Mortgage Foreclosures in Utah

Mortgage Foreclosures in Utah

Utah currently has one of the lowest rates of seriously delinquent mortgages in the nation.
In the fourth quarter of 2007, 7,000 mortgages in Utah were seriously delinquent, or 1.58 percent of mortgages.

Utah currently has one of the lowest rates of seriously delinquent mortgages in the nation.
Table 1

States Ranked by Seriously Delinquent Mortgage Loans
(Fourth Quarter - 2007)
Ten
Lowest
% of Loans
Seriously Delinquent
Ten
Highest
% of Loans Seriously Delinquent
Alaska
1.21
Michigan
5.93
Oregon
1.32
hio
5.89
Wyoming
1.36
Indiana
5.57
North Dakota
1.37
Mississippi
5.28
Washington
1.39
Louisiana
4.09
ontana
1.53
Illinois
3.98
Utah
1.58
Rhode Island
3.9
Idaho
1.60
Kentucky
3.86
Hawaii
1.73
Alabama
3.73
South Dakota
1.83
Maine
3.5
U.S.
3.62
Source: Mortgage Bankers Association.

There are six states that have lower delinquency rates than Utah including Alaska, which has the lowest rate in the nation at 1.21 percent. The states hit hardest by foreclosures and delinquencies are Michigan, Ohio and Indiana. In each of these states nearly one out of every sixteen mortgages is seriously delinquent. These are not states where housing prices have had huge run-ups over past five years, but rather states with prolonged job losses and states that have had difficulty recovering from the 2001 recession.

Utah ranks even better when looking strictly at foreclosure rates without 90 days or more delinquencies. In the fourth quarter of 2007 Utah’s foreclosure rate was 0.80 percent. Only four states had lower foreclosure rates; Alaska 0.67 percent, Oregon 0.72 percent, Washington 0.72 percent and North Dakota 0.79 percent. The number of homes in Utah in foreclosure was 3,550 in the fourth quarter of 2007, up 750 homes over the third quarter.

The second quarter of 2007, with a rate of 0.55 percent, was the lowest point for foreclosures in this cycle and the lowest rate since the fourth quarter of 1997, when foreclosures were 0.50 percent of all mortgage loans.

Subprime mortgage loans have been particularly vulnerable to foreclosure. Nationally there are 6 million subprime loans, accounting for 13.2 percent of all mortgage loans. Subprime loans in Utah represent a very similar share, 13.4 percent of all mortgage loans. There are currently 52,987 subprime loans in Utah and 32,394 of these loans are subprime ARM (adjusted rate mortgage) loans, the most vulnerable to foreclose.

Nearly five percent of the subprime ARM loans in Utah are in foreclosure, about 1,600 loans. While this rate may seem high, Utah’s subprime loans look healthy compared to other states. In fact, Utah has the lowest rate of foreclosure for subprime ARM mortgages in the country. Nationally 13.4 percent of subprime ARM loans are in foreclosure.

Mortgage Foreclosure and Delinquency in Utah
(Fourth Quarter 2007)
Number of Loans*
30 Days
Late
90 Days
Late
Foreclosure
Seriously
Delinquent
All Loans
444,645
2.56%
0.78%
0.80%
1.58%
Prime Loans
335,259
1.62%
0.32%
0.38%
0.70%
Subprime Loans
52,987
6.66%
2.79%
3.68%
6.47%
Subprime ARMLoans
32,394
7.29%
7.29%
4.86%
8.10%
*Loans don’t sum to total due to exclusion of FHA and VA loans.

When Utah experiences a high rate of economic growth there is typically a very low rate of foreclosure. This was certainly the case in the mid-1990s when job growth and rising home prices drove the foreclosure rate down. During this cycle the foreclosure rate hit its lowest point of 0.30 percent in the third quarter of 1996, when only 600 homes were in foreclosure. Historically, Utah’s foreclosure rate is considerably more volatile than the national rate, Chart 1.
For 15 years the national foreclosure rate moved consistently around a narrow range of 1.0 to 1.25 percent, but in late 2006 the national rate suddenly accelerated, while the rate in Utah continued to decline. Foreclosure rates in Utah steadily declined from the peak of 2.0 percent in 2002 to 0.64 percent in 2007.

Not surprisingly, the serious recession of 2001–2003 led to the highest rates of foreclosure in Utah since the mid-1980s. As shown by the troubled large industrial states of Michigan and Ohio, foreclosure rates are particularly sensitive to job growth and economic expansion. Without doubt, Utah’s strong job growth, which continued throughout most of 2007, has helped to keep the state’s foreclosure rate among the lowest in the country.

While Utahns can take some satisfaction in the low rate of foreclosures, there has been a strong up-tick over the past two quarters. The number of homes in foreclosure has risen from 2,400 in the second quarter of 2007 to 3,550 in the fourth quarter of 2007. As Utah’s job growth slows from 50,000 annually in 2006 to an expected 25,000 in 2008, and 16,000 in 2009, the rate of foreclosure could approach 1.5 percent by the end 2009.