Foreclosure actions bottlenecked by ruling

Foreclosure activity continued to stall in January with 274 new delinquency filings for the entire state, well below the 1,908 during January 2011. Irvine, Calif.-based RealtyTrac reports 110 new foreclosure filings in Benton and Washington counties, down 85% from a year ago.

South of the Bobby Hopper Tunnel, Crawford and Sebastian counties together had just 7 new filings, a mere fraction of the 142 delinquencies recorded a year ago.

Homes making their way through the foreclosure pipeline have become stuck thanks to ongoing litigation between out-of-state mortgage lenders following a federal court ruling Sept. 29.

The ruling called into question which lenders were authorized to use the non-judicial means of foreclosure. This abbreviated method does not require a judge’s signature. A caveat in the state law prohibits out-of-state lenders and mortgage servicers from using the non-judicial method. And subsequently questioned the validity of thousands of foreclosures in recent years.

This is an unusual dynamic that continues to skew the foreclosure numbers across the state. There were 7,685 foreclosure filings in Arkansas during 2011, down 61% compared to 2010.

Real estate agents say government-owned properties are slowly making their way back in the the Northwest Arkansas housing inventory, but expect it will take several months before the log jam is completely removed.

MountData reports about 32% of real estate sales in October were for distressed properties, that percentage declined slightly to 29% in January. Distressed homes include short sales, bank-owned and HUD properties. The report also noted about 20% of the new listings making their way on the market in January were classified as distressed properties.

The majority of the foreclosure listings posted in January were for homes classified as bank owned, which is the end of the lengthy foreclosure process. There were very few new filings at front end of the foreclosure pipeline, which happens once a homeowner becomes more than 90 days past due.

“Although overall foreclosure activity was down from a year ago for the 16th straight month in January, we continue to see signs on a local and regional level that the frozen-up foreclosure process is beginning to thaw,” said Brandon Moore, CEO of RealtyTrac.

He expects to see foreclosures pick back up in the coming months now that another mortgage and foreclosure settlement was recently reached between 49 state attorneys general and five of the nation’s largest lenders.

Moore said the settlement sets forth clear guidelines for lenders and servicers to follow when foreclosing, which should allow them to push through some of the delayed foreclosures from last year. However, he said other roadblocks to foreclosure are still in place at the state level such as Arkansas.

FORECLOSURE FILINGS
Northwest Arkansas (Properties in the foreclosure process)
Benton County
2012: 72
2011: 358

Washington
2012: 38
2011: 353

Fort Smith Region (Properties in the foreclosure process)
Crawford County
2012: 2
2011: 63

Franklin County
2012: 0
2011: 8

Logan County
2012: 1
2011: 5

Sebastian County
2012: 5
2011: 79

MOST FILINGS PER HOUSEHOLDS (Top 5 Arkansas counties)
Benton County
2012: 72
2011: 358
1 filing per 1,293 households

Washington County
2012: 38
2011: 353
1 filing per 2,311 households

Pulaski County
2012: 70
2011 329
1 filing per 2,508 households

Saline County
2012: 16
2011: 133
1 filing per 2,801 households

Calhoun County
2012: 1
2011: 0
1 filing per 2,897 households