Foreclosures up locally on The Murfreesboro Post

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By: By ERIN EDGEMON-July 15 2007

The American dream is turning into a nightmare for more and more local homeowners.

Foreclosures are on the rise as homeowners with adjustable rate mortgages are now seeing their monthly payments rise exponentially.

In the first five months of 2007, lenders foreclosed on 612 houses in Rutherford County, a 7 percent increase from the same time period last year, statistics from RealtyTrac, a national company that tracks foreclosures, showed.

Comparatively, Davidson County saw a 33 percent increase for the same time period.

“I think it is every American’s dream to purchase a home,” said Wendell Mandrell, president and chief executive officer of Guaranty Trust Mortgage. “Low interest rates and sub-prime lending allowed them (individuals with a low credit rating and low incomes) to get into a home, but they didn’t think about the future.”

He said in the real estate boom a few years ago, people who couldn’t really afford to buy a home were doing so through predatory lenders.

“Now they are going to have to pay the piper,” Mandrell said.

Rutherford County had 1,168 foreclosures in 2006 compared to 957 the previous year, a 22 percent increase. Tennessee had 36,796 foreclosures, and the nation as a whole had nearly 1.26 million foreclosures, 33 percent and 42 percent increases, respectively, from 2005.

Despite the increase in foreclosures, Stan Vaught, chief manager of Bob Parks Auction Co., said consumers shouldn’t be alarmed. Home foreclosures still represent a small percentage of the total housing market.

Foreclosures in Rutherford County accounted for only 1.36 percent of the total housing market in 2006.
Vaught said some markets in the country are approaching 5 to 8 percent, which creates an excess inventory and abandoned houses.

Local experts say the rising foreclosures in Rutherford County aren’t due to a declining economy or slowing real estate market.

“We live in one of the best markets in the United States,” Vaught said, adding that the job market is strong, and real estate is affordable.

Rising foreclosure rates have to with sub-prime rates that were heavily marketed to prospective homebuyers with less than perfect credit and others who likely couldn’t afford a home obtaining 100 percent or even higher percentage loans, said Michael Loyd, mortgage advisor for Coldwell Banker Home Loans.

Betsey Taylor, real estate agent with Clark Maples Realty & Auction, noted the rise of 100 percent loans.
“They are getting the loans with no money down, and that sometimes creates a problem later,” she said.

Local experts say the foreclosure rates will continue to rise in the short term until the market is cleansed. Lending regulations have tightened, and many predatory lenders doing business a few years ago are now out of business.

Vaught said Bob Parks Auction is noticing the increase in foreclosures.

“Our phone calls are up 20 percent from where they were a year ago,” he said.

Regina Harvey, executive director of the Dominion Financial Management Inc., also said she is seeing a rising number of clients seeking mortgage counseling because of a sudden jump in their monthly mortgage payments. Still, most clients seeking mortgage counseling have experienced job loss or illness.

“The biggest issue we are running into is clients who refinanced their homes and had adjustable rate mortgages,” Harvey said. “Many times they were marketed as fixed rates but only for two years, and after that they go up.”

The easiest solution for most homeowners having trouble making their mortgage payments and possibly facing foreclosure is to sell the home or see a mortgage counselor, she said.

“If you are in that situation, the sooner you get started working on it, the better chance you have to avoid foreclosure,” Harvey said.
Erin Edgemon can be reached at 869-0812 and at eedgemon@murfreesboropost.com.

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Member Opinions:

By: THIRTEEN on 7/16/07
This is just the beginning of the end !

By: DMW37128 on 7/16/07
Go drive over in Evergreen Farms. What is not junky is turning into rental property. The houses were cheap, built cheap, and on too narrow streets, with cars parked on them.
The demand was to get the houses built, get people in then > no planning on the future.

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