Regional Economy Protects Against Bad Credit Tennessee Mortgages

In some areas of the country the subprime loan crisis has hit like a tsunami, but Middle Tennessee’s regional economy is like a flood wall shielding it from deep impact, local Tennessee mortgage lenders and real estate experts say.

It remains to be seen how the subprime issue will affect the long-term growth rate of the area’s residential real estate market.

In the meantime, high-interest, bad credit home loans are under scrutiny on a national level.

The unbridled availability of these loans created a froth around the fringes of the housing market, giving the impression that just about anyone could own a home, even if they had poor credit or lacked money for a down payment, says Scott Ractliffe, branch manager at Mortgage Investors Group in Brentwood.

“Everybody jumped into the homebuying process, consumers and lenders,” he says. “The [mortgage rates] weren’t great but the product was there.”

The good news for the Middle Tennessee housing market is that it’s a high-growth area, says Greater Nashville Area Association of Realtors President Richard Courtney.

“We have so many businesses relocating here. I think it’s a trend that’s going to continue,” Courtney says.

The state’s unemployment rate increased slightly to 4.9 percent in February compared to January, according to the Tennessee Department of Labor and Workforce Development. That rate is 0.1 percentage points higher than January but 0.2 points lower than the February 2006 rate.

Realtors and builders are optimistic that buyers who qualify for traditional home loans - the one’s making up 80-plus percent of the market - will continue to buy at a healthy pace.

“I think it will slow down a little, but I don’t think overall we’ll see a real downturn,” Courtney says.