As the foreclosure market gains more steam and becomes the focus of the stagnating housing market, companies like RealtyTrac are beginning to grab a share of the limelight, and the profits.
RealtyTrac, an Irvine, CA based company, specializes in foreclosure listings, charging a membership fee to view available listings nationwide.
While the subscription itself is not problematic, the way they list the properties is making industry watchdogs question their presentation of foreclosure data.
The company draws their data directly from filings in county recorders’ offices throughout the nation, and then lists properties in any stage of the foreclosure process on their website.
This is where things get a little gray. Instead of creating one listing per property, many properties in foreclosure are receiving multiple listings, sometimes one for each stage of the process.
A property may be listed separately in a variety of different foreclosure stages, such as “notice of default”, “pre-auction”, “auction”, and “bank owned”.
And though many properties fall into the foreclosure process, a good amount are never foreclosed upon for a variety of different reasons, including bank bailout or the homeowners’ ability to turn around on late mortgage payments and stop foreclosure.
This clearly skews the national foreclosure data, making it difficult to accurately judge the severity of the problem nationwide.
But why should RealtyTrac, a privately-owned company be held accountable for our nation’s foreclosure data?
For one, the congressional Joint Economic Committee asked RealtyTrac to gather data for a report last month titled “Sheltering Neighborhoods from the Subprime Foreclosure Storm.”
And that’s not all. Vice President of Marketing Rick Sharga said they’re also being utilized by the FBI for fraud detection, and by the Feds and the FDIC for predictive modeling and foreclosure hot spots.
But should the government rely on a privately held company to gather and assess the nation’s foreclosure data simply because it’s the most popular and widely known?
The government clearly doesn’t have a handle on the national foreclosure numbers, and choosing to rely on a public company to provide objective data is simply unethical.
The Mortgage Bankers Association’s chief economist, Doug Duncan, criticized the company, noting that “Their business model is to market foreclosed properties.”
Similar companies such as DataQuick and PropertyShark have their own foreclosure data, with numbers much different than those of RealtyTrac, but these companies are in it for profit as well.