Home Buying
Housing boom brings surge of foreclosures to Nashville area
by
Keith Russell
Staff Writer
Monday February 21, 2003
At a time when historically low interest rates have put home ownership within closer
reach than ever before, the American Dream has turned into a nightmare for a significantly
higher number of people in Middle Tennessee.
The number of home foreclosures for Davidson and nine surrounding counties rose
52% to 3,004 last year, up from the 1,976 recorded in 2003. The figures were compiled
by Foreclosure.com, an online service that keeps a nationwide database of foreclosure
listings.
Credit counselors and others who work with people in financial distress said the
surge in foreclosures adds a dark cloud to the otherwise sunny picture of a housing
boom enjoyed locally and nationally since 2000.
They say the numbers also point to the dangerous game many middle- and lower-income
Americans are playing: living paycheck to paycheck while saddled with debt.
''We're in a hot housing market, and everybody is buying a house or refinancing
a house, and because the interest rates are low, many people are stretching to buy
more house than would be able to afford otherwise,'' said Maria Salas, a Nashville
bankruptcy attorney. ''But they don't have a safety net, and when something happens
to them, people wind up losing their houses.''
Another troubling thought: It could
get worse. Many forecasters expect interest
rates to rise this year, which would not only add to the housing costs of borrowers
with adjustable-rate mortgages but also cool the overall housing market.
''With the extremely low interest rates we have, it's easier to avoid foreclosure,''
said Joe Prochaska, an attorney who represents lenders in foreclosure proceedings.
''It's easier to sell your home and pay off your lenders. If interest rates go up, what's going to happen to someone with an adjustable-rate mortgage who can barely
make their payments with their interest rate at 4%?''
Symptom of growth?
Davidson and nine surrounding counties saw their number of foreclosures increase,
led by Wilson County, which saw its total more than double last year. Davidson and
Montgomery counties had the most foreclosures and saw their number of listings rise
by 53% and 86%, respectively. Williamson County had the fewest foreclosures, 71,
and saw the smallest increase at 9%.
Local real estate professionals and bankruptcy attorneys generally expressed surprise
at the amount of foreclosures, which coincided with a national 42% increase.
Unclear is whether the sharp rise means that a higher percentage of people are having
trouble paying their mortgages, or whether the numbers are another sign of the growth
in the overall housing market, which posted records for both the number of homes
built and sold last year.
For much of the past five years, falling interest rates have opened the door to
home ownership to record numbers of people. According to U.S. Census Bureau, the
national home ownership rate rose to an all-time high of 68.3% in 2003, the most
recent year data are available. In the Nashville Metropolitan Statistical Area,
the number of homes with a mortgage rose by more than 25,000 in three years, from
188,073 in 2000 to 213,294 in 2003.
