Consumer Law

Desparately Seeking Data

By Alan White

By Alan White

Unlike many other economic indicators, foreclosures are not surveyed or reported by the Federal Reserve, the Bureau of Labor Statistics, or any government agency. Trying to measure the extent of the problem requires Google skills and detective work. Two recent reports from HOPE NOW and the states' Foreclosure Prevention Working Group offer some clues but leave many important questions unanswered. For example, many investors around the world would like to know not only how many homes are foreclosed and how many mortgage loans have been modified but also the loss severities, i.e. just how much less than the mortgage balance is recovered on foreclosure sales. These data are available only in hard-to-get monthly remittance reports for individual pools of mortgages.

The two available reports on foreclosure outcomes tell somewhat different stories. HOPE NOW tells us seemingly good news, that in the fourth quarter of 2007 nearly as many mortgage loans were modified (141,000) as were terminated with a foreclosure sale (147,000). The state regulators, on the other hand, tell us that for the month of October 2007, 126,000 foreclosure sales were completed and only 27,300 mortgages were modified. The Fed yesterday sent a letter encouraging banks to report their foreclosure prevention efforts voluntarily in a uniform manner, but has not yet taken on responsibility for compiling and reporting this critical information.

Should Congress step in with federal aid to purchase or refinance mortgages? How deep will the losses ultimately be? Should foreclosures be delayed to permit more time for workouts? A well-designed, objective and timely (preferably monthly) government survey of foreclosure activity and losses would be extremely helpful in answering these important questions.

Full post as published by CL&P Blog on March 04, 2008 (boomark / email).