Headline in today’s Tribune: Salt Lake Hardest Hit in Housing.
In the first quarter of this year, 5,155 property owners in the Salt Lake metro area, 1 in every 77 properties, received a foreclosure-related notice. This number is 101% higher than the first quarter of 2009 and the biggest increase in the US. Nationally, foreclosure filings rose only 16%. These numbers are courtesy of RealtyTrac, a company that tracks foreclosures in over 200 metro areas across the country. Keep in mind that this is a percentage increase. There are still a lot of cities with bigger troubles. Out of the 200 ranked metro areas, Salt Lake now has the 35th highest foreclosure rate, up from 62nd last year.
So what exactly is a foreclosure notice and why is Salt Lake experiencing a spurt when other parts of the country are starting to improve?
Foreclosure is not a type of property, it’s a process.
Foreclosure is a legal process, varying by state, by which a defaulted borrower is deprived of her, his, or their interest in the mortaged property. There are several associated terms, such as pre-closure, NOD, short sale and REO, that often confuse the issue.
Pre-foreclosure is the period beginning with the initial default, failure to make payments, and extending to when the property is sold.
NOD, or notice of default, is the official notice from the lender that the borrower has defaulted on the mortgage. The NOD begins the foreclosure process and outlines the reinstatement period. Owners who receive a NOD should seek foreclosure avoidance counseling from an agency approved by the U.S. Department of Housing and Urban Development.
Reinstatement period is the time period during which the borrow can bring the loan into good standing by making the required payments.
Short Sale is the situation in which a seller owes more on the loan than the market value of the property. These sellers are often referred to as being underwater. They may or may not be in foreclosure.
Notice of sale is the date on which the property will be sold at auction by the bank IF the borrower is unable to reinstate the loan. The notice of sale is printed in the newspaper and outlines when and where the foreclosure sale, will be held.
Foreclosure sale, also referred to as sheriff’s sale, sheriff’s auction or trustees sale, occurs when the property is auctioned for sale to the higest bidder.
REOis an acronym for real-estate-owned and is another term for to bank owned. REO is the status of the property when the foreclosure sale isn’t successful, meaning the minumum bid wasn’t met, and ownership of the property is transferred to the lender.
Why is Salt Lake City’s foreclosure rate rising when other cities are declining?
Simply put, we were late to the ball. Salt Lake City’s housing market, as well most of Utah’s, were still going strong as markets in the rest of the country began to tank in 2006. Defaults began to creep up in Utah in 2008 when the economy weakened. Mark Knold, chief economist for Utah department of Work force Services, says that since we were late getting into the housing bubble we’ll be the last ones out. He thinks 2010 will be our worst year and things should begin to improve in 2011. Let’s hope.
If you are having trouble making your mortgage payment, you can call 211 to be referred to a non-profit agency that may be able to help. Don’t wait. The sooner you get help, the more options you will have.