Utah #9 Nationally for Foreclosures

So the big news is that Utah has climbed up to ninth nationally in foreclosures according to Realty Trac.com. The interesting thing is that even though it ranks ninth for states, the foreclosure filings per house was still below the national average. In Utah 1 out of every 472 homes had a foreclosure filing. The national average for July was 1 out of every 464 households.

The way Realty Trac keeps trac of foreclosure filings is very interesting. It counts notices of default, notices of trustee sales, and new bank owned homes as “foreclosures.” With this method, the same property could be counted as a “foreclosure” three different months. Foreclosure isn’t an event, but is a process. Generally the Notice of Default is given after three or four months of missed payments, the Notice of Trustees Sale is at about month 8, and if the property isn’t purchased the foreclosure auction, becomes a REO home. Most properties that get a notice of default don’t actually Foreclose. Some homeowners have multiple notices of default as they resolve the preforeclosure before it actually happens.

The RealtyTrac numbers show that In July, Utah had 892 Notices of Default filed and 687 Trustees Sales scheduled. There were also 332 new REO homes. The total number of these filings was up 27% compared to June, and up 294% from last July when foreclosures in Utah were among the lowest in the nation.

In my opinion, foreclosures will continue to rise in Utah. There were too many people who bought homes that they can’t afford because they were convinced that they would continue to appreciate in double digits. Now that home values are falling, these owners have no equity and can’t sell their home in the soft market.  Nationally foreclosures are still on the rise, and the housing boom in many of these areas happened years ago. Hang on for a ride as Utah foreclosures will likely continue to increase.