August foreclosure pace doubles in Northwest Arkansas, Fort Smith area

The local foreclosure pace in August bucked the national trend as the number of filings doubled in Benton, Sebastian and Washington counties compared to the same month last year, according to Irvine, Calif.-based RealtyTrac.

Northwest Arkansas counties reported 52 new filings, the bulk of those (36) were in Benton County, and 16 were in the final stages of foreclosure with bank repossession. Benton County foreclosure filings rose 140% from the same period last year, but they were down 36.8% from July. In Washington County, there were 16 foreclosure filings in August, with seven in the final stages of bank repossession. The number of filings rose 128.5% from the same month last year.

Sebastian County reported nine foreclosure filings in August, which was 10% less than in July but 125% increase over August 2014. Five of the filings were in the final stages of repossession as banks are still working through their inventory levels. In neighboring Crawford County there were 3 filings in August, flat against a year ago.

Higher foreclosures aren’t necessarily a negative, according to local real estate agents and lenders, who also note that the numbers are well below the peak levels reached in 2006. Foreclosure starts remain low in four counties mentioned in this report which is in trend with the national market.

“Foreclosure starts in August continued to search for a new floor below even pre-recession levels, indicating the housing recovery of the past three years is built on a solid financing foundation,” said Daren Blomquist, vice president at RealtyTrac. “But the continued rise in bank repossessions indicates more batches of bank-owned homes will be rippling through the housing market over the next three to 12 months as lenders list these properties for sale.”
 
Continuing, he noted: “This influx of bank-owned inventory may be good news for an inventory-challenged housing market, but buyers and investors interested in purchasing these bank-owned homes should understand they tend to be lower-value properties in areas where house values have not recovered as quickly and are more likely to have deferred maintenance issues that will need to be addressed.”

He said the average estimated market value of bank owned real estate nationwide is now 33% below the average market value of non-distressed properties, and homes repossessed in the second quarter of this year on average languished in the foreclosure process for 629 days.   
 
Nationwide, RealtyTrac reports there were 109,561 foreclosure filings which include default notices, scheduled auctions and bank repossessions.

In August, total U.S. filings were down 12% from the previous month and down 6% from a year ago. The 6% year-over-year decrease in August followed five consecutive months with year-over-year increases.
 
At the state level there were 353 foreclosure filings last month, up 108% from a year ago. The filings are comprised of 211 bank repossessions and 142 scheduled auctions, according to RealtyTrac.

TransUnion recently reported that mortgage delinquency rates – those borrowers who are 60 days or more behind in the mortgage payments – continued to decline through the second quarter of 2015.

About 2.72% of the mortgage loans in the U.S. were delinquent of June 30, the most recent data available. The delinquency rate dropped 20% in the last year, 3.42% in second quarter of 2014, and has been reduced in half in the last three years. 

Millennials led the overall decline in mortgage delinquencies as those consumers under the age of 30 experienced a yearly drop of 26.9% from the second quarter of 2014. There were 2.32% of Millennials with delinquent mortgages in the second quarter of 2014, compared to 1.7% as of June 30, 2015.

Forty-eight states saw double-digit year-over-year declines in seriously delinquent balances, which is a sign that foreclosures should continue to be low throughout the rest of 2015.

“This is the lowest mortgage delinquency level we’ve seen in several years – down from a peak of nearly 7% in early 2010,” said Joe Mellman, vice president and head of TransUnion’s mortgage group. “This is largely due to foreclosures and other seriously delinquent accounts continuing to work their way through the foreclosure process, as well as a reflection of the high credit quality of recent originations.”