The number of Utah households with a foreclosure filing jumped 99.5 percent from 2007 to 2008, according to a report released Wednesday, and the state's foreclosure rate is expected to jump even higher this year.
The data from RealtyTrac, an online market researcher based in Irvine, Calif., showed that Utah ranked 13th in the nation for its 2008 foreclosure rate, which was 1.65 percent, just below the national average of 1.84 percent. For the month of December 2008, the number of Utah foreclosure filings increased 126 percent compared with December 2007, although they dropped 6 percent from November 2008.
St. George registered as the Utah city with the highest foreclosure rate in 2008, at 4.08 percent, with Provo/Orem at 2.12 percent, Salt Lake City at 1.72 percent and Ogden/Clearfield at 1.47 percent. Salt Lake ranked 46th among the top 100 metro areas nationwide for its foreclosure-filing rate.
Jim Wood, director of the University of Utah's Bureau of Business and Economic Research, said Utah's foreclosure rate could nearly double in 2009. The Utah rate could hit 3 percent over the next year if the local job market continues to decline and financial markets continue to struggle, he said.
The weakness in those markets is going to create difficulties for families who bought housing in 2006 through adjustable-rate mortgages and who will have their mortgage rates reset this year, he said. "There's a greater likelihood that they are going to have trouble."
Wood said the state's all-time high foreclosure rate was just over 2 percent in 2002, and he would not be surprised to see filings equal or exceed that figure this year. He said some analysts predict a national foreclosure rate of around 3 percent, and Utah could approach that figure.
Last year, 18,657 foreclosure filings were recorded in Utah. The report defines foreclosure filings as default notices, auction-sale notices and bank repossessions.
Nationwide, more than 2.3 million American homeowners faced foreclosure proceedings in 2008, an 81 percent increase from 2007, with the worst yet to come as consumers grapple with layoffs, shrinking investment portfolios and falling home prices.
More than 860,000 properties nationwide were actually repossessed by lenders, more than double the 2007 level, the RealtyTrac report said.
Moody's Economy.com, a research firm, predicts the number of homes lost to foreclosure is likely to rise by another 18 percent this year before tapering off slightly through 2011.
Still, foreclosures — which keep breaking records going back 30 years, according to the Mortgage Bankers Association — are likely to remain well above normal levels for years to come, and that will continue to keep home prices from rebounding.
The RealtyTrac report comes as Democrats, including President-elect Barack Obama, develop plans to use up to $100 billion of the remaining $350 billion in financial bailout money in an attempt to prevent the foreclosure crisis from getting even worse.
The four states with the highest foreclosure rates last year — Nevada, Florida, Arizona and California — accounted for almost half the national total, the report said.
Nevada registered the highest foreclosure rate, with 7.29 percent of its housing units receiving at least one foreclosure notice in 2008. The report said 77,693 Nevada properties received a foreclosure filing during the year, an increase of nearly 126 percent from 2007.
Florida had the nation's second-highest state foreclosure rate in 2008, at 4.52 percent, while Arizona came in third with 4.49 percent and California was fourth at 3.97 percent.
Stockton, Calif., registered the highest foreclosure rate among the nation's 100 largest metropolitan areas in 2008, with 9.46 percent of its housing units receiving a foreclosure filing during the year. Las Vegas had the second-highest metro foreclosure rate in 2008 at 8.89 percent.
New state laws — particularly in California, Massachusetts and Maryland — that required giving homeowners advance notice of foreclosure proceedings reduced filings in several states. But the effect of those laws has worn off, and lenders appear to be going ahead with foreclosure, rather than trying to modify loans.
"If all you're doing is basically giving a stay of execution, then the inevitable will follow," said Rick Sharga, RealtyTrac's vice president for marketing.
Foreclosures would have been about 10 percent higher in California last year, Sharga said, if it were not for a law requiring lenders to give borrowers a 30-day warning before starting the foreclosure process.
Contributing: Associated Press
E-mail: jlee@desnews.com