The surge of foreclosure activities in Utah is blamed on the growing financial crisis and unemployment in the area. The current situation has affected people from all walks of life, those who lived beyond what they earned and those who purchased affordable homes.
According to Vice President Jason Eldredge of Newreach, a company that monitors the pre-foreclosure market, homeowners who are facing the threat of foreclosure are those with mortgages of not more than $300,000. He explained that 90 percent of homeowners who are 60 days delayed on their mortgage payments will likely be in some form of foreclosure proceedings within a year.
Eldredge also noted that even those who have acquired affordable homes are at risk as an offshoot of the growing economic crisis and unemployment. He added that nearly 650 houses in Utah are in some form of foreclosure proceedings as of October of this year.
University of Utah’s Bureau of Economic and Business Research director James Woods predicts that the contraction in employment growth in Utah in 2008 will likely worsen the housing market crisis.
The scheduled change to higher interest rate of adjustable-rate mortgages is expected to push foreclosures in Utah to about 13,000 by year 2010. The interest rate adjustment would cause an increase in borrowers’ monthly mortgage payments.
Wood said that many of these borrowers are not expected to qualify for loans under the strict lending standards.
The Mortgage Bankers Association’s data showed that 6,450 homeowners in Utah have lost their homes between April and June 2008. This represents more than one percent of the nearly 430,000 mortgage loans in the state.
Another factor that exacerbates foreclosure in Utah is homebuyers’ practice of spending more than half of their monthly income on paying their mortgages.
Experts recommend that a homeowner spend not over 30 percent of his gross monthly income on mortgage payment.
Leticia Carvalho has been educated in the finer points of the foreclosure market over 5 years.