Faces of foreclosure

Deseret News (Salt Lake City), Aug 31, 2008 by Jasen Lee Deseret News

Lisa Eddy had good credit and a great job in safety compliance -- and four years ago, she found herself fighting to keep a roof over her head.

Her finances were fine until her son in 2004 asked her to help him and his wife buy a home.

"They never made a payment," she said. "So 14 days before it foreclosed, I found out about that, and two days later, I also got downsized from my job."

By the end of the year, she was looking at foreclosure, bankruptcy and no job -- compounded by an adjustable-rate mortgage on her own home that was scheduled to reset to a higher rate in two years.

"It started going up, going up, going up, and I was seriously looking at losing my home," she said. "I take care of my elderly mom, and I was just freaked out."

After her son's home was lost to foreclosure, Eddy got in touch with NeighborWorks Salt Lake, a nonprofit housing coun-

seling agency that helped save her home by negotiating with her lender on her behalf.

Eddy said she now has an adjustable-rate mortgage that is fixed for the next five years at 5 percent. She said that five years would give her time to re-establish her credit and eventually refinance her home loan to a more manageable fixed rate.

"Prior to this, I always figured that people who got into foreclosure did it to themselves," she said.

Now, she has a different, more understanding perspective and has since directed three other people in similar circumstances to NeighborWorks for assistance.

As the nation copes with the worst housing market in recent memory, thousands of people in Utah and nationwide are trying to avoid losing their homes. The foreclosure rise has struck people from across the social strata, including famed pitchman and television host Ed McMahon, who recently disclosed that his multimillion-dollar mansion is in foreclosure. They include people who are at risk of losing their primary residence, as well as builders and others who sought to profit from the housing boom and are having difficulty selling those homes now.

"We have a lot of middle and upper class that just bought way more house than they could really afford, or they got into a bad loan or they had credit issues, as well," said Stephanie Hanson, a housing counselor and education coordinator with Community Development Corporation of Utah, a nonprofit housing-counseling agency that provides help to people facing foreclosure.

"We've also had a lot of clients who really shouldn't have gotten the mortgage in the first place," she added. "They weren't credit worthy, and so they got into an adjustable rate, and they were delinquent before their rate ever adjusts due to their poor money management or an unforeseen job loss, illness or increased expenses."

A recent report from RealtyTrac, based in Irvine, Calif., showed Utah ranked ninth in the nation in the rate of foreclosure filings last month.

The four Utah metro areas in July all ranked among the nation's top 100 for the highest number of foreclosure filings. St. George ranked 17th in the report, the Provo/Orem area ranked 39th, Salt Lake City ranked 70th nationally and Ogden/Clearfield was 100th.

Jim Wood, director of the University of Utah's Bureau of Business and Economic Research, said Utah could be in for a state record for foreclosures next year.

Nationally, the foreclosure rate in the first quarter of 2008 was 2.46 percent, Wood wrote this month in a research paper. "The expectation is that within the next 12 months, the national foreclosure rate will increase to over 3 percent."

A foreclosure rate of 3 percent would put about 13,000 homes in Utah in foreclosure, nearly double the previous high of 6,800 homes in 2002, he said.

Utah's foreclosure rate will likely follow the national trend and rise to at least 3 percent by 2009, he said. Falling housing prices will leave some homeowners with little or no equity, increasing the risk of default and foreclosure.

"There is simply no compelling evidence from either historical trends or local market conditions that Utah will be able to avoid foreclosure rates that approach at least the national rate," he said.

The routes that people take to find themselves in foreclosure vary. One Utah woman, who asked not to be identified, told of the struggle to keep her home from foreclosure. She feels shame -- shame at finding herself in such a perilous situation and bewildered at how it could happen.

She paid her bills and worked hard, spending 14 years in the retail business so that she could buy a home. But in July 2006, her life took a sharp turn when she was forced to leave her retail job due to a debilitating medical problem.

"I went to the doctor and found out I had to have a severe back operation," she said. "It was hurting me to where I couldn't stand eight hours for work."

Following the surgery, she tried to return to work, but her employer would not modify her position and eventually laid her off. To make matters worse, in November 2006, she was diagnosed with a neck problem that also required surgery.

While recovering from the second operation, she fell behind on her mortgage.