Knoxville Knocked By Over 47 Percent Increase In Foreclosures - II

March 6th, 2008

A study report issued by CBER in 2007 indicated that Knoxville has not been greatly affected by the subprime mortgage crisis as compared to many other metro areas in the country. The default rate was almost 3 to 4 percent higher in Tennessee than the country’s default rate. While the state showed a default rate of 18 percent, Knoxville showed an increase of only 9.9 percent on the subprime mortgages. Those who have a poor credit history avail these subprime mortgage loans at high interest rates and are more susceptible to fall into the debt trap.

Coming back to Tubbs, loss of his job cost him his house being faced by the foreclosure crisis. He lost his job in May 2007. Later in November and December he earned about $100 which was insufficient to pay for food, utilities and mortgage! Having his basic telephone connections cut off, he was not able to contact and negotiate with his lenders and thus his house entered the foreclosure process.

Tubbs went on to file for Bankruptcy so that through the process, he can manage to pay for his mortgage at the rate of $600 a month for five years. He has also found a job as a cook to help him in this ordeal.

RealtyTrac claims that 6 out of every 1000 households in Knoxville have entered into some stage of foreclosure. However, this does not mean that there are a whole lot of houses lined up for interested buyers to check.

President of the Knoxville Area Association of Realtors, Lee Mrazek says that one out of every 20 or 30 households are looked at by the buyers and more often than not, if the investors are specialists, they purchase these properties.

Lee Mrazek also says that when one loses a home due to foreclosure, he does not automatically qualify to buy another house, unlike a regular sale where when one seller sells the property immediately becomes the buyer for another one.

Though there is a decrease of over 10 percent in the sale of single family homes in East Tennessee, Lee Mrazek feels that since the interest rates are so high, people would actually get bigger houses for that kind of money, and would not want to go in for smaller homes. This seems to be the trend all over the area, with smaller homes finding less favor with buyers as opposed to larger homes.