Over the last year, a handful of articles have come out disputing certain foreclosure listing companies from releasing inaccurate foreclosure data into the media.  Unfortunately, due to the illusive nature of foreclosures in themselves, these articles do not come out as often as need be.  But when these reports are released, they come out with their gloves off. The latest of these reports comes out of West Virginia.

According to an article published by the Charleston Gazette, “five times more West Virginia homes and businesses were sold in foreclosure in 2007,” than Realty Trac statistics reported.  The article published on September 21, 2008, titled, “How many foreclosures? ‘We know we’re underreporting in West Virginia,’” was referring to a quote from Realty Trac executive, Rick Sharga.

The article author, Kate Long, discovered that according to the 55 state-wide county courthouses, Realty Trac reported at least 2,077 fewer foreclosures than the state has. Put in typical media and foreclosure reporting fashion, that would equal a staggering difference of 227%.

Long suggests that while West Virginia foreclosures have not been too detrimental to the state, the problem is the fact that legislation governing predatory lending are affected by the specific foreclosure numbers offered by Realty Trac. If the foreclosure listing company reports little to no foreclosures in West Virginia, then lobbyists can use that information against anti-predatory lending solutions.

The article quotes Delegate Carrie Webster, a house chairwoman, as stating that “decisions have been made on the basis of those numbers that affect people’s lives.” She continues by saying “bad numbers don’t make good policy.”

Referring back to the article title, Rick Sharga (RealtyTrac) provided the following insight, “West Virginia is one of the states where we need to do a better job.”  He continues by stating, “We know we’re under reporting in West Virginia,” and that “we concentrate on areas of 25,000 people or more.”

Further along Sharga states that, “we do the best we can, given the imperfect nature of public record data and don’t knowingly mislead anybody with this information.”

Unfortunately, this is not the case and the figures were misleading. When a company makes a decision to be one of the only sources of foreclosure reporting in the country they must do so accurately, and not just with false confidence and self-service.  In reports across all media outlets there is no warning, asterisks, or any other cautionary note that reflects the true nature of the data.

With August foreclosure figures trickling in to the media this month, more erroneous data reporting is represented throughout all media outlets. Foreclosure filings for August did increase but total foreclosures for the period varied depending on the source.

According to an article in the Los Angeles Biz Journal, “Foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 303,879 US properties during August.”  The article, published on September 12, 2008, titled “California has nation’s 2nd highest foreclosure rate in August,” continues by stating that while there were over 300,000 foreclosure flings, “REO properties, more than doubled from a year ago to 90,893.”  The report was based on figures from RealtyTrac, an Irvine based foreclosure listing company. See Article Here.

As mentioned in prior posts, REO properties (Real Estate Owned Properties) represent homes that have received a foreclosure notice, failed to make current on the loan, and the bank has taken ownership.

An article published by Market Watch had a similar finding from another foreclosure listings service, ForeclosureS.com. The article titled, “ForeclosureS.com Reports More Than 100,000 Homeowners Lost Home in August; One Million Foreclosures Expected in 2008,” details nationwide foreclosure activity.

Published on September 8, 2008, the article written by Sofia Gutierrez, an employee of ForeclosureS.com, offers the following information, “Nearly 102,000 homeowners lost their properties to foreclosure in August, up nearly 6 percent from July and more than 80 percent higher than in August 2007, according to data released earlier this week by ForeclosureS.com.”

The Market Watch article does not provide the details as far as the foreclosure notices are concerned, but considering the 5.5 million listings advertised at the end of the article, one can assume that the filings would be much great than RealtyTrac’s reported 300,000.

While the difference between the August foreclosure numbers are not staggering, it is enough to raise eyebrows.  Even a variation of 12% in the amount of foreclosures reported, can effect whether foreclosures are in fact decreasing or increasing.  As exemplified within the article, ForeclosureS.com reported an increase of 80 percent while RealtyTrac reported more than a 100 percent increase- a 20 percent difference. These disparities between figures can truly alter the reader’s perception of the market and the economy.

Also, journalist and publishers have a responsibility to point out these discrepancies and not simply take “there are differences in the way we count data,” as a reasonable answer.

Recently within the media there were a couple articles reporting on the increase in foreclosures in San Diego County.  While all the articles stated that foreclosure flings in San Diego had in fact increased, all of the articles had differing numbers representing the increase.  The numbers that differed were the total foreclosure filings for San Diego County for the period of July 2008.

The first article published August 22, 2008, “Foreclosures up 213% for July over last year,” stated that, “2,004 San Diego County homes went into foreclosure in July.” The article, written by Emmet Pierce, was based on information gathered from DataQuick Information Systems.  Here is a link to the article Signonsandiego Foreclosure Article.

The second article published on August 25, 2008, by Ned Randolph, offered foreclosure numbers from two separate companies.  Randolph’s article stated that, “in July, 2,174 homeowners in San Diego County defaulted on $940 million in loans, according to ForeclosureRadar.” The author continues by stating that “according to HouseRebate.com, a San Diego-based discount real estate service, there were 12,000 local homes in notice of default last month [July].” Here is a link to the article San Diego Business Journal San Diego Foreclosures Article.

Interestingly enough, Randolph simply stated the varying figures with no question or further investigation, simply that the figures were different.

Given the numbers stated above, foreclosure filings in San Diego County may have totaled somewhere between 2,004- and 12,000 properties according to the three separate foreclosure reporting companies: DataQuick, ForeclosureRadar, and HouseRebate.com.

Due to such a wide variance in findings, Foreclosure Research set out to identify the true amount of foreclosure flings in the area.  Taking information from various sources including the county courthouse, and filtering out unique properties and owners, Foreclosure Research found that there were actually 3,189 foreclosure filings for San Diego County in July 2008.

One reason for the slightly lower figures, could be attributed to past negative press around foreclosure listing companies, such as Realty Trac, which were said to double- even triple-count their foreclosure listings.  As far as the drastically incorrect number from HouseRebate.com, this company only offers a short sale list on its website, and probably would not provide a good indication of the current foreclosure market in San Diego County.

Revisiting the issue of ForeclosureS.com 5 million listings claim, Foreclosure Research discovered another discrepancy with the data provider’s listings.  That issue was that the company may be using .. not so true.. listings as a type of filler, in order to boost total listing numbers.

Nevada seems to have many of these types of listings with Lyon County, Nevada being the biggest offender.

In the image above readers can see a screenshot of a search results page for Lyon County, Nevada.  This shot was taken two weeks ago from today.  However, revisiting the same page today, you will find the same listing at the same page.  However, this listing, or loan amount, begins at page 34.  The listing, for $65,000,000 is repeated from page 34 to page 46 for a total of 220 individual pre-foreclosure listings with a loan amount of $65,000,000.

While the repeated loan amount isn’t suspicious enough, the listings type varies from vacant land to single family residence.  It also has varying market values starting at $280,000, which begs the question, how can a listing with a loan for sixty-five million dollars have only a market value of two-hundred and eighty-thousand dollars?

Page 6 through page 14 has yet another repeated listing; however the loan amount for this particular pre-foreclosure is for $100,000,000 (see picture above).  Again, the market value on this particular repeated loan amount ranges from $164,000 to $213,000; again, a difference of over $99 million.

Only a couple of pages down at page 20, a user will find other listings with a loan amount for $2,215,000.   This listing, or loan amount, repeats until page 29 for a total number of 180 pre-foreclosure listings.  Similar to the previous listings, the loan amount of exactly $2,215,000 ranges from vacant land to single family residences, and the market value also ranges from about $211,000 to $260,000.

When a user jumps to page 50, another replicated number appears.  In this instance the loan amount is for $10,650,000.  This listing is duplicated, or at least seems duplicated for about 3 pages.  Again, the market value for each individual listing ranges from $292,000 to about $302,000.

The total number of exorbitant loan amounts or duplicated listings totals around 620 listings.  Keep in mind, these were only from a sample of pages taken, the remaining pages could also have similarly irregular listings.  While it could possibly be true that 180 pieces of $100,000,000 land could have been foreclosed; at what value is that to the individual investor?  It is highly unlikely that land worth $100,000,000 would be sold for a measly $213,000- especially 180 times over.