In Utah, only 3.05 percent of outstanding loans were at least 30 days past due in the first quarter, down from 3.29 percent in the same quarter a year earlier, the Mortgage Bankers Association reported Thursday in its National Delinquency Survey.
Nationally, the delinquency rate increased in the first quarter to 4.84 percent, up from 4.41 percent in the same period of 2006. The increase reflects not only a slowdown in real estate markets nationwide but also fallout from the subprime-lending debacle, in which buyers with credit issues took out risky mortgages only to find themselves unable to make their mortgage payments.
Utahn's share of subprime lending is not as high as many other states, said Jim Diffley, an economist with Global Insight, which tracks real-estate markets nationwide. "Utah also doesn't have falling [real estate] prices . . . and you still have a strong economy. All of those things bode for better relative performance than the rest of the country."
Only 11 states have lower delinquency rates than Utah. Economists attribute that chiefly to the state's strong economy, with stellar employment growth topping all other states and a bustling real estate market. In many other parts of the county, economic conditions are not so favorable.
Delinquencies are an early indicator of foreclosure, which occurs when a homeowner behind on payments for too long is ordered to vacate a dwelling. Foreclosures plague some regions that just a couple of years ago enjoyed high demand for homes and huge run-ups in prices, but today face a soft market and declining prices.
Nationally, the share of loans entering the foreclosure process was 0.58 percent, up from 0.41 percent a year ago. The share of subprime loans entering foreclosure jumped to a recent high of 2.43 percent.
Utah's foreclosure rate, however, fell to 0.33 percent in the first quarter, down from an already low 0.45 percent in the same quarter of 2006. Only 13 states have a lower foreclosure rate, according to the MBA report, which covers government-insured and conventional loans.
A state's home-sale market and its foreclosure rate are closely linked. In a market like Utah, where homes sell quickly and values are increasing, homeowners with financial troubles often can sell properties quickly and for a price that will cover their mortgages.
For example, Utah's strong real estate market helped Casey Serin of Sacramento, a real estate investor who bought eight homes in four states before finding himself in financial trouble.
To avoid foreclosure on a home in Highland, he hired Utah Realtors Harvey and Robyn Christoffersen to "stage" the property to get it sold.
Serin has blogged about his efforts to stave off foreclosure. Highlights of his home sale are recited on www.iamfacing- foreclosure.com.
Even Utah's real-estate market has slowed in recent months, and Harvey Christoffersen said owners of homes priced below $300,000 are having the best luck at achieving quick sales at good prices. Those trying to sell properties for $350,000 or more may have to make price concessions, he said, or wait a while - weeks or even months, time that people past-due on their mortgage payments may not have. There are fewer options to avoid foreclosure.
''If you're in a position where you can refinance or sell, but house prices have fallen below your outstanding loan balance, you're in trouble," said MBA chief economist Doug Duncan
That is happening now in California, Florida, Nevada and Arizona.
Foreclosures there have been pushed higher by people who bought homes on speculation that rising home prices ultimately would yield a profit, Duncan said in Thursday's report. Those people, many of whom took out adjustable-rate or risky loans, now must pay higher monthly payments for properties declining in value.
Consumer advocates, who believe tighter lending rules could have prevented many problems surfacing now in the lending industry, demanded Thursday that the Federal Reserve write stricter rules to end abusive lending practices, accusing the central bank of not acting forcefully enough to curb delinquencies and foreclosures.
Advocates spoke at a hearing the Fed held in Washington to gather feedback from the mortgage industry and the public as it examines its authority under a 1994 consumer-protection law. Lenders told the Fed that rules aren't needed, preferring that policymakers keep to their practice of giving guidance.
Consumer advocates disagree.
''With the tsunami of foreclosures and lost homes, the Federal Reserve hasn't used this authority,'' said Martin Eakes, chief executive officer at the Center for Responsible Lending in Durham, N.C. ''During the last seven years, the Federal Reserve has made some small steps, but they've been very insufficient.''
lesley@sltrib.com
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* BLOOMBERG NEWS contributed to this story.
