Fewer Utahns are falling behind on their mortgages, according to the latest report from research firm LPS Applied Analytics. In December, delinquency rates in Utah fell more than 11 percent compared to December 2009.

The total percentage of non-current mortgages, including those in foreclosure, was also down from last year. In December 2010, the figure declined nearly 3 percent from the same month in 2009.

The bad news, however, is that while fewer homeowners are defaulting, many who are already delinquent are falling into foreclosure. Utah’s foreclosure inventory in December 2010 was up nearly 29 percent compared to the same month a year earlier.

LPS said the trend for the month is one of foreclosures making their way through the system. Delinquency rates are lower because more loans entered foreclosure and new delinquencies declined. Foreclosure rates are also higher because there is a limited amount of foreclosure sale activity, the company said. 

At 2.7 percent, Utah’s foreclosure inventory was lower than the rates in many other states. The total percentage of non-current loans in December was 9.8 percent, placing Utah as the 35th lowest in non-current mortgages. That’s a slightly better ranking than last year when Utah was No. 34. In the U.S. as a whole, the rate of non-current mortgages is about 13 percent.

Along with declining delinquencies, the other piece of good news was the fact that delinquencies bucked the seasonal trend and declined, even though they typically rise at the end of the year. The Wall Street Journal speculates that could be the result of an improved economy and labor market stabilization.

The LPS report tracks a sample of 52.9 million loans across the U.S.