Foreclosures remain low despite ruling reversal

Foreclosures across the natural state remain stymied despite the recent reversal in litigation that has plugged up the pipeline since late last year.

There were a total of 404 foreclosure filings recorded in Arkansas during  May, down nearly 32% from April and 72% lower than in the prior year period, according to market data provider RealtyTrac.

Local real estate professionals say the number of new properties continue to trickle into the market and they have not seen any major impact on prices or new distressed listings since the cork was pulled last month in the litigation between out-of-state lenders and the federal bankruptcy court.

RealtyTrac reported 120 new filings in Benton and Washington counties during May, down 30% from the prior month and 74% lower than in May of last year. The region has a population of 424,404  with roughly 0.06% of its households in default with lenders.

Benton County continues to lead the state in activity, ranking No. 1, while Washington County’s numbers came in as the fourth highest last month.

In Sebastian and Crawford counties, there were 29 new mortgage delinquency filings in May. That is a 74.5% decline from a year ago, according to RealtyTrac. The two-county metro market has a population of 187,692 with roughly 0.3% of households in jeopardy of foreclosure.

On the national scene foreclosure activity has decreased on year-over-year basis for 20 straight months, but RealyTrac CEO Brandon Moore expects the activity will increase in the coming months making for a “bumpy ride through the back half of this year."

He said default notices, the first phase in the lengthy foreclosure process, have started to rise now that a number of lawsuits have been settled. During May, foreclosure starts increased 12% to their highest level since October 2011 for the nation.

In judicial and nonjudicial states, Moore said there were high number of foreclosure starts, but that was not the case in Arkansas which allows both methods of foreclosure.

Lynnette Harris, broker with the local Coldwell Banker franchise in Rogers, handles foreclosure listings for Freddie Mac — the Federal Home Loan Mortgage Corp.

“We have continued to see these listings trickle in and sell very quickly. I don’t think we are going to see a major impact on prices now that the gate has been opened for more listings. We were flooded with them a few years ago and prices fell. But the values have since recovery quickly which gives buyers and sellers a history dynamic they didn’t have a few years ago,” Harris said.

Vickie Briolat, broker with Crye-Leike, said she has seen the price rebound in HUD homes too.

"There is a HUD listing near my neighborhood with a three–car garage and in-ground pool priced at $160,00. A couple of years ago that home would have been priced around $135,000. The two HUD listings I have are both under contract to close this month," Briolat said.

As of Thursday (June 14) there were 258 HUD or bank-owned properties for sale in the local multiple listing service which includes all of Northwest Arkansas and the Fort Smith metro area, according to Jim Long, broker with Crye-Leike Realtors in Bentonville.

Long said the MLS has a total of 6,149 listings and bank-owned foreclosures make up about 0.04% of the homes for sale. Since the ruling was reversed a month ago, Long said his office has seen 12 new foreclosure listings find their way to this market, 10 of those in the past week.

“I think it’s too early to know for sure what the impact will be,” Long said.

Moore said there are more investors in the market and he doesn’t expect to as many of the distressed homes to end up as bank-owned.

“More banks are now recognizing that treating the problem of delinquent mortgages with short sales rather than bank repossessions can help them minimize their losses and also avoid taking on more REOs, which they then have to manage, maintain and market for sale,” he said. (REOs refer to repossessed property by lenders.)

Local agents in Fort Smith and Northwest Arkansas say there are working with more investors than in recent years and seeing more cash deals.

MAY FORECLOSURE FILINGS
Northwest Arkansas (Properties in the foreclosure process)
Benton County
2012: 74
2011: 238

Washington
2012: 46
2011: 224

Fort Smith Region (Properties in the foreclosure process)
Crawford County
2012: 10
2011: 46

Franklin County
2012: 4
2011: 8

Logan County
2012: 2
2011: 12

Sebastian County
2012: 19
2011: 68

MOST FILINGS PER HOUSEHOLDS (Top 5 Arkansas counties in May)
Benton County
2012: 74
2011: 238
1 filing per 1,258 households

Sevier County
2012: 4
2011: 0
1 filing per 1,722 households

Saline County
2012: 24
2011: 117
1 filing per 1,867 households

Washington County
2012: 46
2011: 224
1 filing per 1,909 households

Lonoke County
2012: 14
2011: 52
1 filing per 1,946 households