Foreclosure filings continued to pile up along the Wasatch Front in October, and this problem will likely get worse as the deepening economic crisis is fueling higher unemployment, which may translate to more foreclosures, according to some local analysts.

Even as the government and several banks are now targeting foreclosure prevention measures at as many as 1 million households nationwide, questions remain whether these programs will prove effective.

"There's more pain to go with foreclosures," said Daren Blomquist, marketing communications manager of RealtyTrac, a company that tracks the foreclosure market nationally. The company released its monthly U.S. foreclosure data for October today.

"We expect those numbers will continue to grow at least until the middle of next year, because there are still many adjustable-rate mortgages out there that are scheduled to reset in 2009," he said.

Compounding the problem is rising unemployment in Utah, said Kelly Matthews, executive vice president and senior economist with Wells Fargo.

"The employment situation in Utah is not as bad as some of the other states, but it will get noticeably worse, and that will augment the housing problem," he said. "How bad the foreclosure situation gets will depend on how soft unemployment gets in the next six months."

Foreclosure statistics

Statewide, the number of Utahns facing foreclosure jumped nearly 73 percent in October to 1,812 from the same month in 2007, according to data released today by RealtyTrac. The report covers filings including default notices, notice of trustee sales and bank repossession notices.

In the Provo-Orem area, the number of foreclosure filings in October jumped 104 percent to a total of 325 compared with the same period a year ago. Nationally, 279,561 properties received a foreclosure-related filing in October, up nearly 25 percent from September 2007, RealtyTrac said.

Still, things aren't all bad in Utah, Blomquist said.

Even though Utah had the 13th-highest rate of foreclosure filings in October, the state isn't a hot spot, he said.

"There are a couple of states driving the national average for foreclosure filings higher, and Utah isn't one of them because it has not seen the kind of price inflation that Nevada, California, Arizona and Florida have seen," Blomquist said.

The Silver State posted the nation's highest foreclosure rate in October, with one out of every 74 households receiving foreclosure filings. Arizona took second place with one out of every 149 households receiving such filings, while Florida came in third with one out of every 157 households getting foreclosure filings.

In Utah, one out of every 497 households received foreclosure filings in October. One out of every 420 households in Utah County received foreclosure filings in October, slightly below the national average of one out of every 452 households.

But foreclosures typically lag an economic downturn by nine months to a year -- which means the worst is yet to come, according to Tom Cook, an attorney with Salt Lake-based Lundberg & Associates.

"Most of the foreclosures are in speculative properties, subdivisions -- that second home someone has built as an investment opportunity," Cook said. "Things haven't changed much on borrower-occupied residences. I assume that will change when the economy continues to slide and people lose their jobs."

A break for homeowners?

To sandbag the flood of foreclosures, the Federal Housing Finance Agency announced a major initiative Tuesday that aims to get struggling homeowners into mortgages they can afford.

FHFA is the regulator for Fannie Mae and Freddie Mac, which guarantee some 31 million mortgages -- about 58 percent of all single-family home loans -- though those loans only represent about 20 percent of seriously delinquent loans.

The FHFA program targets borrowers who have missed three or more payments, own and occupy the property as their primary residence, and have not filed for bankruptcy.

The goal is to make the payments more affordable -- defined as no more than 38 percent of a household's monthly gross income -- by reducing the interest rate, deferring payment on part of the principal and extending the term of the loan to as long as 40 years.

Fannie Mae and Freddie Mac loan servicers will be responsible for implementing the program by Dec. 15 and will receive $800 for each loan modified through the program.

Struggling homeowners who don't meet the guidelines would be eligible for a customized review, although anyone who intentionally defaults on a loan to get it modified would be disqualified, officials said.

Will they work?

Matthews says the FHFA's loan modification program "doesn't turn (him) on as a permanent solution."

"The program will reduce monthly payments. But it's not answering the question of how to permanently re-arrange those mortgages, which means at some time in the future, there will be some kind of balloon payment to make up for the reduction in interest rates," he said.

"Until the principal is reduced and the monthly payment is reduced on a permanent basis, it's just a Band-Aid solution," he said.

Matthews says he understands that it's difficult for FHFA to "legally reduce" the loan principal because many of those mortgages have already been sold to the secondary market and are securitized. Mortgages are securitized when they are pooled together, sliced into pieces and resold as bonds.

For that reason, Matthews is questioning the effectiveness of the FHFA plan, even though it is modeled on one developed by the Federal Deposit Insurance Corp. to lower loan payments for borrowers with mortgages from the failed IndyMac Bank.

"When the FDIC took over IndyMac, the FDIC owned those mortgages. That's why they could write down those mortgages," he said. "But in Fannie and Freddie's case, because they don't own the mortgages anymore."

In an effort to keep more people from losing their homes, banking giant Citigroup is halting foreclosures on mortgages it owns in which the borrower lives in the house, has enough income to handle an affordable payment and is "working in good faith" with the company to revise the loan. Citi also will reach out to 500,000 homeowners who are in danger of falling behind on their mortgages to try to rework their loans with $20 billion in new mortgages over the next six months.

JPMorgan Chase & Co. launched a program on Nov. 1 in which none of its customers, including those in Utah, will face foreclosure over the next 90 days as it works to make payments easier on $110 billion of problem mortgages. The JPMorgan program is expected to help 400,000 families with $70 billion in mortgage loans in the next two years.

Lundberg's Cook said he expects the initiatives will take a few months to take effect. "It's a good time right now for these initiatives to be put in place for the borrowers because banks typically don't act as quickly to foreclose on properties during the holidays."

Blomquist questioned if these initiatives -- which he described as "being a little behind the curve" -- are simply delaying the inevitable.

"It would have been better to nip the problem in the bud a year ago, but nobody had the foresight to see how bad the downturn would become. While these are good-intentioned programs, they may have the unintended effect of prolonging the pain of the foreclosure cycle," he said.

"The big question is whether the lenders are going to aggressively modify the loans enough to truly help homeowners avoid foreclosure in the long run," Blomquist said.