• 09
  • September
    2010

Over the last few years, much of the economic distress experienced by people around the country has been attributed to the collapse of the real estate market and the high rates of home foreclosure. In particular, many blamed rising interest rates associated with adjustable-rate mortgages and sub-prime loans with balloon payments as reasons for high foreclosure rates, but it appears now that other causes may be continuing to fuel the home foreclosure crisis.

Numbers released recently by the Mortgage Bankers Association show that a growing number of people in Tennessee are falling behind on their mortgage payments. In all, 10.47 percent of the state's mortgages where past due in the second quarter of the year. That was an increase over the first quarter of the year, which saw a past due rate of 9.89 percent. Nationally, 9.4 percent of homeowners were behind on their mortgage in the second quarter.

This rising number of people falling behind on the mortgages raises fears that another wave of foreclosures may be coming, despite the drop last quarter in the number of foreclosures initiated against mortgage holders in Tennessee. For the first quarter of this year, 1 percent of Tennessee mortgages holders had a foreclosure initiated against them. In the second quarter, that number had fallen to just 0.78 percent.

According to some economists, people are likely falling behind on the mortgages because of the poor job market. At this point, it is believed that many of the bad mortgages or those with disadvantageous terms for borrowers have worked their way through the system already. As those that have previously lost jobs find new ones that pay less money, we are likely to see more people falling behind.

One bright spot for Nashville-area residents is that the percentage of people "underwater" on their mortgages, that is, those owing more on their home than the home is worth, is actually lower than the national average. According to CoreLogic, a research firm that studies real estate information, about 11.4 percent of homeowners in the Nashville area are underwater, whereas about 23 percent of homeowners nationally have negative equity in their home.

Related Resources:

More Tennesseans behind on mortgages (Tennessean.com)