Each quarter, foreclosure data publishers report on the state of the industry either by citing current statistics or attempting to forecast where the industry is headed. While the U.S. housing market is indeed experiencing a crisis, many of these reports misleadingly display astronomical numbers that combine multiple phases of foreclosure on the same property – depressing already low homes values in states like California, Florida, Nevada, Colorado and Michigan, and leading the general public to fear for the worst. Now, more than ever, the public needs accurate, timely data presented in ways that are easy to understand.
To better understand the reports and forecasts as they are published, there are five things every homeowner and prospective homebuyer needs to know about quarterly foreclosure reports and forecasts, including:
■ Industry Terms – Know the difference between a default notice, auction notice, REO, les pendens and more – and most importantly, how they correlate.
■ Regional Differences – The actual foreclosure data, and how it is reported, varies from region to region.
■ Number Forecasts – While these are generally reasonably accurate, a forecast often includes numbers that have been averaged across regions, or numbers that have been manipulated based on past numbers and guesswork.
■ Timing of Forecasts – Because different states report their foreclosure numbers at different times, no region is ever truly “complete” at the time of foreclosure industry forecasts.
■ “Double-dipping” – Some foreclosure data publishers count a statistic at Notice of Default, and then “double-dip” or count the same property again at auction, thereby inflating the numbers.
The most trustworthy data reporting companies are those that “scrub” their data, rather than just publishing it. All data comes from the same source, but it is how the data is processed and reported that spells the difference between accurate and inaccurate statistics.
When and Where the Data Originates
County Recorders throughout the country provide access to their recorded documents at different intervals. A “best case scenario” in terms of timing would be Los Angeles County, which records a Notice of Default today, meaning the mortgage payments on a property are in substantial arrears, would then be posted on a foreclosure data Web site in approximately six days. San Luis Obispo County, although located within the same state, could take as long as 45 days. Typically, smaller counties generally require a lengthier period of time to report their foreclosure numbers; however, any county can be delayed in reporting when there are an inordinate number of recordings. Therefore, it is nearly impossible to report accurate numbers in most counties for at least three to four weeks after the end of the preceding month.
In America there are 3100 counties, and all are inconsistent with each other regarding their recordings. Some counties record some form of Default document, such as a Notice of Default or Les Pendens, whereas others use an Appointment of Substitute Trustee. Some counties have no reporting altogether or very limited reporting, while still others report only those properties that have been repossessed.
Third party sales and foreclosure cancellations are an important piece of the puzzle in reporting accurate statistics. Third party sales are sales made to a party prior to the foreclosure sale or at auction. A foreclosure cancellation means the past due balance and penalties have been satisfied by the lender and the property is no longer in foreclosure. Either scenario can occur any time prior to the actual day of the auction. Continue >>
RSS
