Tri-Cities new foreclosures and delinquency rates decline

TRI-CITIES, Tenn. – An example of “a rising tide lifts all boats” is playing out in the region’s stressed properties market. The dramatic equity gains from the last three years are giving homeowners who are having financial problems an equity pad to keep foreclosures at bay. However, foreclosure activity is picking up.

New foreclosures stalled in the Tri-Cities and across the nation in July, according to Attom Data Solutions. At the same time, local mortgaged properties rated as seriously underwater are at an all-time low. And CoreLogic is reporting that stressed property rates are down from last year.

There were 37 new local filings in July, down from 43 in June. The July 2021 total was 15.

Rick Sharga, executive vice president of market intelligence at Attom, thinks “there may be some seasonality impacting the numbers. In eight of the last 10 years, Q3 foreclosure activity has been lower than the previous quarter, and we might just be seeing a return to more normal seasonal patterns of delinquencies and defaults.”

One noteworthy change is for the first time this year, bank repossessions are equal to notices of trustee sales. There were 18 REO properties last month compared to 19 trustee sale notices.

Sullivan Co. accounted for the lion’s share of the repossessions. Washington Co. had one fewer repossession (9).

It’s no surprise that the percentage of seriously underwater loans is at the lowest level ever.

Over half of the local mortgage properties have an equity-rich status, and equity gains extend to those homeowners who have issues. It’s estimated that at least 90% of the properties with underwater mortgages have some level of equity. “While home price appreciation appears to be slowing down due to higher interest rates on mortgage loans, it seems likely that homeowners will continue to build on the record amount of equity they have for the rest of 2022,” according to Sharga.

During the second quarter of this year, there were 1,183 mortgaged properties seriously underwater. That means the owner owed at least 25% more on the mortgage than the property’s estimated value. This time last year, there were 2,565 underwater mortgages.

According to Attom’s report, there were 53,141 Tri-Cities mortgaged properties during the second quarter.

CoreLogic’s loan performance report shows the Kingsport-Bristol metro area with a 3.2% delinquency rate, down from 4.7% this time last year. The Johnson City rate is 2.5%, down from 4.1% last year.

Both metro levels’ foreclosure rates are below the region’s historical level. It’s 0.3% in Kingsport-Bristol and 0.1% in the Johnson City metro area.

“Early-state mortgage delinquencies are at a generational low supported by a strong labor market,” said Molly Boesel, principal economist at CoreLogic. “Furthermore, serious delinquencies have declined to where they were in early 2020. While the foreclosure rate remains low, about half of serious delinquencies are from mortgages that are six months or more past due. This suggests that there could be small increases in the foreclosure rate later this year.”

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