Middle Tennessee Home Sales Rebound as Banks Aggressively Push Short Sales, Foreclosures
Home prices may still be sliding, but real estate experts say the Tennessee housing market is showing signs of recovery.
More than 2,000 homes in the Nashville area have sold since May - the highest number in four years, according to Nashville Public Radio.
But though it's good news for home buyers, it may not be such welcome news for homeowners.
Part of the reason consumers are finally pulling the trigger on home purchases is that a large number of homes are being listed as short sales or foreclosed properties, which usually means they're priced well below market value.
As our Tennessee bankruptcy lawyers predicted earlier this year, banks are ready to get back down to the business of processing foreclosures and repossessing homes now that the settlement between states and mortgage lenders has been reached.
That's a 22 percent increase over the previous quarter and a 25 percent jump from a year earlier.
Short sales, also known as pre-foreclosure sales, were at the highest level in three years. In a short sale, underwater borrowers make a deal with their lender to sell their house for less than what they owe, with the bank absorbing the cost.
It may sound like a benefit for the homeowner, but it's actually an advantage for the bank.
Banks typically earn 20 percent more in short sales than in traditional foreclosures. Short sales tend to occur more quickly, eliminating maintenance fees, property taxes, and insurance that must be handled when a foreclosed property sits on the market.
As for homeowners, they must often pay taxes on the forgiven difference between their mortgage value and their home value, which the IRS counts as income. And just like with a foreclosure, a short sale wreaks havoc on a homeowner's credit.
In some situations, a foreclosure or short sale may make sense. Most of the time, however, banks push these strategies to help themselves, not homeowners.
Filing for Tennessee bankruptcy may allow mortgage holders to avoid foreclosures and short sales. With Chapter 13 bankruptcy, it is possible to legally protect your home from the bank while reducing or eliminating the debts that are making it difficult to pay the mortgage.
It's true that bankruptcies, foreclosures, and short sales will all damage credit. But only bankruptcy protects consumer interests by stopping foreclosure, addressing other forms of debt, and allowing you to begin rebuilding your finances - and your life.
More Blog Entries:
Number of Home Sales Highest Since May of 2008, by Daniel Potter, Nashville Public Radio
Foreclosures Made Up 26% of U.S. Home Sales in First Quarter, by Jessica Dickler, CNNMoney