Burnett Quadruples Foreclosure Statistics
The subprime lending ‚Äúcrisis‚ÄĚ has already led to a record rate of home foreclosures, so why do the media continue to exaggerate already disappointing statistics?
In an egregious mischaracterization March 7, CNBC‚Äôs Erin Burnett told the NBC ‚ÄúToday‚ÄĚ show that ‚Äúwe had about 8 percent of homes in this country right now are in the foreclosure process.‚ÄĚ
Eight percent? Yikes!
Unfortunately, Burnett either misread a decimal point or combined statistics for two different categories of mortgage problems: foreclosures and delinquencies.
The actual rate of loans entering foreclosure in the last quarter of 2007 was 0.83 percent, according to the Mortgage Bankers Association (MBA). And ‚Äúthe percentage of all loans in the foreclosure process was 2.04 percent of all loans outstanding at the end of the fourth quarter,‚ÄĚ the report found. That‚Äôs not a good number, but it‚Äôs only a quarter of what Burnett reported.
Burnett may also have combined the percentage of homes in foreclosure ‚Äď 2.04 percent ‚Äď with the percentage of homes in delinquency, which stood at 5.82 percent in the fourth quarter of 2007. Those add up to 7.86 percent of homes either in foreclosure or past-due, fairly rounded to ‚Äúabout 8 percent.‚ÄĚ
The New York Times also referenced the MBA statistics in a March 7 article, saying the association ‚Äúreported Thursday that loans past due or in foreclosure jumped to 7.9 percent of the total in the fourth quarter.‚ÄĚ
But it‚Äôs unfair to use the ‚Äú8 percent‚ÄĚ as Burnett did without clarifying that not all of those homes are actually going through foreclosure. Often, lenders will work with borrowers struggling to make payments to restructure loans and avoid the costly foreclosure process.
Almost two hours later in the broadcast, co-host Ann Curry referenced the same MBA report in saying that ‚Äúnew foreclosures jumped to almost 1 percent of all home loans at the end of last year.‚ÄĚ Curry didn‚Äôt mention Burnett‚Äôs mischaracterization of the numbers.
A report released January 29 by foreclosure tracking service RealtyTrac found that ‚Äú1 percent of all U.S. households were in some stage of foreclosure‚ÄĚ during 2007. Journalists have also misconstrued RealtyTrac numbers, resulting in exaggerated reports about foreclosure statistics.