group in Salt Lake City.
    She said a number of people her organization has counseled through its foreclosure assistance hot line have had costly medical problems that have caused them to miss some house payments.
    Utah economist Jeff Thredgold, a consultant to Zions Bank in Salt Lake City, said it makes sense that delinquencies have increased given the fact that Utah's economy simply isn't as robust as it was a couple of years ago.
    The state's job creation rate, while still positive, is heading downward and the strong income gains of past years are moderating, he said.
    Delinquencies are an early indicator of foreclosures, in which a homeowner loses a property. Many, but not all, delinquencies lead to foreclosure.
    Foreclosures are plaguing many areas of the country that several years ago were enjoying high demand for homes and huge run-ups in prices but today face a soft market and declining prices.
    Utah's foreclosure rate - the percentage of loans at some point in the foreclosure process - rose to 0.55 percent in the first quarter, up from 0.33 percent in the same quarter in 2007. The state's foreclosure rate, while up over last year, remains the 11th-lowest of all states and far below Utah's high of 1.7 percent in 2003.
    Nationally, the foreclosure rate was 0.99, up from 0.58 percent in the January-March period last year.
    Homeowners who fall behind on their mortgages are less likely in a soft real estate market to be able to sell their properties fast enough - and for enough money - to cover their mortgages. And fewer are able to take out home-equity loans to cover their payments on their first mortgages during tough times.
    In fact, a growing number of Utah families are "upside down" on their loans, meaning they owe more on their properties than they can get if they sell, real estate agents say. Many people in this situation simply walk away from their loans.
    Gus Faucher, economist with Moody's Economy.com, has said that Utah's foreclosure and delinquency rates will increase along with the rest of country but likely will remain below the national average.
    The economic forecasting service believes Utah's underlying economic fundamentals are better than many other parts of the country.

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