Understanding the Truth Behind Foreclosure Data

California Foreclosure & Real Estate News
After a full year of silence, foreclosure.com founder speaks out about the current foreclosure crisis- or in this case, a lack there of. Brad Geisen, CEO and founder of foreclosure.com, gave a press interview yesterday, regarding the current state of the economy and the disparity between foreclosure figures in the media.

According to one graph, Geisen points out that all default rates in 2007 were less than 1% of all loans. Currently the default rate is nearing 2%, which according to Geisen has been the standard of the loan industry for quite sometime.

Geisen also touched upon the misrepresentation of foreclosure data in the media. Because the media receives foreclosure data from a number of reporting outlets- there are bound to be some disparities in the numbers. One reason for this disparity results from the classification of foreclosure data between providers. For example, pre-foreclosures are many times counted as foreclosures, yet in actuality pre-foreclosures only occur when the homeowner defaults on one payment. Many times these pre-foreclosures are resolved between the homeowner and the bank and other times a new owner intercedes with what is called a short sale.

A short sale normally occurs when the house value is less than the amount of the loan. In this situation the bank may settle to receive less than the amount of the loan simply to avoid the drawn-out process of foreclosure. Many of these statistics- those pre-foreclosures than never make it to foreclosure -are rarely referenced in the media. Many times these numbers are magnified to reflect a mortgage and foreclosure crisis and not relative to the industry as a whole.

During the press conference Geisen also provided his insight into the state of the economy. Contrary to mainstream news and media, Geisen does not believe the economy is doing that bad but rather considers the economy to “be in a good state.” He references the current unemployment rate, which last year was at its lowest point in a 5 year period. This number is increasing slightly in 2008; however he doesn’t think it will (among other factors) have enough impact to force the economy into the recession that many are predicting.

Another subject mentioned was the savings and loan crisis in the 1980s where the economy was truly in a crisis. Interest rates at that point were astronomical compared to today’s rates where Geisen says, “money is cheap.” Interest rates are low and people will be finding great deals on homes and foreclosures he continues. According to Geisen the real estate market has been in a much needed correction- but he predicts prices will start going up as early as this June.

You will be seeing more of foreclosure.com in the news as they attempt to resolve the rift in foreclosure numbers nationwide and provide accurate numbers and figures on the current state of the market and foreclosure rates.

For more California and foreclosure news, please visit the California Foreclosure home page.

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