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.

Read more on the phenomenon from Kim Souza with our content partner, The City Wire, at this link.