With property foreclosures rising to a record high, local officials are trying to expand assistance programs to help financially troubled homebuyers stay put.
But with the end of some foreclosure moratoriums this spring and unemployment still on the rise, some real estate experts fear the foreclosure problem is likely to get worse before it gets better.
"Unfortunately, I think we're going to see even more foreclosures," said Nickie Schwartzkopf, an agent for Remax Properties and president of the Chattanooga Association of Realtors. "There are still a lot of mortgages whose interest rates are going to be reset in the next couple of years at higher rates and, with unemployment still very high, there could be a lot of people who won't be able to make their payments."
"We definitely have to have more counseling services available and more trained people in order to help those being affected by this growing problem," Mayor Ron Littlefield said.
Home foreclosures have doubled in Hamilton County over the past decade to a record high 669 houses during the first half of the year, according to filings with the Hamilton County Register of Deeds.
Compared to a year ago, the number of foreclosures in the first six months of 2009 was up 3.2 percent, the highest level on record. But the rate of increase is slowing, and Chattanooga's foreclosure rate is well below most markets in Georgia, Florida, California, Arizona and Nevada, according to RealtyTrac, a national online marketplace for foreclosure properties.
According to RealtyTrac, one in 800 Hamilton County households received a foreclosure notice in May, the most recent month for which figures are available. The rate of local foreclosure notices was less than half the national rate of one for every 398 U.S. housing units during May.
But in Ooltewah -- the hardest-hit neighborhood in Hamilton County in May -- foreclosure notices were well above the national average, with one of every 228 households receiving a notice of a pending foreclosure.
Cindy Walker, manager of the "Real Estate Owned" division of Crye-Leike Realtors, said she is seeing more foreclosures this month.
"Chattanooga has never been as bad as most markets, but we seem to be getting a lot more than a year ago right now," she said.
"Our economy has held up better than most markets," Mr. Littlefield said, "but it is a large problem and, for anyone facing foreclosure, it's a major tragedy."
foreclosure task force
Mr. Littlefield and Hamilton County Mayor Claude Ramsey assembled a task force of area agencies last week to plot new strategies to help those facing the prospect of losing their home. With the assistance of the regional office of the U.S. Department of Housing and Urban Development in Knoxville, area service agencies may schedule a housing fair to bring together resources for homeowners in financial trouble or facing foreclosure.
Although assistance programs are available -- and mortgages sometimes can be refinanced -- many people don't seek such help until it is too late, experts say.
Chattanooga Neighborhood Enterprises, the nonprofit agency created to help low- and moderate-income families buy or rehabilitate their homes, launched the Chattanooga Foreclosure Prevention Hotline in May under a partnership with the city and the National Foreclosure Mitigation Counseling program.
CNE President David Johnson said the hotline and the task force need to help more homeowners in financial trouble not wait until the foreclosure process is well under way. Since the hotline's start on May 20, more than 100 people have called, he said.
"We need to educate families who are at risk for foreclosure that the time to act is as soon as you find out there may be a problem," he said. "Unfortunately, our experience tells us that only about 50 percent of those facing foreclosure seek any help."
Mr. Littlefield said local services are available from nonprofit agencies, and he urged those facing foreclosure not to fall victim to many companies offering limited services for a fee.
"There are people out there who know that homeowners out there are suffering, and they are reaching them through foreclosure notices and offering them services to help them for a price," he said. "That is absolutely unnecessary, because those services are available from United Way, Chattanooga Neighborhood Enterprises and other agencies in this community."
contacting the lender
Blane Andrews, a home ownership specialist for CNE, said most people are unfamiliar with how to approach their lender. And, since many mortgages are sold -- multiple times, in some cases -- to other financial companies after a homeowner signs the papers, some people can't even identify who owns their mortgage, he said.
"We act as a go-between with the individual and the loan servicer to help work out a plan, where possible," he said. "The most important thing we do in most instances is to help people work through a spending plan. We can't save every home, but we can help people know their alternatives."
Mr. Johnson said studies indicate lenders often lose $50,000 or more in a home foreclosure, and municipalities can lose as much as $34,000 per home in lost taxes and property values.
To limit such losses, Fannie Mae, Freddie Mac and many commercial lenders imposed moratoriums earlier this year on property foreclosures, trying to give borrowers more chances to rearrange their finances and to avoid liquidating property.
But most such moratoriums expired this spring, pushing foreclosures back up, according to RealtyTrac spokesman Darren Blomquist.
"The foreclosure activity is continuing at a very high level, and we really don't expect that to change throughout this year," he said. "In fact, we believe there is a lot of pent-up foreclosure activity that hasn't even hit our numbers yet because of delays caused by foreclosure moratoriums and other state laws."
WHERE TO GET HELP
* Chattanooga Neighborhood Enterprises operates a foreclosure prevention hotline at 664-HOME (4663).
* United Way 211 is a telephone link to community services and foreclosure prevention counseling.
* A coalition of charities and mortgage companies created the Homeowner's Hope Hotline for counseling help toll-free at 888-995-HOPE.