About 10,000 moderate-income Utahns who purchased homes with the help of the state's first-time buyer assistance program are not only getting through the mortgage foreclosure storm, their default rate has actually dropped by more than half over last year.

The default rate among moderate-income and first-time homeowners who have lower-than-market interest rates through Utah Housing Corporation has dropped by 52 percent the past fiscal year that ended June 30. That's one foreclosure for every 4,857 households.

During the same period, according to Utah Housing figures released Monday, foreclosure rates statewide increased by 141 percent. That's one foreclosure for every 600 households, a rate that is lower than the current national foreclosure rate of one in every 501 but still 10th-highest nationwide in the rate of default increases the past year.

Utah is 10th in the country in increased rate of foreclosures, according to the housing market monitoring company Realty Trac.

The interest break provided to Utah Housing customers is a factor in the decline in foreclosures compared to the national boom in them, company administrators said Monday. But the main reason Utahns who bought homes, financed rental properties or developed special needs housing through Utah Housing have fared better is a combination of responsible lending practices and purchasers buying what they could actually afford.

Utah Housing, which was established by the Legislature in 1975 and has provided less than the going loan interest rate to about 60,000 Utahns, historically has had many fewer delinquencies and foreclosures compared to the rest of the state.

"Moderate-income and first-time homebuyers do not need any surprises when it comes to making their monthly house payments," said Utah Housing President William Erickson. "All of our loan payments are fixed over the life of the loan and not subject to fluctuations like the adjustable or variable rate stuff out there that has led to the subprime mess."

Purchasers themselves must have a verifiable history of good credit and steady employment in order to qualify for Utah Housing funds.

"Utah Housing wants having a mortgage to be a positive experience for our customers, because it has finally allowed them the American dream of home ownership," Erickson said.

The company has found several ways to achieve that goal, he said, noting that it offers programs to fund downpayments and closing costs that often total around 6 percent of the loan amount. Homes built by students are discounted for buyers, and the agency also underwrites rent-to-own purchases.

The agency essentially is the state's version of the national Fannie Mae and Freddie Mac loan security agencies established by the federal government.

Fannie and Freddie are in trouble with subprime loans, but Utah Housing is in an enviable position of not being part of the housing bubble, either when real estate was booming or when it burst, he said.

In addition to providing below-market rate mortgages for modest-income homebuyers, Utah Housing also partners with developers to finance affordable and subsidized rental properties around the state. Special needs housing, such as shelters for victims of domestic violence, elderly, physically and mentally challenged, among many others, are also provided through Utah Housing.

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