The recession may officially have ended a year ago, but rising foreclosures in Hamilton County have still pushed an average of four homeowners a day out of their houses so far this year.
The number of property foreclosures in Hamilton County, which have doubled over the past decade, rose an additional 3.7 percent in the first nine months of this year to 1,111 residential properties, according to records filed with the Hamilton County Register of Deeds.
NEED HELP?Chattanooga Neighborhood Enterprise will offer foreclosure prevention help:* Thursday, 6-8 p.m., at Carver Recreational Center, 600 N. Orchard Knob Ave., in conjunction with the East Chattanooga Weed and Seed program* Oct. 26, 6-8 p.m., at New Covenant Fellowship Church, 1326 N. Moore Road, in Brainerd.
Despite a moratorium declared on additional foreclosures by major lenders such as Bank of America and JP Morgan Chase, local Realtors warn that more homeowners are likely to lose their homes from unpaid mortgages later this year.
"We don't have as much foreclosure activity as many markets," said Randy Durham, president of the Chattanooga Association of Realtors, "but I'm afraid with the number of delinquent loans right now and the continued high unemployment rate, it is probably going to get worse before it gets better."
With nearly one-fourth of the city's foreclosures in East Chattanooga and Brainerd, Chattanooga Neighborhood Enterprises is offering workshops Thursday in Orchard Knob and on Oct. 26 in Brainerd to help financially troubled homeowners stay in their homes.
Such aid helped Johnnie Watkins keep her Alton Park home where she has lived for the past 20 years. Watkins feared she would lose her Kirkland Avenue house when she was got behind last year on her mortgage payments after her income as a home health care aide shrunk along with her work hours.
"I called CNE because I was just trying to find any way I could to save my home," she said.
CNE worked with the lender to modify the mortgage, extending the term and lowering the rate to a more affordable level and avoiding many of the late penalties assigned to Watkins when she became delinquent on her mortgage.
Job losses boost foreclosures
Watkins is typical of most Chattanoogans facing foreclosure, said CNE Home Buyer Education Administrator Blane Andrews.
Most foreclosures stem from job losses or other income losses among homeowners, he said. With home prices down and credit standards higher, fewer are able to refinance their mortgages as they did prior to the recent recession.
The National Bureau of Economic Research calculates that the economic decline, or recession, ended in June 2009 after nearly three years of falling economic output. But home foreclosures nationwide and in the Chattanooga area have continued to rise, acccording to local and national figures compiled by RealtyTrac Inc.
"Chattanooga definitely has had decreases in home prices, but we've not lost as much as many markets," said Andrews, who works with nearly 20 distressed homeowners every month to help avoid foreclosure. "We know there is still a major need for our services because most people really want to stay in their house."
Andrews said helping residents avoid foreclosure helps not only the homeowners but their neighbors as well.
"Every time a house is foreclosed upon, it has a negative impact on every house in the neighborhood," he said.
During the first nine months of 2010, foreclosed properties have accounted for one of every three homes sold through the Chattanooga Multiple Listing Service, Durham said. Among residential properties listed for sale, 7 percent of those on the MLS list are now in foreclosure.
Such homes comprise a shadow inventory that is holding prices down.
"The urban areas have been hit the most, but we're certainly seeing foreclosures in most all parts of the county," said Nickie Schwartzkopf, a broker and Realtor with RE/MAX Properties, which recently began selling HUD foreclosed homes.
Lending reprieve
Some homeowners facing foreclosure are getting a reprieve from lenders such as Bank of America and GMAC, which announced plans this week to suspend foreclosures nationwide until their procedures are improved.
Because such banks didn't properly fill out all the paperwork involved in transferring and foreclosing on delinquent mortgages, many homeowners will have more time while banks improve their procedures for handling the record number of foreclosures.
"The entire system is rife with unfairness, and the mistakes and omissions have serious consequences in terms of unnecessary or even mistaken foreclosures," said Julia Gordon, a senior policy analyst at the Center for Responsible Lending, a North Carolina group that is urging a suspension of most foreclosures.
But others worry that continued delays in foreclosures will only delay the market from clearing out the inventory of delinquent mortgages and homes where owners owe more than they can pay.
Durham said halting bank foreclosures has helped delay some of the impact of the depressed housing market from hitting home values. But he cautioned buyers against waiting for better prices in the future.
"It's a buyer's market right now with lots of inventory and some of the best mortgage rates we've ever had," he said. "Prices could go lower in some areas, but then mortgage rates are also likely to head higher.
"The biggest problem right now seems to be consumer confidence and that will improve as the job market gets better," he said.