West Valley Real Estate

In Utah, fewer homeowners are underwater when it comes to the value of their homes, according to a new report by American First CoreLogic.  At the end of this year’s third quarter, 18 percent of Utah (40,801) residential properties with a mortgage were in negative equity — meaning borrowers owed more on their mortgage than their home was worth.  Utah’s negative equity rate is well below the national rate of 23 percent.  And it remains far below those of neighboring states.  In Nevada, 65 percent of residential properties with a mortgage were in negative equity, the report said.  In Arizona, 48 percent of residential properties were in negative equity.  Idaho was at 20 percent and Colorado was at 19 percent.  The report confirms that the rampant housing speculation that was so prevalent in many states was not as severe here in Utah.  It also means Utah’s foreclosure rate will not rise as dramatically in the coming year.  (Salt Lake Board Of Realtors)

The Federal Housing Administration’s financial cushion has fallen to a dangerously low level, but government officials maintain the agency should avoid a taxpayer bailout under “most economic scenarios.”  The agency, a major source of funds for first-time homebuyers, faces mounting concerns that it will eventually need an infusion of cash.  FHA losses have increased with the unemployment rate as more homeowners default on their loans.  About 17 percent of FHA borrowers are at least one payment behind or in foreclosure, compared with 13 percent for all loans, according to the Mortgage Bankers Association.  Agency officials, however, said Thursday the agency won’t need a rescue unless the economy slips back into a severe recession.  “It is absolutely critical that going forward, we build that cushion back up,” said Housing Secretary Shaun Donovan.  “Foreclosures are still far higher than we want them to be, but we do appear to have them on the right path now,” Donovan said.  The FHA does not make loans, but rather offers insurance against default.  Borrowers are willing to pay for the insurance because FHA loans only require down payments of 3.5 percent of the purchase price.  Donovan, however, said the agency is considering raising its insurance premiums for borrowers as well as the 3.5 percent down payment requirement.  Legislation introduced by Rep. Scott Garrett, R.-N.J., would hike the down payment to 5 percent.  (Alan Zibel, Associated Press)