Tennessee Mortgage Activity Strong in Nashville

Local Realtors estimate Tennessee mortgage foreclosures in the Nashville area for April were 15 percent higher than they were the same month last year.
Though the figure may seem high, it is about half the increase that a foreclosure tracking company has calculated for the state of Tennessee.

RealtyTrac recently released state-by-state figures for the April 2007. In terms of the number of foreclosures, Tennessee ranked 13th in the nation with a total of 3,397 foreclosures in April 2007 alone.

That’s one mortgage foreclosure for every 722 households, and a 30 percent increase over the same period last year, according to the company’s data.

Richard Courtney, president of the Greater Nashville Association of Realtors, attributes the vast majority of the foreclosure increase to sub-prime lending activity, and believes the Nashville housing market is somewhat insulated from the problem by the region’s stable housing prices.

“Nashville hasn’t suffered as much as the rest of the country,” said Courtney, who writes a residential real estate column for The City Paper.

“Our prices are still appreciating. If [a homeowner] gets in trouble in our area, they can usually sell in a year or two. In other places, prices aren’t increasing as rapidly.”

On Wednesday, Courtney was in Washington D.C., spending some of his time advocating on behalf of the GNAR for legislation that would address sub-prime lenders.

Sub-prime, or bad credit home loan lenders target borrowers who do not qualify for standard loans, allowing those borrowers to more easily purchase homes priced higher than what they can realistically afford.

The bad credit mortgage problems and the foreclosures that are expected to follow are anticipated to result in 2.2 million American homeowners losing their homes in the next year, National Association of Realtors data shows.

The number of foreclosures affects Realtors, and the rest of the economy, by increasing the amount of housing stock on the market.

Houses sold after defaults are often, despite the perception, sold at a higher price than the market would otherwise command, due to the sub-prime lending process and to fees accumulated by lenders.

Also, when homeowners are about to be foreclosed upon, they’re often not in a position to invest in home improvement loans to keep up maintenance, which lowers property value.

SOURCE: Nashville City Paper