Stability seen in Utah homes
Foreclosure rates up, but still far below average for country
By JORDAN MUHLESTEIN
Standard-Examiner staff jmuhlestein@standard.net
Utah's foreclosure rate is slightly higher than a year ago, but far lower than the national average.
Statewide, the percentage of loans in foreclosure was 0.8 percent in the fourth quarter of 2007, up from 0.61 percent a year earlier, the Mortgage Bankers Association reported Thursday.
The Utah rate was less than half the nationwide rate, which rose from 1.19 percent in 2006 to 2.04 percent in the fourth quarter of 2007.
Nationally, more than one of every 20 home mortgages was delinquent during the last three months of 2007, the highest level in 23 years.
More than 938,000 home loans were in foreclosure nationwide in the fourth quarter of 2007, a record 2 percent of all outstanding home loans.
In all, more than 3.6 million mortgages were past due or in foreclosure proceedings across the country during the final three months of last year. Of those, nearly 381,700 entered foreclosure in the quarter, another record.
"Fortunately, we don't have, at this point, a very big problem, and I'm hopeful that it doesn't become a very big problem in Utah," said Kelly Matthews, executive vice president and economist for Wells Fargo Bank.
"We are seeing modest increases (in foreclosures), but in total, I would describe our foreclosure situation as much less of a problem than the national average."
Foreclosure rates in Utah for all of 2007 were actually down 26 percent from 2006, Matthews said, although monthly figures on foreclosures in the state jumped 7.2 percent from November 2006 to November 2007 and 15 percent from December 2006 to December 2007.
Matthews said the strength of Utah's economy, including job growth and minimal layoffs, has helped keep housing strong. Struggling homeown- ers have mostly been able either to sell their homes or refinance.
He also said he believes Utah's housing market has not been hit as hard as other parts of the country because lending was not as aggressive in the past few years.
While the state's foreclosure rates should stay below the national average, the rates will probably continue to rise.
"It is more than likely the problems will get worse both in Utah and nationwide," Matthews said.
John Norman, executive director of the Utah Mortgage Lenders Association, agrees.
Utah is faring well, but eventually tends to follow the national economy, he said. However, there are some reasons why Utah shouldn't have as many problems as other areas.
Utah has the largest households in the nation and the most new households formed - and those people need homes, Norman said.
"We have a strong economy and positive house-price appreciation," he said. "People can still sell their homes if they get in trouble."
Foreclosures are usually tied to housing prices, said Jim Wood, director of the Bureau of Economic and Business Research at the University of Utah.
"When we had housing prices from 2001 to 2003 that weren't growing at all, we had higher rates of foreclosures," he said.
Because Utah housing prices are still going up in general, he said, foreclosures haven't increased much.
"What provokes foreclosures is when people are ‘under water,' when they owe more than the house is worth," Wood said. "We haven't had that yet, so we don't have nearly the incidence of foreclosure that you see nationally."
As of the fourth quarter of 2007, payments were 30 days late or longer on 4.15 percent of the more than 422,000 active home loans in Utah, according to the new Mortgage Bankers Association figures.
Nationwide, the delinquency rate was 5.82 percent.
Builders affected
The slowing market has affected not only homeowners, but also builders, said Lance Garner, chief credit officer of Barnes Bank, which deals with financing new construction.
Barnes Bank's debtors can have problems with their loans if a buyer decides to back out or if an investor is no longer interested in the home.
"The last couple of years, investors were coming in and assuming they could flip the house," Garner said.
"That is no longer the case. We've seen a definite softening of values, and there are not those huge profits that some of the investors were lined up to take."
Many lenders have pulled back from providing financing for speculation homes, said Mike Ostermiller, CEO of the Weber/North Davis Association of Realtors.
That doesn't mean, however, that qualified buyers can't get loans, he said.
"Banks are being more conservative, but interest rates are low right now," Ostermiller said.
"There is still money out there for potential home buyers."
Standard-Examiner reporter Jeff DeMoss and wire services contributed to this article. 
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