While the deepening housing slump and tight credit conditions have resulted in rising numbers of foreclosures in Utah, local real estate experts downplay the magnitude of the problem here compared with that of California, Florida, Arizona, Nevada, Ohio and Michigan, which account for the bulk of foreclosure activity in the nation.

According to data from foreclosure listing service RealtyTrac Inc., Utah has the 10th highest rate of foreclosure filings in the nation for the third quarter of 2008, with 4,867 people receiving at least one foreclosure-related notice from July through September. That's up 136 percent from the same period a year ago.

That compares with nearly 766,000 homes nationwide that received at least one foreclosure-related notice from July through September, up 71 percent from a year earlier.

Among Utah metropolitan areas, the Provo-Orem area saw the greatest percentage increase in foreclosure filings in September alone -- a whopping 2,188 percent -- compared with September 2007, with 183 properties receiving foreclosure notices.

In Salt Lake City, the number of foreclosure filings in September rose 58 percent to a total of 458 compared to a year ago.

How bad is it?

But Jim Wood of the University of Utah's Bureau of Economics and Business Research said those numbers belie the seriousness of the foreclosure problem in Utah.

" 'Foreclosure filings up 2,188 percent in Provo-Orem' makes a dramatic headline, but that's not the whole picture," Wood said. Based on Provo-Orem's demographics, he estimates there are about 93,000 homeowners in the area, of which an estimated 62,000 aren't fully paid up on their home mortgages.

"If there are 183 in foreclosure, that's only a fraction of the 62,000," he said.

Taylor Oldroyd of the Utah County Realtors Association agreed. "Historically, we haven't had many foreclosures at all, that's why the percentage increases are so big," he said.

Among large metropolitan areas, Salt Lake City had the 43rd highest rate of foreclosure filings for the third quarter, with 2,062 properties receiving a foreclosure notice -- a 64-percent increase from the same period a year ago, according to RealtyTrac.

In September alone, 1,746 properties in Utah were under foreclosure, with 1,263 properties either subject to notices of default or notices of pending foreclosure sales.

"These numbers confirm what I suspect, that there is an acceleration in mortgage filings; but the problem is, we don't know how many of those filed end up as foreclosed properties," Wood said.

Joel Carson, president and owner of Prudential Utah Real Estate in Salt Lake City, said he expects to see more foreclosures in 2009 than in 2008.

"We've not seen the worst of the foreclosures yet in Utah because we traditionally lag behind other states. But the problem shouldn't be as bad here because our prices have been rising moderately," he said.

Government intervention

Oldroyd said foreclosures are a growing concern, but he remains confident that the problem will be mitigated by Utah's relatively stable economic fundamentals and possible government intervention to stem the housing crisis.

Richard Gaylord, president of the National Association of Realtors, said at a Utah County Realtors Association luncheon Wednesday that he has heard that Gov. Jon Huntsman Jr. may be looking at setting aside $30 million to help people who are have trouble with their mortgages avoid foreclosure.

"Even though Utah has fared better than some other states in the current housing cycle, it has not been immune to the problems in the credit markets and the rise in foreclosures," he said.

Lisa Roskelley, director of communications for the Governor's Office, said the $30 million proposal is one of many that Huntsman is considering. "Foreclosures are of concern to Huntsman," she said. "But nothing is endorsed yet. He is seeking proposals on approaches on how to help homeowners stay in their homes, rather than have mass foreclosures."

Meanwhile, Sheila Bair, chairman of the Federal Deposit Insurance Corporation, told the Senate Banking Committee on Thursday that the government must do more to stem foreclosures.

Government loan guarantees could be used as an incentive for servicers to modify loans. In doing so, she said, unaffordable loans could be converted into loans that are sustainable over the long term. Bair said the FDIC is working "closely and creatively" with the Treasury Department on such a plan.

These government measures may be necessary, especially since RealtyTrac expects that by the end of the year, more than a million bank-owned properties may pile up on the market, representing around a third of all properties for sale in the U.S.

That's bad news for anyone who lives nearby and wants to sell their home. While foreclosure sales are booming in many areas, those properties are commanding deep discounts and pulling down neighboring property values. "It has a pretty significant impact in terms of pricing," said Rick Sharga, RealtyTrac's vice president for marketing.

RealtyTrac monitors default notices, auction sale notices and bank repossessions. More than 250,000 properties were repossessed by lenders nationwide in the third quarter, 81,000 of which were taken back last month.

The combination of sinking home values, tighter mortgage lending criteria and an economy that many economists think has already slipped into recession has left hundreds of thousands of homeowners with few options. Many can't find buyers or owe more than their home is worth and can't refinance into an affordable loan, with the global credit crisis making loans far less available.

For those who can qualify for a loan, or have cash to invest, there are bargains to be had, especially in ravaged markets like Nevada and California. Last month, foreclosure resales accounted for more than half of existing home sales in California, as home sales jumped 65 percent from a year ago, while the statewide median home price fell 34 percent to $283,000, according to MDA DataQuick.

RealtyTrac, however, reported that foreclosure filings in September were actually down 12 percent from August. But much of that decline was the result of new state laws that delay the foreclosure process. In California, for example, lenders are now required to contact borrowers at least 30 days before filing a default notice. A similar law in North Carolina gives borrowers an extra 45 days.

Still, that's not likely to be enough to save homeowners who owe more on their mortgages than their homes are worth. Nearly 12 million of the 52 million Americans with a mortgage -- that's 23 percent of them -- are in that position, according to Moody's Economy.com.

It remains to be seen how much the government's intervention will stem the housing crisis. Earlier this month, the Federal Housing Administration launched a program that aims to prevent foreclosures by allowing homeowners to swap their mortgages for more-affordable loans, but only if their lender agrees to take a loss on the initial loan. The bill is projected to help about 400,000 households.

Meanwhile, the FDIC, which took over Pasadena, Calif.-based IndyMac Bank over the summer, has been aggressively modifying troubled home loans since August in an effort to stave off foreclosures. Congressional Democrats are calling for that approach to be expanded as the Treasury Department buys billions in troubled mortgage debt as part of a $700 billion financial industry bailout.

Creative selling

Local real estate companies such as Prudential Utah Real Estate and Coldwell Banker are already taking proactive steps to jump-start home sales in Utah.

Prudential, which has about 3,000 residential listings along the Wasatch Front, is trying to lure buyers out of the woodwork by inviting its listing clients to discount their home prices by 8 percent for eight days starting Nov. 8.

Up to 400 Prudential home sellers are expected to participate in this promotion, of which about 60 may be in Utah County, Carson said.

"Everyone has been struggling to figure out how to get buyers off the fence. Typically, sellers are willing to offer between 2 percent to 4 percent reductions, so this [8-percent reduction] is out of the ordinary," he said.

Earlier this month, Coldwell Banker Residential Brokerage held a national "10-day sales event" during which participating home sellers from the Salt Lake City area and across the nation reduced the listing prices of their homes by up to 10 percent.

"They had a 10-percent discount on about 400 homes in Utah. And one out of every 10 homes sold, which is significant given the 10-day period and the kind of market we're in now," Carson said.

• The Associated Press contributed to this report.