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.”