Utah, the New Foreclosure Hub in US

August 5th, 2008

Utah has been coroneted as the new foreclosure hub of the United States. It has bagged the tenth highest foreclosure rate in the country and one out of every 600 households is dreaded to be in some stage of foreclosure processing, because the borrower has defaulted in loan payments. The information is forwarded by RealtyTrac, an on line service that provides data on the mortgage market trends of the entire country. June 2008 was an ominous month, especially for the state of Utah. After years of economic prosperity, it had 1,501 households receiving some kind of notice related to foreclosure filing. An increase of 141% over that of the same period in 2007 was registered while the country’s foreclosure figures stood only 53% higher than that of the same period, last year. Even then, according to RealtyTrac reports, Utah lagged behind in foreclosure rate compared to the national rate where one in every 501 households received a foreclosure filing.

Utah’s misfortunes began just a year ago, when the other states were already reeling in the midst of their foreclosure woes. Sluggish employment growth had significantly dwarfed the growth of the once soaring real estate market of the state, holding one of the country’s strongest economies to ransom. House prices began to fall and so were sales of houses. The rate at which the people of Utah lost their homes was low compared to the foreclosure plague that had gripped the country since the past two years and was fast approaching Utah.

Mark Zandi, chief economist for economic forecasting service Moody’s Economy.com remarked that since the job market was on a downward swerve and retrenchment followed suit, home owners had less equity; lenders were least interested to enter into any alternative arrangement with defaulters having negative equity and the borrower was left with no other option but to renounce their property. Zandi felt that the foreclosure crisis was gaining ground and matters would get even worse in the next decade.

Housing advocate, Kim Datwyler, executive director of Neighborhood Non-profit Housing Corporation in Logan said that majority of the borrowers facing foreclosure had loans under adjustable-rate mortgages and it was difficult to reset their loan payments at higher rates of interest and increased installments per month. Various factors account for the disastrous trend in the house mortgage activities, she said and with few buyers home inventories were piling and anyone defaulting in mortgage payments could not avoid a foreclosure.