About 1.18 percent of mortgages in Utah were in foreclosure in the second quarter, down from 1.56 percent in the same three-month period a year earlier, the Mortgage Bankers Association reported Thursday in its National Delinquency Survey. The share of delinquent loans in which homeowners have fallen behind on payments dropped to 4.25 percent in the second quarter from 4.65 percent during the same three months in 2004.

Several factors - such as job growth and an improving housing market - are pushing foreclosure rates lower, economists say.

Utah's economy, battered by layoffs during the economic downturn earlier this decade, now is creating jobs at one of the highest rates in the country. More jobs generally mean fewer foreclosures.

And the Wasatch Front's real estate market, one of the nation's most sluggish in recent years, has begun to boom. Homeowners who can sell their homes fast - and at an amount that covers what they owe on their mortgages - are less likely to lose their homes to foreclosure.

Low interest rates are another factor leading to lower second-quarter delinquencies in Utah and the nation, said Doug Duncan, MBA's chief economist. However, if higher energy prices persist - primarily the retail cost of gasoline - there could be an uptick in delinquencies and foreclosures later this year, Duncan noted.

Once among the highest in the country, Utah's delinquency rate is now below the national average.

The national delinquency rate is 4.34 percent, compared to Utah's 4.25 percent. Utah's foreclosure rate of 1.18 percent, however, is still higher than the national foreclosure rate of 1.00 percent but is declining in relation to other states.

A drop in the delinquency and foreclosure rate is "due to a better economy, for sure, but it's also due to increased regulation at the state level," said Al Bingham of National City Mortgage, who has been involved in fighting mortgage fraud on a state level.

Traditionally, loans plagued by fraud - such as those in which appraisers have inflated home values or loan officers have lied on applications - have a higher foreclosure rate than loans that involve no fraud.

In recent years, the Utah Division of Real Estate, headed by former director Dexter Bell, cracked down on mortgage fraud. "The state has a sharp group of regulators," Bingham said. "They are short-handed but they do a very good job of fighting fraud."

lesley@sltrib.com