Sunday, December 03, 2006

Defaults "Poison The Market" In Memphis

The Commercial Appeal reports from Tennessee. "With interest rates rising, some homeowners locally and nationally are finding it harder to make the mortgage, and their American dreams are being foreclosed and sold to the highest bidder."

"A well-manicured family cottage in Whitehaven and an Atoka mobile home sitting on an acre of land are two of the 25 foreclosed homes that will be auctioned off by Hudson & Marshall auction company Dec. 13."

"The Memphis sale is part of an auction-circuit of more than 200 foreclosed properties in Tennessee, Georgia and Alabama. Armed with personal checks and prepared to pay at least $2,500, buyers can snatch up homes for as little as $10,000. Buyers like the auctions because many of the homes sell for less than market value and Texas-based Hudson & Marshall guarantees there are no back taxes or liens."

"Lenders resort to real estate auctions to get property off of their books quickly. With the number of default mortgages more than doubling in some parts of the country, foreclosure auctions are gaining in popularity, said Hudson & Marshall principal Dave Webb."

"An online foreclosure database ranked the Memphis metropolitan area 10th in the nation in foreclosures. In October 2005, Shelby County recorded 618 properties in some stage of foreclosure. One year later, the number of foreclosures for the same five-week period nearly tripled to 1,717. Similarly, Tipton County's number of foreclosures doubled from 17 to 40 year-over-year."

"With one foreclosure for every 144 households, the Memphis area foreclosure rate is 2.5 times higher than the national average. That statistic doesn't surprise Corky Neale who works with RISE and the Memphis Debt Collaborative. 'We've traditionally had a very high foreclosure rate,' said Neale who cited divorce, job loss and illness as traditional causes."

"'But now on top of all that we've got this adjustable rate mortgages where the rates have been going up and it looks like we haven't seen the end of rate increases and so we can anticipate that we're going to have more foreclosures,' he said."

"'It cost the public tax collections, it cost the lenders. Everybody loses with a foreclosure,' he said. 'It's almost like you get a critical mass of foreclosures then you poison the market then nobody can sell.'"


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