Tennessee Mortgage Problems Increase in Chattanooga
The housing boom during early part of the decade ended in a bust for many homeowners. The dream turned into a nightmare, and late Tennessee mortgage payments resulted in foreclosure.
Where does the Chattanooga mortgage climate fit into the problem?
A husband and wife stayed away from the Hamilton County Courthouse as their Woodmore Lane home sold at a foreclosure auction. “A bid of $50,000 to FSG bank, going once twice, sold.”
It’s on to the next house, for the trustee running this auction. On this day, nearly a dozen homes in foreclosure will be sold.
“Again the same conditions of sale apply,” he says.
Financial planners say a few years ago, people with credit issues entered the housing market, using a bad credit home loan.
Because of the financial risk, these bad credit Tennessee mortgages carry higher interest rates. The Center for Responsible Lending reports over 18 percent of sub-prime loans in Chattanooga ended in foreclosure last year.
That’s the second worst in the state, behind only Knoxville.
Jim Place of Evergreen Management says “the impact is certainly going to be at the lower economic strap.”
Aside from bad credit mortgage loan problems, foreclosure factors include buyers purchasing more of a home than they could afford, and ARMs, which shot monthly payments up hundreds, if not thousands of dollars.
Place says “most of the people aren’t going to lose their house because they lost their job, they’re going to because their payments have become too expensive.”
Despite foreclosures ticking up, the local Tennessee housing market remains solid, as 2007 home sales track closely with those from 2006.
Jim O’Dell, President-Elect of the Chattanooga Realtors Association, says “we’ve lost some buyers to bad credit mortgage trouble, and picked up some buyers from out of state, particularly Florida, coming to Chattanooga.”
In addition, Realtors say small business growth adds buyers and Tennessee mortgage applicants locally, helping the Chattanooga housing market remain stable, even as the industry undergoes a correction.
A recent report by the Mortgage Bankers Association found delinquency rates rose in 49 states at the end of 2006, while foreclosures jumped in 44.
SOURCE: WDEF-TV