Foreclosure filings expected to increase in 2013

The backlog of foreclosure filings stuck in the pipeline thanks to legal issues is flowing once again across the Natural State, sending delinquency filings higher to start 2013.

Mortgage delinquency activity rose 270% in Arkansas from January 2012 as 1,016 households faced foreclosure to start 2013, according to RealtyTrac.com.

Last month there were 218 new filings in Benton and Washington counties and the local foreclosure pace rose 98% compared to January 2012. But real estate agents say the numbers are still manageable and much lower than the foreclosure peak in 2009 and 2010.

Benton County reported 121 new filings in January, 89 of which were set for trustee sales and 32 listed as bank-owned real estate just out of the foreclosure pipeline. The notice of trustee sale is the midway point in the foreclosure process and this metric was 13 times higher in January than in the previous year. 

Washington County reported 97 new foreclosure filings, up 155% from a year ago. Some 68 of those delinquencies were set for trustee sale in the coming weeks, this compared to just 11 in the year-ago period.

The same pattern was true for Sebastian and Crawford counties, while the overall numbers are considerably less.

Sebastian County reported 32 new filings in January, up from 5 in the year-ago period. The majority of the new filings, 28, were midway through the foreclosure process as set for auction in the next two months.

In Crawford County there were 39 new filings, 18 of which are set for auction and 11 already recovered by banks and soon to be listed for sale.

Realtors have been monitoring the levels of foreclosures coming back into the local market.

Jim Long, agent with Crye-Leike Real Estate in Bentonville, said there are 257 bank-owned properties noted in the Multiple Listing Service which includes Northwest Arkansas and the Fort Smith market.

This so-called distressed inventory totaled 260 in December, according to Long.

“The property is coming under contract about as quickly as it hits the inventory, at or near asking price,” Long said. “Buyers include investors and consumers wanting to purchase while interest rates are low and prices are starting to edge upward."

Andres Carbacho-Burgos, housing analyst with Moody’s analytics, said as the foreclosure backlog makes its way into the marketplace, there will be some downward pressure on home price appreciation across Arkansas, particularly in the Fayetteville metro area where there is a larger shadow inventory to be worked out.

According to Equifax, Cabacho-Burgos says the Fayetteville metro area has a 3.7% mortgage delinquency rate – 90 days past due or more. This compares to 3.1% in the Southern region and 3% in the state as a whole.

He said it remains to be seen how much impact this will have on prices. It will depend on how many of the home sales in 2013 are distressed properties compared to non-distressed sales. In many regions of the country there is sufficient investor activity to offset this negative price impact.

“One thing is for sure, the shadow and distressed properties do have to be come out of foreclosure and be sold again before markets can resume normalized price gains, Cabacho-Burgos said.

On the national scene, U.S. foreclosure starts were down 28% from a year ago, the lowest level since June 2006, according to RealtyTrac.com.

Carbacho-Burgos said some states are recovering faster than others and Arkansas is a laggard state because of the court ruling that stalled foreclosures late in 2011 and part of 2012. 

Among non-judicial states Arkansas posted the largest increase in foreclosure starts in January, up 539% from a year ago.

The state of Washington had an increase of 179% while Nevada’s foreclosure starts rose 87% year-over-year.

January Foreclosure Filings
Northwest Arkansas
Benton County
2013: 121
2012: 72
one in 760 households

Washington County
2013: 97
2012: 38
one in 892 households

Fort Smith Area
Sebastian County
2013: 32
2012: 5
one in 1,696 households

Crawford County
2013: 39
2012: 2
one in 889 households
Source: RealtyTrac.com