SALT LAKE CITY — The rate of foreclosures in Utah fell significantly during the first quarter of this year — the fifth straight quarter of year-over-year decrease.
According to a new report, the Beehive State has seen its rate of default filings drop nearly 50 percent in first three months of 2012 compared to the same period last year.
The RealtyTrac U.S. Foreclosure Market Report for the first quarter of 2012 showed that the rate of Utah foreclosure filings — default notices, scheduled auctions and bank repossessions — decreased 49 percent from the first quarter of 2011 and declined 18 percent from February 2012.
Despite the decrease, Utah still had the ninth highest foreclosure rate in the nation with one in every 198 households registering a default filing. Nevada reported the highest rate at one in every 95 households, followed by California at one in 103 households, Arizona was third with one in 106, Georgia at one in 119 and the Sunshine State of Florida ranked fifth with one in 123 households reporting a foreclosure filing. Rounding out the 10 worst foreclosure rates were Illinois at No. 6, Michigan ranked seventh, followed by Colorado at No. 8, Utah and Wisconsin ranked 10th.
The nationwide average foreclosure rate was one in 230 households.
Utah's relatively streamline foreclosure process has aided in the state's ability to reduce its overall default rate and foreclosure volume, said Daren Blomquist, RealtyTrac marketing and communications manager.
Foreclosure filings were reported on 572,928 properties during the quarter, down 2 percent from the previous quarter and down 16 percent from the first quarter of 2011, the report stated. The first quarter total was the lowest quarterly total since the fourth quarter of 2007.
“The low foreclosure numbers in the first quarter are not an indication that the massive reservoir of distressed properties built up over the past few years has somehow miraculously evaporated,” said Brandon Moore, chief executive officer of RealtyTrac. “There are hairline cracks in the dam, evident in the sizable foreclosure activity increases in judicial foreclosure states over the past several months, along with an increase in foreclosure starts in many judicial and non-judicial states in March."
The dam may not burst in the next 30 to 45 days, he said, but it will eventually, and everyone downstream should be prepared — in terms of new foreclosure activity and new short sale activity.
To foreclose in accordance with the judicial procedure, a lender must prove in court that the mortgagor is in default. Non-judicial foreclosures are based on deeds of trust that contain a power-of-sale clause. The clause enables the trustee to initiate a foreclosure sale of the home without having to file a lawsuit or go to court.
The nationwide decrease in foreclosure activity was caused primarily by decreasing activity in states that use the non-judicial foreclosure process. According to the report, those 24 states combined, along with the District of Columbia, had 329,854 properties with foreclosure filings during the quarter, more than half the national total — but a decrease of 8 percent from the previous quarter and 28 percent less than the first quarter of 2011.
Twenty non-judicial states registered year-over-year decreases in foreclosure activity, led by Arkansas with a 79 percent drop and Nevada with a 62 percent decline. Recent legislation or court cases have disrupted the normal foreclosure process in both states.
Meanwhile foreclosure activity increased in states that primarily use the judicial foreclosure process. Those 26 states combined accounted for 243,074 properties with foreclosure filings during the quarter, up 8 percent from the previous quarter and 10 percent higher than the first quarter of 2011.
The state with the largest year-over-year increase in judicial foreclosure activity was the Hoosier State of Indiana — up 45 percent.