Number of Bank Foreclosed House Rose 50 Percent in Arkansas

by on States

Last month, the number of bank foreclosed house in Arkansas rose by almost 50 percent, compared with figures of the same month a year ago. Also in June, foreclosure filings were made on 1,667 properties in Arkansas, representing a 48 percent increase from 1,146 filings posted for the same month last year.

The volume of bank foreclosed house filings in June was slightly higher than the May filings of 1,671. Last month, one out of 772 homeowners received at least one foreclosure notice, making the state 22nd in terms of high foreclosure rate in the country.

Year-over-year foreclosure increase in Arkansas varied from 16 percent in March to last month’s annual increase of 48 percent.

University of Arkansas’ Center for Business and Economic Research director Kathy Deck said that the increasing number of bank foreclosed house will continue to put strain on the state’s economy. She pointed out that the longer the economy languishes, the less likely that homeowners who are struggling to pay their mortgages can hold on to their properties.

According to Streetsmart Data Services economist Jeff Collins, the foreclosure crisis in Arkansas and the rest of the country were linked to subprime loan borrowers. He said that the devastating effects of subprime lending in Arkansas have been washed out and the foreclosure that the state is currently experiencing is brought about by the effects of recession.

Both Deck and Collins agree that the major cause of foreclosures in the state is unemployment. They explained that when borrowers lost their jobs, it may be impossible for them to continue paying their mortgages. The unemployment rate in Arkansas was 7 percent in May.

Meanwhile, another foreclosure contributor is the financial difficulties facing both real estate developers and builders. Collins explained that it has been so long that real estate demand was at an all time low and developers who have the means to fulfill their financial obligations are now under so much pressure. Some of them could no longer pay their debts and are forced into foreclosures.

Collins said that he expects more developers to go into foreclosures and to file for bankruptcy.

Nationally, the number of bank foreclosed house jumped by 33 percent last month, compared with the same period a year ago. And one out of 380 homeowners received foreclosure filings in June.