Are realty foreclosures as bad as they are reported in the media? Not according to a spokesman from RealtyTrac, an Irvine, Calif.-based organization that tracks foreclosures. According to the firm, journalists sometimes misunderstand or misreport the company’s analysis.
On August 24, the Business & Media Institute reported that different industry experts were skeptical of RealtyTrac’s foreclosure data provided. The media – including NBC, ABC, CBS, CNN and the New York Times – often cite the firm’s data.
“The fact of the matter is we really don’t have an agenda with the numbers,” Sharga said. “We’re not a ‘Center for Responsible Lending’ kind of organization where we’re trying to make the case the government should come in, slap regulations on the mortgage providers or anything like that.”
The major concern with the RealtyTrac data was it was counting the stages in the foreclosure process individually and there could be as many as three steps for the same property.
“The fact is we do track all levels of foreclosure activity,” explained Sharga. “This is the important consideration – foreclosures are a process, they’re not an event, so it’s an unfortunate happenstance that the word happens to be a noun, a verb, a pronoun, an adjective and probably a prepositional phrase in some instances.”
“When people talk about foreclosures, they are often talking about slightly different slices of the same pie. What we cover and have always covered are all three stages of the foreclosure process and that’s why we use terms like foreclosure activity and foreclosure filings to try and help people not misinterpret the numbers as absolute numbers of foreclosed properties,” He continued
Sharga claimed he has gone to great lengths to make this clear, but often his message falls on deaf journalistic ears.
“I spend an awful lot of my time dealing with people in the media,” Sharga said. “Either they don’t always get or they don’t appreciate the nuance or they may have an agenda of their own.”
On August 23, NBC “Nightly News” used RealtyTrac’s data in one of its reports. “They’re up 93 percent nationwide last month from the same period last year,” said NBC “Nightly News” anchor Brian Williams. “This situation is dire. It’s creating a lot of anxiety about how that’s going to affect a great many homeowners and the economy as a whole.”
But Sharga said that reporting of RealtyTrac’s data is inaccurate. “It was a 93 percent increase of total foreclosure activity and when I see the headline foreclosures up 93 percent, I cringe just like you do.”
Sharga dismissed claims RealtyTrac was intentionally sensationalizing their reports to garner media attention. “Here’s a headline I haven’t written on any of our releases – ‘Foreclosures are at Historically High Levels,’” Sharga said.
Sharga also said there are no fewer than four different government organizations that use RealtyTrac’s data for their analysis.
The way foreclosure data is reported by the media and then perceived in the public and by politicians could make a difference in government action. Rep. Barney Frank (D-Mass.) is advocating stricter regulations due to the high number of foreclosed properties. Some in the business sector have even suggested a federal bailout of property owners in trouble.
Sharga told BMI that the media take the data out of context. “I’ve spoken with Doug Duncan, who is the chief economist over at the Mortgage Bankers Association about this and he said, ‘Look I understand what you guys are doing and I don’t really have a problem with the numbers. What I have a problem with is what the press does with your numbers.’ And he said it really doesn’t do anybody any good if the number of foreclosure filings in a county has gone from one to two and the banner headline the next morning’s newspaper is foreclosures up 100 percent. Technically it is correct, but it misrepresents the context of the situation.”
According to Sharga, the RealtyTrac model makes comparing data on a state-by-state basis is easier because it is more comprehensive.
“We’re very, very careful to as precise and as specific as possible about what numbers we’re reporting on,” Sharga said. “The problem I have is when people try to generalize what we’re doing as double counting because the double counting thing is a little bit of a red herring,” Sharga complained.
Sharga also told BMI the RealtyTrac data included each stage of the foreclosure process because to give a more comprehensive view of activity. He said if one of the stages were not included – the initial default, the foreclosure notice or real estate-owned property (REO – where the banks take the property back) – it would be an incomplete view. “Every time we issue, we break out the type of filing by state,” Sharga said.
Sharga claimed there was still a proportional relationship with foreclosure filings and individual properties.
“If you look at year-over-year or quarter-over-quarter trends, there’s almost no difference between the filings and the households. Now, there’s a numerical difference, but the percentage rate increase and so forth is almost identical.”
Sharga said the reason RealtyTrac continues to total up and report foreclosure filings as they’re criticized for is because they have three years of history doing it like that and it makes an accurate comparison of historical data with current data possible.
“I think the relationship between the total number of filings and the total number of properties is relevant.” Sharga said their method shows you the number of properties going through the entire process in one state versus another state and that gives a better view of the marketplace.
The unique nature of foreclosures on a state-by-state basis makes it difficult to have a –one-size-fits-all formula for their data reports.
“If the foreclosure as a process was a nationally regulated process, in other words, if there was one standard process in which this took place, we could probably come up with a more scientifically precise way to measure these things. The problem is foreclosures are regulated state-by-state, and the District of Columbia has its own regulations, so you have 51 different versions of the process. Some are judicial, some are non-judicial. Most are public record, a couple of them aren’t and then they get executed on a county-by-county basis, so the vagaries of being able to capture the data on a month-to-month basis are mind-numbing.”
He admitted RealtyTrac data was far from perfect. “It’s far from an automated process, it’s far from a scientific process. The degree of difficulty in trying to gather accurate data to begin with is just incredible.”