More Utahns are losing homes

More Utahns are losing homes
Downturn » The state's rate of troubled loans is still below the U.S. average.

By Lesley Mitchell, The Salt Lake Tribune
Updated: 03/05/2009 06:12:29 PM MST

Nearly 35,000 families in Utah have fallen behind on their mortgages or 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 Utah, 6.06 percent of 440,841 mortgages, or more than 26,000 loans, were at least 30 days past due in the fourth quarter. That's up from 4.15 percent in the same quarter in 2007, the Mortgage Bankers Association reported Thursday in its National Delinquency Survey.

Utah's delinquency rate has now surpassed the state's previous high of 5.3 percent set in 2003, but still remains significantly lower than the national rate of 7.88 percent.

Utah has the 13th-lowest delinquency rate among all states.

Delinquencies are an early indicator of foreclosures, in which a homeowner loses a property. Many, but not all, delinquencies lead to foreclosure.

Another 1.79 percent of loans in Utah -- nearly 7,900 -- were in the foreclosure process at the end of the fourth quarter, a rate that also is climbing but remains well below the national rate of 3.30 percent. Utah has the 17th lowest foreclosure rate.

"We're going to see foreclosures and delinquencies in Utah increase, but we may never reach the national average, because we normally don't," said Austin Sargent, an economist with the Utah Department of Workforce Services.

The higher share of past-due loans nationally and in Utah reflects in part the fact that adjustable-rate
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loans taken out years ago are just now resetting at higher rates and subsequently higher payments.

Many of those homeowners are not able to refinance their properties with today's lower interest rates and get fixed-rate loans because banks have tightened lending standards after the nation's subprime lending debacle.

Many don't qualify under the stricter lending criteria.

But adjustable-rate loans are only part of the problem. A larger factor is the bad economy.

In Utah and elsewhere, many people with already-low fixed-rate loans are falling behind as well because of pay cuts, furloughs and job losses.

"We're seeing increases in fixed-rate categories," said Jay Brinkmann, chief economist for the Mortgage Bankers Association. "The foreclosure picture is more clearly driven by the jobs market."

The problem in Utah -- and elsewhere -- is that borrowers who lose their jobs often can't find another one with comparable pay fast enough and don't have enough savings to last until better times.

Selling their homes isn't quick fix, either, because home prices are falling and a number of Utahns now owe more than their home is worth. Many people simply can't sell their homes fast enough and at a high enough price to cover their mortgage.

Some homeowners are able to do a short sale in which their mortgage holder accepts less than they are owed. But these types of transactions can take months to complete.

The Associated Press contributed to this report.