Foreclosure activity remains mixed, re-defaults rise

The foreclosure pace across Arkansas remains mixed as 2013 winds to a close. There were 469 foreclosure filings across the Natural State in November, down 5.25% from the year-ago period, according to Irvine, Calif.-based RealtyTrac.

The number of foreclosure filings nationwide totaled 113,454, down 37% from November 2012.
 
“While some of the decrease in November can be attributed to seasonality, the depth and breadth of the decrease provides strong evidence that we are entering the ninth inning of this foreclosure crisis with the outcome all but guaranteed,” said Daren Blomquist, vice president at RealtyTrac. “While foreclosures will likely continue to stage a weak rally in certain markets next year as the last of the distress left over from the Great Recession is dealt with, it is highly unlikely that there will be a foreclosure comeback that poses any major threat to the solid housing recovery that has now taken hold."

Northwest Arkansas areas differed in their reporting last month with 66 new foreclosure filings in Benton County, up 11% from a year ago. In neighboring Washington County there were 26 new filings, a 53% decline from November 2013.

The Fort Smith metro area was also a mixed bag with 17 new foreclosure listings in November, up 13% from a year ago for Sebastian County. Crawford County reported 11 new foreclosure filings, down from 13 filings a year ago.

Local real estate agents report the number of new foreclosed properties coming back into the markets of Northwest Arkansas and the Fort Smith metro area have been fairly stable at 360 listings as of Wednesday (Dec. 11). Crye-Leike agent Jim Long said the new HUD listings are few and far between with a smattering of properties from Fannie Mae and Freddie Mac in the mix.

“We see a fairly large number of bank-owned properties on the market at this time. The listings range from $12,900 for one acre and an uninhabitable home, all the way up to two homes in Fayetteville listed at  $1.4 million,” Long said.

Last month Long reported there were 368 foreclosed homes listed for sale in the four counties included in this report. That number totaled 354 in September, down from 373 in August.

Foreclosure listings peaked at 393 in July, rising from 222 in March of this year. The listings have slowed a bit, according to Long, who said the clean, well-kept properties are still selling fast, as investors and cash buyers are back in the market.

RISING REDEFAULTS
Roughly 967,000 distressed homeowners took advantage of federal programs to obtain mortgage loan modifications intended to stem foreclosures since 2009. But the most recent report from the Inspector General indicates that nearly half of those mortgages modified in the Home Affordable Modification Program (HAMP) are back in default.

The HAMP initiative has helped about 888,394 homeowners avoid foreclosure through permanent modifications since it began, but 337,854 had redefaulted by the end of September, according to the most recent government report. The Obama Administration has made multiple attempts to fix the program, including expanding the requirements for participation, paying investors more for principal reductions, and extending deadlines.

When it was first initiated, officials estimated that it would reach as many as 4 million homeowners, but closer to just 900,000 have been helped. And more than 1 million borrowers have been bounced out of the program either thanks to redefaulting after failing to make the first three payments during the trial process, failing to qualify, or for failing to finish a three-month trial.

In Northwest Arkansas the report indicated there had been 1,035 permanent modifications, with a redefault rate of 29%. The Fort Smith metro area reported 175 permanent modifications with a redefault rate of 23%. Nationwide the redefault rate has been 27%.

The Treasury reports homeowners with redefaulted loans serviced by the 8 largest mortgage companies have had mixed results since falling out of HAMP. As of Sept. 1, about one-third of borrowers were able to secure an alternative modification, usually a private sector modification. About 22% of the redefaulted loans have moved into foreclosure and 13% lost their homes through deed-in-lieu of foreclosure proceedings or short sales.