U.S. efforts to reverse the housing crisis may not be correctly considering rural foreclosures. "A company called RealtyTrac provides some of the most widely followed statistics on home foreclosures, but it fails to report on more than 900 rural counties," Scott Finn of West Virginia Public Broadcasting reports for National Public Radio. Critics say failing to include these counties promotes the myth that there is no foreclosure crisis in rural America.
Lawmakers in West Virginia abandoned a predatory-lending bill after seeing RealtyTrac's low foreclosure figures for the state. In 2008, RealtyTrac counted fewer than 500 foreclosures in the state. New federal statistics note 12,000 foreclosure notices in the state since the start of 2007. RealtyTrac's reports are also used widely by both the government and journalists to get a picture of the nation's housing market.
"We know we're underreporting in West Virginia. We know we're not covering the whole state as thoroughly as we'd like to," Rick Sharga of RealtyTrac tells Finn. But he notes they are still more focused on urban areas: "If I miss a county in California, I miss more in a month than I'd miss in West Virginia for the whole year."
Eight of the 10 most rural states in the country are on RealtyTrac's top 10 list of states with the lowest foreclosure rates. "It's ridiculous, it's embarrassing, it's stupid," Sen. Jay Rockefeller, D-W.Va., tells Finn . "I'm going to fight to make sure everybody gets accurate information, and they get counted."
The Foreclosure Prevention Act, passed by Congress in July, required the Department of Housing and Urban Development to measure state foreclosure rates. HUD's measurements showed significantly higher foreclosure rates in rural states, Finn reports. Mississippi, one of RealtyTrac's top 10 lowest foreclosure states, ranked near the bottom of HUD's list. The law only required HUD to compile the list one time, but Rockefeller wants the department to continue tracking foreclosures to avoid relying on incomplete data from companies like RealtyTrac. (Read more)
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RealtyTrac and Foreclosure.com include default notices, auction sale notices and bank repossessions. There can be numerous filings for the same property and often numerous lenders filing for the same property. In other words, the number of filings is not a good indication of the number of properties facing foreclosure.
This system counts one foreclosure as several. Consider what this does to the difference between rural and urban divides on foreclosure rates. The greater populations yield greater overall numbers of foreclosures, these greater numbers are multiplied several times by RealtyTrac and Foreclosure.com. There's no way rural areas can compete.
This is how rural areas were largely robbed of Neighborhood Stabilization Funds by states with larger municipalities. They pointed to RealtyTrac and Foreclosure.com data and said "Look, urban areas are hurting far worse than rural areas."
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