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     It is hard to miss the grim news about everyone losing his home from an inability to pay the mortgage. But what if the critical data in those stories were inflated?

 

     “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 mortgage foreclosure data Williams referred to is from RealtyTrac, a publisher of databases on foreclosures. But there are several voices throughout the industry that think the RealtyTrac numbers are over-inflated.

 

     The RealtyTrac monthly data have also been used by The New York Times (in a story that appeared on its front page on August 22) and on ABC.

 

     “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.”

 

     The problem? RealtyTrac has a tendency to count some foreclosures more than once, said another industry analyst.

 

     “RealtyTrac is run by people who have no expertise in real estate,” said Alexis McGee, founder of a competing Web site, ForeclosureS.com, to BMI. “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.”

 

     Multiple calls to RealtyTrac were not returned, but Rick Sharga, vice president of marketing for RealtyTrac, told the (Newark, N.J.) Star-Ledger in June the company was going to fine-tune its figures because too many people, including the media, were misinterpreting the foreclosure numbers.

 

     “We stand by our numbers and always have, because they are exactly what is in the public record,” Sharga said to the Star-Ledger. “But we want to provide a greater level of detail.”

 

     McGee isn’t sure they have fixed it, and one newspaper reporter who closely follows the New Jersey housing market is convinced it still isn’t right.

 

     “RealtyTrac's monthly foreclosure data is still inflated, because they haven't changed their methodology on a month-by-month basis,” Sam Ali, a reporter for the Star-Ledger, told BMI. “So a single property may still get counted several times based on the number of filings it has accrued over time. They did release a six-month (January-June) roundup where they did include what they described as ‘Unique Households.’ They claim this figure eliminates the double and triple counting of the same properties.”

 

     But even with the adjustments in the RealtyTrac data, Ali determined it would not be possible to compare their “tweaked” data of this year to last year’s and come up with an accurate number of increased foreclosures.

 

     “In New Jersey that reduced the number of foreclosure filings from January through June from something like 27,000 to 13,000 – so it cut the figure in half, but for some reason they do not break down ‘Unique Households’ on a month-by-month basis,” Ali said. “Nor did they include a ‘Unique Household’ number for January through June 2006, so it’s impossible to compare year-over-year figures.”

 

     Yet the media continue to use RealtyTrac’s questionable numbers.

 

     “Sadly, I think all of us in the media are to blame for that,” Ali said. “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.”

 

     The coverage has many people alarmed, and some politicians are suggesting more regulation for the home lending industry or even a federal bailout of homeowners in trouble.