Every day on the news in recent months there have been stories about the plight of the distressed home owner who has been unable to pay his mortgage and is forced into foreclosure. It’s portrayed as grim and ripe for government action – whether it is regulation or even government handouts.
“Now we switch to the housing market and the U.S. economy and this is a big story,” said NBC “Nightly News” anchor Brian Williams on August 23. “Listen to this number on mortgage foreclosures in this country. They’re up 93 percent nationwide last month from the same period last year. 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.”
The 93-percent increase Williams referred to comes from RealtyTrac, a company that tracks foreclosure and sells the data. But RealtyTrac’s compilation has been far from accurate.
“RealtyTrac is run by people who have no expertise in real estate,” Alexis McGee, founder of a competing Web site, ForeclosureS.com, told the Business & Media Institute. “They don’t understand the numbers. So what they were doing that was getting them in trouble is every time a foreclosure was recorded, they were adding them all up and saying this is how many foreclosures there are, when foreclosures are a process. And, a person goes from being delinquent to being in default to going to auction to becoming a REO [Real Estate Owned Property] and each step they were counting – so one person they may count three times and I don’t think they understood it.”
So why are they using it? “I believe the reason that a lot of media sources use the RealtyTrac press releases is because it makes a good headline since the numbers are so negatively high,” Steve Dutra, a real estate industry expert for John Burns Real Estate Consulting, told the Business & Media Institute. “The news is not good but this grabs the attention.”
One journalist can’t even explain it. “Sadly, I think all of us in the media are to blame for that,” said Sam Ali, a reporter that follows housing for the (Newark, N.J.) Star-Ledger. “Call it the lemming factor. RealtyTrac has been pretty aggressive about sandblasting their press releases to every media outlet on the planet with catchy, eye-popping headlines. When one person reports the figures, pretty soon, everyone starts reporting the figures. RealtyTrac first and foremost is not a research firm – it’s a company that sells foreclosure lists to real estate investors.”
Editor at Large
Comments Policy
Not all about mortgages
August 24, 2007 - 11:07 ET by Mica the MagnificentAs a former property manager, I have foreclosed on condo owners who have not paid their HOA fees or a special assessment.
Some people placed no money down on their 2nd home resort condo, collected the rents without paying their mortgage or HOA dues. It takes about a year for the foreclosure to take place.
It's not all about mortgages.
No one is giving Numbers...just Percent increases
August 24, 2007 - 11:14 ET by JayTeeI keep waiting for the MSM to give me some Numbers....but all I hear is that Foreclousures are up 93%......is that 1,000 and now 1,830, or what ? Now you explain the figure, and it is NOT as it was represented.
When the MSM won't give you the Facts, the particulars, then you assume it's an Agenda item and disregard them and get your numbers from somewhere else.
What good is a Free Press, if it is a False Press ? David Foote GoE
Now someone correct me if
August 24, 2007 - 12:17 ET by rbosqueNow someone correct me if I'm wrong but I heard only about 4% of subprime loans are going trough default. That means that about 96% are not. besides, the loan companies know what they are getting into when they make such loans. They employ actuaries and other risk assessment specialists who work those figures out. That's why they charge higher interest rates and higher fees, to protect themselves from loss.
It depends on where you are
August 24, 2007 - 13:21 ET by Prester JohnHere in northern Virginia outside of DC some areas have been absolutely devastated (200 foreclosures in a city of 30,000 and almost 2000 for the county). Think legal/illegal immigrants buying homes with no down payment, 3-4 co-signers and no doc mortgages as well as young couples panicing and buying homes in 2004/2005 that they couldn't afford using option ARM mortgages.
On the other hand there are areas only a few miles away have that have been barely touched.
You can get a feel for how areas have been hit by going to Yahoo Real Estate and searching for the number of foreclosures by zip code or city.
http://realestate.yahoo.com