Foreclosure Filings Rose 81% in 2008

One of the problems with trying to gauge foreclosure activity is that the data is pretty poor. We discussed this problem last year in “Foreclosure Stats: Pick a Number, Any Number“:

We’ve noted more than once that quite a few government statistics near and dear to analysts and investors, such as GDP, inflation, and employment growth, are pretty iffy.

So you don’t think we are unfairly singling out the government; some measures produced by the private sector are also questionable. A prime example is foreclosure statistics, which are of greater interest than usual, thanks to the soft housing market.

A story in the LA Times, “Getting a Fix on Forclosure Data,” tells us how the two most widely cited sources of foreclosure information, RealtyTrac and DataQuick, are almost certainly incorrect. RealtyTrac counts every step in the foreclosure process as a foreclosure, and is also charged with not correcting its data for multiple liens on the same property, resulting in figures that are almost certainly too high. Experts charge that DataQuick’s results are too low. And the differences are large. For the state of California, RealtyTrac reported 142,149 foreclosure filings in a February news release; DataQuick’s figure was 12,672.

But it is well nigh impossible to arrive at a correct answer due to problems of definition….

The implication is that foreclosure data really does not tell you how many people are actually losing their houses in any time period. But trend data from a single service (in the case of today’s update, RealtyTrac) is probably a pretty good indicator of trends and amplitude. And the picture is not pretty.

From Bloomberg:

U.S. foreclosure filings jumped 81 percent last year as falling house prices, tighter mortgage lending and the longest recession in a quarter century battered property owners, RealtyTrac Inc. said.

More than 2.3 million properties got a default or auction notice, or were seized by lenders, the Irvine, California-based seller of default data said today. That’s the most RealtyTrac has documented in four years of recordkeeping. Filings rose 41 percent in December from a year earlier to 303,410….

Foreclosure prevention programs offered by U.S. banks and state laws that temporarily delayed property seizures “have not had any real success in slowing down this foreclosure tsunami,” James Saccacio, RealtyTrac’s chief executive officer, said in a statement. One in 54 housing units, or 1.8 percent of homes, received at least one filing in 2008…

December foreclosure filings rose 17 percent from November, RealtyTrac said. The total for the year reached 3.2 million, which includes multiple filings against some of the 2.3 million properties affected.

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  1. Shnaps

    Great point, Yves.

    Maybe someone should ask the Hope Now coalition to start reporting the figures, now that they have all that servicing data.

  2. Anonymous

    Time for cramdowns and reworks on all loans. Time to leave moral harzard at the door….. This will be a stimulous to the economy AND stop house price declines. The stimulous comes form someones payments getting cut in half. Example, somebody is paying $3000 a month for a home that is now worth $200k based on foreclosures accross the street. Think he will eventually foreclose and buy another property, yes…. why not prvent the foreclosure and speed up the process in one fell swoop with a cram down. Same for all the new “investors” they need some sort of writedown to kee pit all going. Otherwise wealth will continue to go up in smoke. There are just not enough new buyers to soak up all the inventory in todays horrible job market. Time for extreme measures and decisive action; we have been delaying to long!

  3. Anonymous

    Anonymous– “there’s just not enough new buyers to soak up all the inventory..”

    NO– and there won’t be, because HOUSE PRICES are still WAY TOO HIGH in bubble markets. To move inventory quickly, the Gov. had best do something to truly incent first-time homebuyers. WE need a “backstop”– why would we buy a house now when we know prices are declining?

  4. Philip Crawford

    RealtyTrac is a for profit business and they are attempting to generate traffic to their website.

    Filings increased by about 43% from 2007 to 2008 according to their data. (3.15 M vs 2.20 M)

    I’d really love to hear them describe how they calculate the number of properties involved, which is how they make the claim of an 81% increase.

    For example, they claim Wisconsin had a 62% increase in foreclosures. The data does not support this one bit. In case you wonder how I know, I run this site on Wisconsin Foreclosures:

  5. Anonymous

    Looks like Vinny Goldberg is getting ready to invest in some really cheap property in Florida…

    Vinny out… but feverishly browsing the classified section for foreclosed properties…

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