Squishy foreclosure data

Although most observers of today's housing market believe that the foreclosure rate is rising nationwide, some are suggesting that the data underlying that belief might be just a little bit squishy.

"It is simply the way in which foreclosure numbers are tracked," said Mark Fleming, chief economist at First American CoreLogic in Sacramento, Calif., which develops automated home-valuation models for lenders throughout the country.

"Most of the techniques that are used to track foreclosures are based on aggregating information from the public record," Fleming said. "When foreclosures occur, there are pieces of paper filed at the courthouse, and how we count those pieces of paper is the way these numbers are calculated."

Multiple pieces of paper representing the same foreclosure may be filed, he said, so the number of total foreclosures can end up inflated.

According to Holden Lewis of Bankrate.com, "A mortgage is said to be delinquent when you are 30 days past due. It is a temporary state that ends when you catch up with your payments or lose the house."

(A borrower is in default if he or she has not made monthly payments over a period, sometimes three or six months, specified in the loan papers signed at closing.)

But because of the variety of ways that the data are measured and surveyed, there is a chance "that the number can be spun," Lewis said.

Both the Mortgage Bankers Association of America and First American CoreLogic periodically track loan performance to determine "what is going on beneath the surface of mortgage-backed securities," Fleming said. The mortgage bankers' group surveys lenders, while First American tracks monthly performance of 20 million loans to measure delinquency rates and foreclosure rates.

Recent national numbers compiled by First American show that 14 percent of all subprime loans (made to borrowers with less than good credit) are in a 60-day delinquency.

"The best it has been is 7 percent, and that was in early to mid-2005," Fleming said. "The subprime category always has a relatively high delinquency rate. The last peak was 11 to 12 percent in late 2001."

A first-quarter survey by the Mortgage Bankers Association showed the delinquency rate at 4.84 percent of all outstanding loans, down 0.11 percentage points from the fourth quarter of 2006 and up 0.43 percentage points from the first quarter of 2006.