Housing The Economic Pain

October 30, 2008
By: Lisa Slade

Foreclosures seem to be on everyone’s minds these days — the fallout from subprime lending practices and an economy that makes it impossible for families to pay their mortgages are at the heart of the crisis on Wall Street and the $700 billion bailout package recently passed by Congress.

The News Sentinel’s classifieds pages are filled with local foreclosure announcements and the situation has turned tragic for some families — an Oct. 11 article in the Knoxville newspaper reported a Sevierville woman “apparently killed herself as sheriff’s deputies prepared to evict her from her foreclosed home…”

Civil warrants officer for the Knox County Sheriff’s Office David Thompson is a frequent witness to that emotional distress — he and his partner spend their days evicting families and individuals from homes after a writ of possession for a property is filed with the Knox County Clerk’s Office. (Writs of possession are filed for both foreclosures and rental situations, and Knox County doesn’t distinguish between the two because the paperwork is the same for both. Writs of possession are filed after a resident ignores the first notice, called a detainer warrant.)

In the first 10 months of 2008, 3,112 detainer warrants were filed in the clerk’s office. During the same period of 2007, 2,890 detainer warrants were filed. Realty Trac (an online database of foreclosed homes) released its quarterly report Oct. 23 stating that national foreclosure filings for the third quarter are up 71 percent over the same period in 2007.

Two or three times a month, when Thompson and his partner show up to evict someone, they discover the person in the house is a renter who has paid his or her rent, but the landlord hasn’t paid the mortgage. In those instances, the evictee is shocked to see officers at the door, but Thompson says most residents know what is coming. He says while almost everyone is visibly upset, they generally comply with his instructions, even if they’re not certain where they’ll go.

“Most of the time they realize it’s something that’s going to be done. We hope they have family to stay with,” Thompson says. “I have recommended people to go to the women’s shelter. That’s the bad part about it; you don’t know where they go. Evictions don’t pick color, race or age. It varies from 80-year-old people to 21-year-old people.”

Sergeant Bobby Horner, also of the Knox County Sheriff's Office, formerly performed evictions and agrees that, emotionally, it’s not an easy job, but it’s a necessary one.

“It's an unfortunate situation,” he says. “But once the court order comes down, we have no option whatsoever. Unfortunately, it’s a continuous thing we deal with.”

Foreclosures affect more than individuals, however; they also affect the local real estate market in surprising ways. When houses are appraised, the price is partially determined by other “For Sale” properties in the same neighborhood. If the other property is a foreclosed house, the price is frequently lower than average. Since many neighborhoods now have at least one foreclosed home in them, housing prices have softened over the last year, though the decrease in price could also be attributed to lack of demand.

But there are signs things might be slowly improving; Tennessee foreclosure activity was down 12 percent in September, about equal with the national average. Six states accounted for 60 percent of foreclosures, and Tennessee ranked 15th in the nation the third quarter and for September, with 4,098 new foreclosures during the month and 11,977 for the quarter. The city of Knoxville ranked 70th in the nation for foreclosures, better than its 2008 first quarter ranking of 64th and better than 24th-ranked Memphis. Some Knoxville real estate agents say they are selling homes — a sign the market hasn’t entirely bottomed out — albeit at a slower rate than before the economic crisis.

“I’m out there every day and people are still buying and selling homes, it just takes a little more work than it used to,” says local real estate agent Suzy Trotta.

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