Beehive state No. 6 for residents faced with losing homes

Beehive state No. 6 for residents faced with losing homes
Economy » Jump in foreclosure-related filings, dip in retail sales halt stock market rally.

Salt Lake Tribune Staff And News Services
Updated:05/13/2009 09:20:45 PM MDT


Utah, which had an increase of 120 percent in foreclosure-related filings over the past year, now has the sixth-highest rate among all states, according to a report released Wednesday.

The housing news, combined with reports of disappointing retail sales nationally for April, prompted investors to retreat from the stock market Wednesday and put a two-month rally on hold amid concern that an economic recovery won't come as fast as hoped. The Dow and other key indexes dropped at least 2 percent.

The Commerce Department said retail sales fell 0.4 percent last month, while economists had expected sales to be flat. Investors watch these numbers closely because consumer spending accounts for about two-thirds of U.S. economic activity. Without improved spending, the economy is more likely to remain mired in a recession.

Adding to the worries, the foreclosure report, by RealtyTrac, shows that the number of U.S. households faced with losing their homes to foreclosure jumped 32 percent in April, compared with the same month last year. Utah is among nearly one dozen states showing a year-over-year increase of more than 100 percent.

Nationally, more than 342,000 households received at least one foreclosure-related notice in April, RealtyTrac Inc. said. That means one in every 374 U.S. housing units received a foreclosure filing last month, the highest monthly rate since the listing firm began its report in January 2005.

In Utah, nearly 3,000 households received a foreclosure-related filing, which translates to one in 312 households. The filings include a range of actions, from default notices in which home owners are simply behind on their payments but not in danger of losing their properties to notices that a bank is taking possession of their home.

Salt Lake City economist Jeff Thredgold, a consultant to Zions Bank, said he isn't surprised because Utah's economy is experiencing "the worst economic downturn in 50 years."

And even though the Utah's economy is faring better than many other states -- unemployment is much lower, for example -- Utah families have some distinctive characteristics that make them especially vulnerable to financial distress in bad times.

"You have fewer two-income households in Utah and more large families," he said.

Utah's foreclosure-related filings still are better than Nevada, where one in every 68 households receive a notice last month -- the nation's highest rate. In No. 2 Florida, one in every 135 households received a filing. For California, the rate was one in every 138 households.

Utah is No. 6, also behind Arizona and Idaho. Rounding out the top 10 are No. 7 Georgia, followed by Illinois, Colorado and Ohio.

Nationally, April was the second straight month with more than 300,000 households receiving a foreclosure filing.

"We've never seen two consecutive months like this," said Rick Sharga, RealtyTrac's senior vice president for marketing. "It's the volume that's surprising."

Although total filing activity was up, the number of repossessions by banks was down on a monthly and annual basis to their lowest levels since March of last year, RealtyTrac said.

But that is far from positive news. Because much of the foreclosure activity in April was in the default and auction stages -- the first parts of the foreclosure process -- it is likely that repossessions will increase in coming months, RealtyTrac said.

Help might be on the way. The Obama administration announced a plan in March to provide $75 billion in incentive payments for the mortgage industry to modify loans to help up to 9 million borrowers avoid foreclosure. But the extent of the relief remains unclear, with questions lingering about how much the lending industry will cooperate in modifying loans.