Monday, May 16, 2011

Foreclosure Chances 38% Higher In Tennessee

72 Tennessee legislators said YES to shorten the amount of public notices published for home foreclosures this past week - despite information which indicates that such practices have very negative economic reactions - for homeowners and commercial property owners - and for the state's economy in general.

Tennessee is one of only 5 states (Michigan, New Hampshire, Tennessee Utah, and West Virginia) which do not offer a judicial review of foreclosures (25 states offer the option of either having a judge review the process or for a non-judicial review). While it is true such judicial reviews can offer greatly lengthen the foreclosure process, that's a result of offering greater consumer protections.

Since TN does not offer that option, some striking statistics emerge in recent studies:

What we found is not only do these neighborhoods that do not require a judicial process have higher rates of foreclosure but as a result, they have a much steeper decline in housing prices and real outcomes”, says Mian. “It’s possible that the further decline of the broader economy makes people feel less wealthy and so they start becoming more cautious with new investments and buying debt.”

The researchers collected data from, Fiserv Case Shiller Weiss,, and Equifax to study foreclosures, house prices, and delinquency rates by zip code, respectively.

The rate of foreclosure per delinquent home in 2008 and 2009 is twice as high in non-judicial states. A delinquent home has a nineteen percent chance of being foreclosed in a judicial state, but thirty eight percent in a non-judicial state."

As noted in last week's Senate Judiciary Committee meeting on the bill, mortgage attorney Steve Baker, "There is no compelling reason to shorten the time for publication of public notices," and further, "The more notices published for a sale, the more it helps to create a better market" for potential buyers.

Sen. Jack Johnson, sponsor of the bill, noted in his testimony "... it may be considered I have a personal interest in this bill" as he is a board member for a state bank. Other comments, from the Tennessee Bakers Association, said "banks pay the fees for the public notices if a mortgage holder can not." It's safe to say if a mortgage holder cannot pay their bills, then they will be unlikely to pay any publication fees.

Sen. Jerry Jones noted in her opinion piece in The Tennessean:

"We are facing economic challenges not seen for decades. But instead of helping Tennessee residents hold onto their homes and get back on their feet, this legislation will make it easier to foreclose and harder on working families to recover from hard times."

House sponsor of the bill (HB1920) Rep. Jimmy Matlock, also a banker, said in an opposing editorial:

"But it is a complicated issue and at any rate is nothing but a red herring to divert attention away from the real issue — money."


  1. Anonymous5:52 PM

    Good for Matlock. Finally someone intends to take on the newspaper lobby. It is so sad that formerly independent newspapers use precious editorial space to admittedly protect their own business. It is nothing more than a bully pulpit. If the trucking industry wanted to use that space to lobby for their own industry, this newspaper would not print it citing it as commercialization. There is a site that is INDEPENDENT, that PROVIDES E-MAILED ALERTS, MAPS TO ZONING ADDRESSES, SCHEDULES FOR HEARINGS, and AFFIDAVITS TO PROVE THAT NOTICED PUBLISHED. . And instead of tens of thousands of dollars per year, they charge $2,000 per year for as many notices as you want aggregately saving the local governments of this state millions. Government does belong to the public not to the newspapers. We all now understand despite what newspapers provide, that their time has passed and our state laws should move with the times. There are many more citizens with access to the internet than there are who subscribe to newspapers. When the market works everyone gains. Look at what happened when Craig's List offered a better service for much less money. Classified Advertising left the newspaper to go on line. Same with public notices. This issue is being covered well on this blog .

  2. TN newspaper publisher Eric Barnes offered some perspectives in his Senate testimony on the topics you mentioned -
    "This is a business problem; there are ways for banks to deal w/ this w/out legislation. The statewide average for foreclosure notices in newspapers is $212 per notice; one-day turnaround of notices some banks want is indeed more expensive, and he cited how banks in his area often publish only in papers with the highest costs - why?
    banks should be shopping around for the lowest prices they could find - but they do not.

    "As for the newspapers, yes, general circulation is down and costs are up, but it never occurred to me to come to state to ask you to help lower my cost ... as for online notices, the TN Press Association does puts notices online -- further, by allowing one less notice as per this new bill, the shorter description will cut cost 30 to 40 percent."

    the argument that it is the newspaper business vs banks ignores the reality that banks most often eat the cost of those notices, not struggling homeowners. also your argument ignores the powerful push underway now in TN to only publish all public notices via the internet - what if one cannot afford the cost internet access?

    it seems the best option is to require public notices be published both in newspapers and online, especially since not 'everyone' has internet access.

    and without judicial oversight as an option in TN, public notice is often the only public oversight offered for some government and business actions.

  3. Anonymous2:15 AM

    Joe, your profiles says that you like to "disrupt the status quo." I would have expected more from you. You quote Eric Barnes who leads the organization that lobbies for newspapers. He and his group have an economic interest in keeping the notices in newspapers. How credible is that source? 1.) So instead of running newspaper association he tells the banks how how to run their business? "banks should be shopping for better prices from newspapers." Why should they have to use a newspaper at all?
    The metric that makes sense to discuss is to compare how many people receive a newspaper vs. how many have access to the internet. It is overwhelmingly in favor of the internet. You say that the "best option" is to publish in both print and on line. How about radio or TV? Yes, they are wildly expensive, just like newspapers. You can reduce costs by 95% by publishing notices on line only. Why don't the newspapers publish them for free. If they are as wildly popular in the newspaper as they say they are, then they could recoup their costs via increased sales of the newspaper. The web site I mentioned is an independent third party and provides oversight and affidavits. Newspapers can still provide oversight by doing their jobs ... covering the news, not copying and pasting a few lines of text and collecting $212 from a homeowner who can not afford it. The argument to keep notices in print at all as strong as the argument 100 years ago when newspapers argued that posting a notice on the local courthouse was insufficient notice.

  4. Barnes is publisher of The Daily News in Memphis and the weekly paper The Memphis News,, and offers a large public records database on their website, and also operates The Chandler report, which reports on real estate news - so your claims seem mostly to be a "shoot the messenger".

    Yes, he is on the board of directors of the TN Press Association, and they, along with the Tennessee Bar Association, and the Tennessee Land Title Association and other consumer groups all oppose this legislation.

    Why publish the notices at all, you ask? Because that is the law.

    There's no law requiring notice be made on radio or TV - do you think that's a law worth creating? Then talk to your representatives.

    And Barnes did not demand banks act as he wishes - he asked a question, which was never answered, which is why to banks often decide to publish in papers where the cost of public notice is highest?

    More importantly, he asked what kept banks from working out agreements on the cost of public notices instead of asking the state to change laws which have served the public very well.

    Your argument that somehow newspapers are to blame for banks wanting to shorten public notice is, at best, very weak.

    Likewise, you ignore the reality that the bill's sponsor and several other on the Senate Judiciary Comm. work for banks. How many members of the legislature work for a newspaper?

    And how many new government employees will you be willing to add to your tax burden to write, archive and maintain the public notice databases in every county and at the state level too? 100? 1,000?

    As was testified before the Senate, Tennessee is already the easiest and leas expensive state in the nation to foreclose on residential and commercial property. There seems zero reason to make the act even easier and less expensive.

    As I said in the previous comment - public notices published anywhere in TN are available for free online via The TN Press Association, and they add new publications 24/7.