Foreclosure train picks up steam

It’s been nearly one year since bank litigation halted much of the foreclosure activity across the Natural State, but local real estate agents say the pace is starting to pick up as more listings are making their back into inventory.

In August there were 550 new foreclosure listings across the state, that compared to 750 filings a year ago. While the year-over-year pace fell 26.67%, the activity rose 61% from the prior month, according data provided by RealtyTrac.

Washington and Benton counties ranked No. 1 and No. 3, respectively, with highest foreclosure rates in the state. Together the two counties reported 147 new filings in August, roughly 26.7% of the state total. August filings were down 56% from a year ago, but 69% higher than in July.

Northwest Arkansas has a population of 424,404, with 180,892 households in the two counties. Roughly one in every 1,400 households were in the midst of foreclosure last month. This compared to one in 2,393 households in Arkansas and one in 681 homes nationwide.

“Bucking the national trend, deferred foreclosure activity boiled over in several states in August,” said Daren Blomquist, vice president of RealtyTrac.

He said several non-judicial states like Arkansas showed steep increases in the past month now that the backlog in the pipeline has started to move forward.

“This rebounding pattern will likely be repeated in the coming months in other states that have passed legislation delaying the foreclosure process,” Blomquist said.

The federal court ruling that put state foreclosures on hold in October 2011 was reversed in April. It has taken several months but agents say they are starting to get more HUD and other bank-owned listings each week.

“We are hearing from HUD that by October the volume of properties coming back should return to more normal patterns. Up to this point those homes that have come back since April have been priced to sell and they have not lingered on the market very long,” said Vicki Briolat, agent with Crye-Leike Realtors in Bentonville.

The Multiple Listing Service, which includes the Fort Smith area, had 199 bank-owned listings in April when the moratorium was lifted. Since that time the number of  listings had stayed fairly consistent at 255 with about 60 new listings coming in and almost that many sales each month.

Briolat said there are 336 bank-owned properties listed for sale in the region at this time and the inventory has increased faster than sales in the past few weeks.

Analysts estimate some 2 million mortgages across the nation are in some phase of foreclosure, not all of those may be showing in the pipeline as more homeowners are opting for short sales in lieu of foreclosure.

Short sales across Benton and Washington counties totaled 264 from Jan. 1 through Aug. 20  of this year. That was a 54% increase from 171 short sales in the same time frame of 2011. Year-to-date short sales comprise about 7% of the total home sales reported through the local Multiple Listing Service in Benton and Washington counties, this compared to 5% in the year-ago period.

In Arkansas an estimated 12.5% of homeowners have negative equity in their homes, according to CoreLogic.

Blomquist said negative equity is one of the factors that leads to foreclosure particularly when homeowners that find themselves having a hard time making payments.

Economist Kathy Deck says as the Northwest Arkansas job market continues to show signs of strength the overall foreclosure effect could be less severe going forward. Deck is the director for The Center for Business and Economic Research at the University of Arkansas.

FORT SMITH MARKET
The real estate market in Sebastian and Crawford counties had 58 total foreclosure filings in August, down 38.9% from a year ago. The number of filings rose 45% from July following the upward trend statewide.

Sebastian County has a population of 125,744 with 54,651 households. Roughly one in every 2,227 of households are in some phase of foreclosure.

Kevin King, broker with Weichert Realtors in Fort Smith, said the foreclosure market has been pretty stable and those homes generally sell pretty quickly.

“We never got the high price appreciation and haven’t seen the wide swings in home values that occurred in Northwest Arkansas and other markets,” King said recently.

Bankers in the Fort Smith market say the recent job losses in the area haven’t really shown up in more loan delinquencies perhaps because consumers had been preparing for the high profile plant closures and layoffs for a couple of years.

Crawford County has a population of 61,948, with 26,115 households. There were 8 new foreclosure filings in August, down 72.4% from a year ago. Like the rest of the state, Crawford County foreclosure filings jumped 166% in the recent 30-day period as more properties are being pushed back into inventory.

In the Fort Smith metro area, the foreclosure pipeline is the fattest in the middle with 20 properties up for trustee auction. It takes between 60 and 90 days to move from phase two — trustee sale — to the final phase of bank owned.

At the front of the pipeline the numbers are still low — just 8 new notices of default between the two counties in August. That compared to 39 notices of default a year ago.

AUGUST FORECLOSURE FILINGS
Northwest Arkansas (Properties in the foreclosure process)
Benton County
2012: 71
2011: 186
-61.83%

Washington
2012: 76
2011: 150
-49.33%

Fort Smith Region
Crawford County
2012: 8
2011: 29
-72.41%

Sebastian County
2012: 50
2011: 68
-63.64%