Figures Lie and Liars Figure

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By now you’ve probably read or heard a headline today with these eye-popping tidbits: Stockton, Calif., had the highest rate of foreclosures in the U.S. in the third quarter, with 1 in 31 households receiving some sort of foreclosure notice. In third place was Riverside-San Bernardino, where 1 in 43 households posted a foreclosure filing. (Detroit took the No. 2 spot.)

What’s more, with 31,661 filings on 20,664 properties, the Inland Empire saw its filings jump fourfold year over year for the most filings of any metro area in the U.S.

These statistical stunners are according to RealtyTrac, the Irvine-based foreclosure database marketer.

But can they be believed?

Not entirely.

By trumpeting such sexy statistics, Realty Trac gives the impression that there was a dramatic increase in the properties entering foreclosure in the quarter vs. previous periods. But the truth is that some of these households were also receiving notices in the first and second quarters as well. In California, the foreclosure process usually takes a minimum of four months.

“They are all new filings, but not all new properties,” Rick Sharga, RealtyTrac’s vice president of marketing, told me today.

So why not just report new filings on new properties?

RealtyTrac has been coming under increasing scrutiny. Last month, the Atlanta Journal-Constitution took a close look at the company’s data after it said that Atlanta’s foreclosure rate had jumped an alarming 75% from June to July. RealtyTrac admitted to the newspaper that it made mistakes in its calculations, and that the month-to-month increase was really 14%.

Unfortunately, not all media outlets are taking the time to vet the RealtyTrac numbers.

‘Call it the lemming factor,’ Sam Ali, a reporter for the New Jersey Star-Ledger, told the Business & Media Institute in another article calling RealtyTrac’s numbers into question.

‘RealtyTrac first and foremost is not a research firm -- it’s a company that sells foreclosure lists to real estate investors.’

The Los Angeles Times tends to rely on stats from DataQuick Information Systems. The La Jolla-based research firm has been collecting data for almost 20 years and is not in the business of selling its info to consumers. It also provides separate stats of initial notices of defaults -- the first step in the foreclosure process -- and notices of trustee sale -- the last notice the homeowner receives from the bank. That makes month-to-month or year-over-year comparisons more meaningful.

I asked RealtyTrac to provide The Times with a similar breakdown of third-quarter foreclosures notices in the Inland Empire. This is what they sent:

By contrast, DataQuick’s third-quarter numbers show fewer filings in both categories:

For his part, Sharga acknowledged that DataQuick is a pretty good outfit and said the companies may have different ‘filtering’ systems and other analytical variations causing the mismatched results.

He has a point. No matter who’s doing the foreclosure-data collecting, the trend is heading in one direction, and that’s up.

Questions? Comments?

-- Posted by Times staff writer Annette Haddad