2. Presented By: Joseph Aldrich Brandon Andersen Justin Andersen Cody Rempfer Foreclosure & Bankruptcy in Utah

3. Foreclosure Foreclosure: The procedure by which a person’s property can be taken and sold to satisfy an unpaid debt. Deficiency Judgment: If the amount that the property sells for is less than the claims against it, the lender can proceed against the borrower’s other unsecured debts. This may require the borrower to to sell other assets, and oftentimes leads to the borrower declaring bankruptcy. Video

4. Foreclosure Facts The state reported 11,536 properties entering some stage of foreclosure during 2005. 1.5 percent of Utah households entered some stage of foreclosure in 2005. New foreclosures dropped 27 percent from the first quarter to the fourth quarter.

5. Definition: Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditor. A declared state of bankruptcy can be requested by creditors in an effort to recoup a portion of what they are owed; however, in the overwhelming majority of cases, the bankruptcy is initiated by the ‘bankrupt’ individual or organization. Bankruptcy

6. Bankruptcy was introduced in Utah in 1976 Chapter 13 debtors promise to repay a portion of these unsecured debts over a three- to five-year period, by making monthly payments to a bankruptcy trustee who distributes the funds to priority and unsecured creditors. Chapter 7 debtors file a liquidation plan to discharge their unsecured debts. Only unsecured debts can be discharged in bankruptcy. Secured debts, such as mortgages and car loans, must either be repaid or the lender can repossess the collateral. Priority debts such as back taxes, child support and alimony, and student loans must be repaid. Bankruptcy Facts

7. At the end of 2001, Utah ranked 3rd in the U.S. in personal bankruptcy filings. At the end of 2002, the number rose to 22,052, placing Utah 1st in the U.S. At the end of 2003, the total number was down by 135; however, those figures still left Utah in the No. 1 spot. At the end of 2004, some progress was made as Utah came in at 5th in the U.S. In Utah, bankruptcies are filed at the rate of one in every 37 homes! The national average is one in every 73 homes! About 68 percent of the filings are Chapter 7, meaning the filer is asking the Bankruptcy Court to forgive as many debts as possible, with no intention or obligation to make payments on them. (Chapter 13 involves an agreement to re-pay and for a set period of time.) Bankruptcy Statistics

8. Bankruptcy Abuse Prevention and Consumer Protection Act Signed by President Bush April 20, 2005 Went into effect October 17, 2005 Largest overhaul of Bankruptcy Codes since 1978 Had provisions that affected small businesses, farms, corporations, as well as individuals In Utah, filings dropped 79% in the first quarter of 2006, compared with the first quarter of 2005, and they dropped 82.6% nationally Bankruptcy Laws

9. Contributing Factors to High Foreclosure and Bankruptcy Rate Lending Institutions Growing economy in Utah - Prices of homes in Utah have skyrocketed Couples wed at younger age in Utah – Average is 21.9 years for women and 23.9 for men (Washington, D.C. has the latest age for marriage, with an average of approximately 30 years) Lending Institutions approve loans with much higher risk than before – sometimes up to 50% of monthly gross earnings Different types of loans. (80/20, ARM, Interest Only, etc.) Individuals People are getting in over their heads to get homes (and cars) they can’t afford People are taking these creative loans

10. Utah Saves Program (United Way) Avoid creative loans Don’t get the maximum amount that you qualify for Be patient Solutions