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Utah has the nation's 10th-highest foreclosure rate in the country, with one in every 450 households receiving a foreclosure-related filing last month, a new report shows.
But the Beehive State, which has been in the top 10 for more than two years, has a foreclosure problem that pales in comparison to No. 1 Nevada, where 1 in every 118 households received a filing in July, according to foreclosure-tracking company RealtyTrac.
Nevada was followed by California (1 in 226), Arizona (1 in 248), Georgia (1 in 346), Idaho (1 in 348), Michigan (1 in 349), Florida (1 in 376), Illinois (1 in 424) and Colorado, No. 9 with a rate of 1 in every 439 households receiving a filing.
Nationally the foreclosure rate is 1 in every 570 U.S. households, said RealtyTrac.
In all, about 228,098 U.S. homes received a foreclosure-related notice last month, a 7 percent increase from July, but a nearly 33 percent decline from August last year. In Utah, 2,119 households received a foreclosure-related filing, down 17 percent from July and more than 48 percent from August 2010.
But that trend isn't expected to hold.
Nationally, banks have stepped up their actions against homeowners who have fallen behind on their mortgage payments, setting the stage for a fresh wave of foreclosures.
The number of U.S. homes that received an initial default notice — the first step in the foreclosure process — jumped 33 percent in August from July, RealtyTrac said.
The increase represents a nine-month high and the biggest monthly gain in four years. The spike signals banks are starting to take swifter action against homeowners, nearly a year after processing issues led to a sharp slowdown in foreclosures.
"This is really the first time we've seen a significant increase in the number of new foreclosure actions," said Rick Sharga, a senior vice president at RealtyTrac. "It's still possible this is a blip, but I think it's much more likely we're seeing the beginning of a trend here."
Foreclosure activity began to slow last fall after problems surfaced with the way many lenders were handling foreclosure paperwork, namely shoddy mortgage paperwork comprising several shortcuts known collectively as robo-signing.
Many of the nation's largest banks reacted by temporarily ceasing all foreclosures, re-filing previously filed foreclosure cases and revisiting pending cases to prevent errors.
Other factors have also worked to stall the pace of new foreclosures this year. The process has been held up by court delays in states where judges play a role in the foreclosure process, a possible settlement of government probes into the industry's mortgage-lending practices, and lenders' reluctance to take back properties amid slowing home sales.
A pickup in foreclosure activity also means a potentially faster turnaround for the U.S. housing market. Experts say a revival isn't likely to occur as long as there remains a glut of potential foreclosures hovering over the market.
Foreclosures weigh down home values and create uncertainty among would-be homebuyers, who fret over prospects that prices may further decline as more foreclosures hit the market. There are about 3.7 million more homes in some stage of foreclosure now than there would be in a normal housing market, according to Citi analyst Josh Levin.
"This bloated foreclosure pipeline now presents the greatest obstacle to a housing market recovery," Levin said in a client note this week.
Banks have been working through a backlog of properties that first entered the foreclosure process months, if not years, ago. But the August increase in homes entering that process sets the stage for a host of new properties being targeted for foreclosure.
Tribune reporter Lesley Mitchell contributed to this story