Case Hampers Filings

NORTHWEST ARKANSAS — Northwest Arkansas foreclosure activity remains low as a court case continues to hamper filings.

Several northeast Arkansas homeowners filed an appeal June 8 to keep alive the case stating only lenders “authorized to do business in the state” could use the nonjudicial foreclosure method.

Arkansas allows lenders to use both judicial and nonjudicial foreclosures. Nonjudicial cases are quicker and less expensive than cases requiring a judge’s involvement.

U.S. District Judge Leon Holmes in May overturned a September ruling from the U.S. Bankruptcy Court for Arkansas, which caused many banks to stop foreclosure activity.

Foreclosure filings slowed but didn’t stop.

Benton County continued leading the state in foreclosure activity despite May numbers being down 23 percent from April and 68 percent year-over-year, according to RealtyTrac, an online marketplace for foreclosure properties. There were 74 homes in the foreclosure pipeline last month.

Washington County’s May foreclosure figures were down 38 percent from April and 80 percent year-over-year. The county had 46 homes in the pipeline and ranked fourth in the state.

State numbers follow the same trend, down 32 percent month-over-month and 72 percent year-over-year.

The court case targets banks not registered with the secretary of state or the Arkansas Bank Department, but many banks went into a wait-and-see mode.

Gavin Edwards, broker at Synergy Realty Group in Rogers, said local banks with foreclosure inventory are starting to put them on the market before the larger institutions can flood the market.

“It’s not local banks I’m worried about but the big national banks,” he said. “They don’t care about the local inventory.”

He said inventory is increasing at a trickle and hopes that rate continues.

“The real estate market does not want to see a flood of these homes come on the market,” Edwards said.

An increase in pre-foreclosure sales is also lowering numbers nationally, said Brandon Moore, chief executive officer of RealtyTrac.

“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 in a release.

REO, or real estate owned, is a property that goes back to the mortgage company after an unsuccessful foreclosure auction.

The federal government is also trying to keep more homes out of foreclosure by making changes to the Home Affordable Refinance Program.

The program allows underwater homeowners to refinance at low interest rates.

Arvest, the state’s largest mortgage lender, saw a 162 percent increase in program loans in the first quarter compared with the same quarter a year earlier.

The program removed the limit of how far underwater a homeowner could be to qualify. The loan-to-value ratio on fixed-rate loans was capped at 125 percent.

The program is available until Dec. 31, 2013.