The number of Utah homeowners who received a foreclosure filing jumped 22 percent in the second quarter of 2008, compared with the first three months of the year, according to RealtyTrac, a real-estate market analysis firm. Utah had the 12th-highest foreclosure rate in the nation in August, the most recent month for which figures are available. The state had 1,611 foreclosure filings in August, a rate of one foreclosure filing for every 559 households, and an 85 percent increase from the same month a year earlier.

Real-estate experts say many homeowners facing the possibility of foreclosure choose a short sale because it has less impact on their credit rating. A short sale would affect a person's credit rating for up to three years, while a foreclosure would loom for more than twice that long.

Banks changing terms

Castrejon and her husband bought their two-bedroom house in Salt Lake City's Rose Park neighborhood in September 2007 for $129,000, hoping it would be a safe place to raise their two children.

But unbeknownst to the Castrejons, the home was infested with insects, worms and mice that hid inside crevices in the foundation. In addition, the house had structural problems from rotting wood that made the house unlivable.

Results of the home inspection that would have informed the family about all of the safety and health issues in advance were not returned until the day of closing. The couple eventually stopped making payments on the house and moved out just three months after they had bought it.

Lilian Hernandez, a loan counselor with NeighborWorks Salt Lake, is now assisting the family through the short-sale process. NeighborWorks is a nonprofit housing agency that provides free counseling and education to families in Salt Lake City.

She said that the family also felt pressured by the Realtor they hired, who told them they would lose their downpayment if they backed out of the deal.

Speaking through Hernandez as a translator, Castrejon said her family now lives with her brother while they try to resolve the short-sale situation.

"She feels that it's a big impact on their credit, but at the same time, it's better than to continue with this nightmare where they are accumulating all of this debt and not being able to see the light at the end of the tunnel," Hernandez said.

Hernandez said the family has received two offers on the home of $85,000 and $90,000, but neither one was accepted by the lender. She said the home would hopefully be sold within the next month or two.

As the number of short sales increases, some real-estate professionals are inadvertently becoming experts in the process.