Utah lawmakers look to reduce foreclosures

SALT LAKE CITY — For the third straight year, Utah was among the worst states in the U.S. for the rate of foreclosure filings per household, according to a recently released nationwide report. Two state lawmakers now want to do something about it.

Irvine, Calif.-based research firm RealtyTrac reported this month that Utah had the nation's fifth highest foreclosure rate in 2010, representing a nearly 20 percent hike from 2009 and a 119 percent jump from 2008. The report showed that one in every 29 Utah housing units received a foreclosure filing last year.

The housing crisis in Utah is tipping in the wrong direction and requires a solution, said Sen. Ben McAdams, D-Salt Lake.

"The reality is that we've got an unprecedented crisis that needs to be addressed and we want to do that in a way that is responsible," he said following a public forum Tuesday at the Senate building of the State Capitol complex. "What I think we're trying to do is restore transparency to the real estate process."

Transparency and a clear understanding between local borrowers and out-of-state lenders have been eroded in a world of collateralized debt and mortgage-backed securities that are sold on Wall Street, McAdams added.

"We're not going to mandate that a borrower and a lender have to have a certain outcome," he said. "We want to restore the ability for a borrower to communicate with their lender."

McAdams said the proposals considered in Utah have been successful in neighboring states that have also been hit hard during the housing crisis.

"What we've seen in Nevada is that a similar program has had a significant ability to reduce the rate of foreclosures," he said.

The forum was organized and hosted by McAdams and Rep. LaVar Christensen, R-Draper, to discuss the home foreclosure crisis in Utah and to expand efforts to reduce the impact of foreclosures on Utah families. Christensen said a major problem is that a disconnect between borrowers and lenders has grown substantially over the years and that dynamic needs to change.

"All of the local lenders I've talked to seemed compassionate and understanding," he said. "Most of the homeowners have said, 'If I could just talk to the person who is the decision maker … and talk out solutions (they might be able to avoid foreclosure).'"

But (out-of-state lenders) become so detached that it makes it very difficult to work things out, he noted.

"There is an undeniable need for help," he said.

Christensen said he planned to introduce a foreclosure relief bill during the first few weeks of the upcoming legislative session that would focus on creating more transparency and requiring lenders to employ local decision-making representatives.

Foreclosure defense attorney Dough Short said he has seen the rate of foreclosures increase significantly and hoped that lawmakers can create measures that would streamline the loan modification process to help homeowners and lenders avoid long, drawn-out disputes.

"They can put regulations on how business is conducted in Utah," Short said. "Right now we simply don't have anything. There are no requirements, it's carte blanche."

E-mail: jlee@desnews.com

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