Ok, not really, but the headlines covering 2009 foreclosures may as well have purported such a figure. CNNMoney.com offered an article titled, “Record 3 million households hit with foreclosure in 2009.” The article written by Les Christie and published on January 14, 2010 seemingly reports three million foreclosures last year or at least that’s what the headline reads.

Let’s hope visitors to the site at least read through the first paragraph which states, “Almost 3 million homeowners received at least one foreclosure filing during 2009.”

Even more so, let’s hope that these visitors read through the fourth paragraph which offers even more insight. The article states that while foreclosures FILINGS were at record highs, that actual bank repossessions, or what people in the industry like to call ‘foreclosures’ only increased 1% from 2008 figures. According to RealtyTrac and other foreclosure listing companies the average total remained under a million foreclosures.

In other words a more accurate headline would have read, “2009 foreclosures less than 1 million.”

Call me crazy, but the information provided in the fourth paragraph seems much more considerable than the headline and subsequent introductory paragraph. As ForeclosureResearch has disseminated in the past foreclosure filings should not be utilized to give an accurate interpretation of foreclosures or bank repossessions on a per household basis. Many times a single homeowner will receive up to 3 notices or filings. Also, many investors defaulting on a number of houses each receiving up to 3 notices a piece does not accurately depict the average homeowner.

States across the country should take an initiative similar to Colorado and gain control of their foreclosure statistics. In the meantime someone please send a memo to Christie containing the definition of foreclosure.

As 2009 comes to a close let us revisit some of the top stories of the year. Undoubtedly the year was awash in news of a depressed economy and a depressed real estate market. However, with the cyclic nature of both these areas, we can only wait and see what developments arise in the coming year, and in the coming decade.

January 2009
Foreclosure Research reports mixed figures on foreclosure filings and REOs for 2008.
According to RealtyTrac there were a total of 3.16 million filings for the year. ForeclosureS.com reported 2 million filings. Read the full post here.

February 2009
For the first time in several months, all foreclosure listings companies reported a decline in foreclosure activity between December 2008 and January 2009. Read the full post here.

Foreclosure Research reports on the fraudulent practices of Foreclosure World and Foreclosure Store, specifically spotlighting several Ripoff Report complaints against the company. Read the full post here.

March 2009
A different perspective comes out of a University of Virginia study that finds “foreclosure rates really aren’t that high,” citing that the majority of foreclosures are concentrated in only a few areas. Read the full post here.

More concerns over faulty foreclosure reporting arise with blog author Elizabeth Razzi voicing her concerns. “Like most major media outlets, The Post reports foreclosure numbers from RealtyTrac each month, mostly because there’s no other source that’s better. But I don’t know anyone who uses those numbers, including reputable economists, who isn’t frustrated by the fact that the same home often gets counted more than once in their statistics.”

April 2009
Colorado passes new law which prohibits the governmental use of private foreclosure listing company statistics. The new bill (HB1196) aims to help regulate foreclosure reporting. Read the full post here.

More doom and gloom. Realtor, John Hull describes the fallout from such negative reporting, which “helped to stymie consumer confidence across our nation,” and helped “to cause fear and alarm in our community without including any of the positive aspects, which offer balanced reporting.” Read the full post here.

May 2009
RealtyTrac quote found in job loss statistic, which triggers concerns over whether or not that is their area of expertise. Read the full post here.

June 2009
An article headline reads, “U.S. foreclosures jump to record high,” misusing the word foreclosure for foreclosure filings (or notices of default). Yet further in the depths of the article a reader will find that actual foreclosures decreased for the period. Read the full post here.

July 2009
RealtyTrac makes public statement that its figures “should not be held to the same standards as statistics compiled by government agencies for the purpose of making public policy decisions.” However, in a press release located on their Web site it specifically states that “RealtyTrac’s foreclosure data has also been used by the Federal Reserve, FBI, U.S. Senate Joint Economic Committee and Banking Committee, U.S. Treasury Department, and numerous state housing and banking departments to help evaluate foreclosure trends and address policy issues related to foreclosures.” Read the full post here.

July 17, 2009: Happy one year anniversary for Foreclosure Research!

August 2009
Foreclosure Research reports a deviation of 51% between ForeclosureS.com’s mid-year statistics and those of RealtyTrac’s.

RealtyTrac offers an explanation for its sparse coverage in rural areas; citing populations of less than 25,000 are many times overlooked. Read the full post here.

September 2009
ForeclosureS.com and RealtyTrac figures show only a 6% difference in Nevada foreclosure statistics compared to past differences of over 100%. Read full post here:

October 2009
Colorado posts its first foreclosure report since converting to government run foreclosure data collection. Read the full post here.

The Housing Assistance Council releases the report, “What is the housing foreclosure situation in rural America?” The report cites discrepancies with certain foreclosure statistic providers such as RealtyTrac and their sparse coverage in rural counties. Read the full post here.

November 2009
Concerns spread over the practices of online retailers. In this particular instance a professor of economics unwittingly subscribed to two services (rather than the obvious one service) when signing up for real estate listing provider RealtyTrac. Read full post here.

December 2009
A close look into the Obama administration’s Making Home Affordable Program. While created with good intentions it appears that some of the homeowners with modified mortgages are still falling behind in payments. Read the full post here.

On the upside, while foreclosures are up from previous years, many states have seen consecutive months of decreased foreclosure rates. Some experts say recent legislation, specifically the Obama Administration’s Making Home Affordable Program, has played a significant role in the latest figures.

The program offers homeowners with mortgages guaranteed by Fannie Mae and Freddie Mac the option to refinance at more affordable rates or more affordable payment schedules. The program is back by $75 billion in tax payer funds.

However, the billion dollar question may be “is it working?” According to a recent article on ABC News, “more than one-quarter of homeowners receiving help under a U.S. government foreclosure prevention plan are behind on their new mortgage payments.”

Proponents of the plan say it’s too early to tell and that many of the modifications are only temporarily. The key to success surely would be making the modifications permanent. However, banks it seems continue to be reluctant in making such changes.

According to a recent article published in the Los Angeles Times, an assistant economics professor identified a mysterious charge that stemmed from the foreclosure listings site, RealtyTrac. UCLA Assistant Professor Maria Casanova discovered a $44.95 charge eight months after she canceled her RealtyTrac subscription.

Only through further investigation involving her bank did Casanova discover the charge stemmed from the RealtyTrac registration, where she unwittingly hit an orange “continue” button. According to a RealtyTrac representative the continue button was for an additional product for a completely separate company, Real Estate Promoter.

The article discusses the deceptive nature of the button, where it explains that a button stating ‘continue’ would be easily construed as the way to continue registering for the original service.

The article continues, “Unless you read the fine print, which consists of gray letters on a gray background, you won’t know that clicking continue will in fact sign you up for Real Estate Promoter’s service at a recurring cost of $44.95 a month.”

Undoubtedly this was the case with Casanova’s experience as she is quoted in the article as stating, “I was completely unaware that I was signing up for this other company,” she continues, “I thought the whole sign-up process was for RealtyTrac.”

As for the extraneous charge, Casanova contacted Real Estate Promoter to inquire about what it was she had in fact purchased. According to the article the company “had set up a house-hunting website on Casanova’s behalf and was billing her monthly for its use.”

Casanova, still confounded by the whole situation, explains that the company had failed to even send her information regarding this service and that she “wouldn’t even know where to find this website.”

It looks like Casanova is not alone. According to the article, a Google search for Real Estate Promoter lists numerous, similar complaints, “in virtually all cases, as a result of signing up for RealtyTrac.” If you also google RealtyTrac Ripoff Report you can also see 257 returned results, many of them are related to these types of issues.

While this may be an all too common practice among some online retailers, this should serve as a caveat as buyers should keep a sharp eye out for any covert, orange continue buttons.

While browsing foreclosure data on Zillow.com, a property came up with the following comment in the Q&A section: “Why is the same house listed for sale for $2,500.00 on RealtyTrac.”

The property on Zillow was a Foreclosure.com property listed at $39,900. See picture below.

With further investigation, the property, located at 145 Stoneybrook Road in Pacolet South Carolina 29373 was in fact listed on both Foreclosure.com and RealtyTrac.com priced at $39,900 and $2,500 respectively.

See RealtyTrac below

See Foreclosure.com below

In order to find out which service was correct, Foreclosure Research contacted the agent, D. Fowler, who verified the correct price at $39,900.

In conclusion, the property listed on foreclosure.com contained the more accurate information of the two.

One of the main complaints within the foreclosure listing arena is a lack of accurate data. It’s good to see that at least one company offers accurate information.

It is evident that ForeclosureResearch is not the only one with concerns over certain foreclosure reporting companies The Housing Assistance Council, a Washington DC non-profit, has also expressed concerns over foreclosure data in certain areas of the country. Such concerns were recently released in an October 2009 HAC report, “What is the housing foreclosure situation in rural America?”

The report specifically describes concerns over RealtyTrac figures. Here is a snippet of the report:

RealtyTrac presents data for approximately 2,200 counties across the United States. This excludes roughly 900 counties, most of which are predominately rural. RealtyTrac does not openly disclose its methodology for data collection; however, company representatives indicated that they generally do not collect data for a county if it has less than 10,000 housing units (RealtyTrac 2008a). The company has reportedly improved its quality control measures; however, duplicate and multiple counting of foreclosure entries is a particular concern when citing RealtyTrac data (Galvin 2007). Limitations related to over representation in some areas (namely urban), and under-representation in others (primarily rural), indicate substantial concern when trying to derive rural foreclosure estimates from RealtyTrac data.

Report References:
Realty Trac -a. Telephone discussion with ReatlyTrac representative, Mike Smith. July 25, 2008.

Galvin, Andrew. “Tracking the Truth on Foreclosures,” The Orange County Register. November 18, 2007.

It has been a little over a year since the state of Colorado took foreclosure reporting into its own hands. Last month the state released its first yearly foreclosure report based on the numbers of its own collection methods. Colorado was the first state to break away from a reliance on the many times inaccurate reporting of RealtyTrac.

The only snag seemed to be reports comparing August and September 2009 rates with the prior year. According to the foreclosure data report, “the large difference in foreclosure filing totals between September 2008 and September 2009 is driven partially by statutory changes and partially by actual conditions in the real estate markets.”

Besides that minor hiccup, figures in 2009 seem to have stabilized dramatically since previous years under the indiscretions of RealtyTrac. According to an article in the Denver Business Journal published on October 8, 2009, “state officials have complained about widely followed foreclosure reports by RealtyTrac.” Continuing by stating their “methodology could lead to the counting of the same property multiple times.”

For a comparison, RealtyTrac reported 6,472 foreclosure filings in Colorado for August 2009. The Colorado Division of Housing reported 3,496. These figures further confirm RealtyTrac’s tendency to over-report.

While the division of housing only tracks metropolitan counties, it would be a stretch to say that rural Colorado areas showed about the same number of filings as total metropolitan filings. According to the U.S. Census Bureau, The population in the area covered by the state is over 4 million, while the population in areas not covered is less than one million. Along the same vein, in order to have a conclusive, state-wide figure RealtyTrac themselves would have had to cover the rural counties. However, the company has stated in previous inquiries they do not sufficiently report areas of populations less than 25,000.

Of the remaining counties not covered by the Division of Housing, 82% have populations of less than 25,000.

It looks like the foreclosure giant RealtyTrac has laid off a considerable number of employees within the last month. According to Inman News “RealtyTrac has trimmed its workforce by nearly 30 employees and is moving away from some media partnerships.” The layoffs comprise roughly a quarter of its current workforce.

According to Hitwise, an online metrics company, the company has exhibited a steady decrease in traffic over the last few months. The company also moved down in the rankings to 18 from 10 for overall online real estate popularity.

In the article Senior Vice President Rick Sharga explains, “We’ve been in some media deals that weren’t profitable.” He continues, “They were delivering traffic, but not profitable traffic.”

Considering these “media deals” it is no wonder why the media relied heavily on their figures in many of their articles. Certainly being a deep-pocket sponsor for the media outlet had some pull with reporting content as well.

Now that these media deals have proven unsuccessful, perhaps the media will become more diversified in the figures it reports. Or better yet, RealtyTrac will now focus more on accurate data collection methods- the basics of a foreclosure listing company, rather than over-leveraging the brand.

Despite the fact that most foreclosure listing companies reported a nationwide decrease in foreclosures and default filings, the media offered headlines donned with the usual negative perspective.

RealtyTrac seems to be the only major listing company that offered statistics for August. The foreclosure listing company reported a 1 percent decrease in filings with a 13 percent decrease in repossessions. ForeclosureS.com didn’t offer a report for the month presumably because they found an increase in fillings, as they have historically reported larger number of properties in foreclosure.

Here are some of this week’s headlines:

From the Washington Post: “Foreclosure Filings Were Flat in August.”
The Post chose to use the lower valued decrease (1 percent) of filings as opposed to actual repossessions.

From CNNMoney.com: “Foreclosures: The struggle continues.” While the article states the decrease in the 4th paragraph, the major premise was that pre-foreclosures, although also having exhibited a decrease, may continue to creep back.

Los Angeles Business Journal reports: “RealtyTrac: California ranks 3rd in August Foreclosures.” This ranking down from second which should have been stated in the headline as the more important statement.

From the Columbus Business First BizJournal: “Ohio’s August foreclosures nudge up.” This nudge refers to the 3 percent increase from July. July happened to show a 15 percent decrease. In other words a 12 percent decrease since June.

Boston.com reports: “Foreclosures still high, even as economy brightens.” The article does not even mention the 13 percent decrease.

From the Financial Times: “US foreclosure flings remain near record high.” This article also has no mention of the 13 percent decrease in repossessions, only that “foreclosure activity among US properties slipped last month for the first time since May.”

Within the first 15 articles on a Google News search only one article mentions the national decrease. This comes from the Philadelphia Inquirer, “Foreclosures dip from July number.” However, you won’t find the larger decrease of 13 percent until the 9th paragraph.

In order to boost morale the media outlets should put a little more consideration on highlighting the upside of the economic situation.

It looks like RealtyTrac and Foreclosures.com are getting closer to similar reporting results but have yet to get it down to a science. The most recent statistics for Clark County Nevada came to only a 6.5% disparity compared to past differences of up to 100%. While the percent difference was closer than usual, the difference in the total properties varied by 13%.

It’s also getting harder and harder to catch. While RealtyTrac reports foreclosure flings, which include both default notices and REO properties, ForeclosureS.com reports them separately. Also, many times exact figures are not utilized, but rather percentages. Through a few quick calculations and historical research, Foreclosure Research was able to determine exact comparisons.

Here is a snippet from an article published in the Credit Union Times on August 19, 2009:

“Clark County had the nation’s highest foreclosure rate during the first six months of 2009, according to RealtyTrac. In the county, 7.45% of all housing units were in foreclosure. That represents a 56% increase from the same period in 2008. Nationally, 1.6% of all housing units were in foreclosure during the first half of 2009, a 15% increase over the same period last year.”

Foreclosure research was able to calculate the total foreclosures by taking the 7.45 percent of housing units. The total foreclosure for the six month period was 82,127.

The following snippet comes from an article in the Review Journal published on August 9, 2009:

“For the first six months, Clark County foreclosures rose 84.3 percent to 23,588 from 12,800 in the year-ago period, Sacramento, Calif.-based investment advisory firm Foreclosures.com reported. Preforeclosures increased 34.8 percent to 47,467 from 30,922 a year ago.”

Based on these figures, Foreclosures.com reported a total of 71,055 foreclosures/properties for 2009, or an increase of 62.5% compared to Realty Trac’s increase of 56%.

Below you will see the breakdown of those figures. Again, while the difference is not as vast as usual, it still exemplifies that the reports continue to fail in accuracy. Yet, media outlets continue to report all such figures with the utmost confidence.

RealtyTrac
Totals:
2009 (based on 7.45% of housing units in the county): 82,127

Foreclosures.com
January to June 2009:
Clark County foreclosures rose 84.3 percent to 23,588 from 12,800
Preforeclosures increased 34.8 percent to 47,467 from 30,922

Totals:
2008: 43,722
2009: 71,055

62.5% increase

6.5% difference in percent increase
13% difference in totals