published Friday, April 30th, 2010

Foreclosures in area jump 25%, still below U.S. average

The number of Chattanooga area properties entering foreclosure jumped by nearly 25 percent in the first quarter compared with a year ago.

But a new report released Thursday indicates that the rate of foreclosure activity in metropolitan Chattanooga was still 35 percent below the U.S. average during the first three months of 2010.

RealtyTrac, an online service that tracks properties with foreclosure notices, reported that 1,093 properties in the six-county Chattanooga metro area received a foreclosure filing in the first quarter, or one of every 211 properties. Nationwide, 933,234 properties -- or one of every 138 households -- got a foreclosure filing in the first three months of the year.

The national foreclosure filing rate was up 16 percent above the year-ago rate in the first quarter and RealtyTrac officials warned that the worst may not be over in many markets. James J. Saccacio, chief executive officer of RealtyTrac, said the housing market "is still not out of the woods yet" due to falling home values and the end of the housing tax credits today for first-time homebuyers on new home purchases. A government program designed to encourage distressed properties to be sold prior to a foreclosure -- known as a short sale -- also may have delayed or avoided some foreclosures this month.

RealtyTrac reported that the amount of real estate owned by lenders is at the highest level since the company began reporting the data and could go even higher as more banks initiate foreclosure action this spring.

"The federal government's new program designed to encourage short sales, which was launched April 5, may have caused some lenders to delay initiating foreclosure against distressed properties -- particularly in hard-hit housing markets where a short sale costs less than a foreclosure," Mr. Saccacio said.

Rate of foreclosure filings in the first quarter:

* Atlanta, one of every 74 households

* Memphis, one of every 148 homes

* Birmingham, Ala., one of every 194 homes

* Nashville, one of every 210 homes

* Chattanooga, one of every 211 homes

* Knoxville, one of every 264 homes

* Huntsville, one of every 455 homes

* U.S. average, one of every 138 homes

Source: RealtyTrac. First quarter 2010 foreclosures

Aaron Shipley, a Chattanooga Realtor whose real estate company handles many foreclosure sales for both banks and buyers, expects foreclosures to continue to grow until the employment market improves.

"In the next three months, I think we're probably going to be slammed," Mr. Shipley said. "I think some banks held back because of the tax incentives for first-time homebuyers and some of the efforts to try to work out some type of repayment option. But as incentives go away and rates creep up, I'm afraid we may see even more foreclosures."

Jeremy Fitzsimmons, a foreclosure specialist for Chattanooga Neighborhood Enterprises, said many lenders are overwhelmed by the number of foreclosure cases they are handling.

"But we're still having a lot of success with our workout plans," he said.

During the first quarter of 2010, the foreclosure problem remain concentrated in many of the markets that enjoyed the biggest housing boom five years ago. Las Vegas remained the metro area with the highest foreclosure rate -- one in 28. Nearly 70 percent of all U.S. property foreclosures in the first three months of the year were in 10 states, including, in order, California, Florida, Arizona, Illinois, Michigan. Georgia, Texas, Nevada, Ohio and Colorado.

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