BLOG VIEW: The housing market might be lacking many things, but it certainly has no shortage of data. Whether you tap the number crunchers in Washington, the trade associations, academia or the vendor community, you will find endless statistics covering nearly every aspect of the U.S. housing market.
However, there is one area that has been curiously absent of concrete data: the number of homeowners who were victims of wrongful foreclosure. This is fairly confusing, because the subject has been rather ubiquitous. Indeed, it seems that we cannot go a week without an Obama administration attack dog, a headline-grabbing state attorney general or a self-appointed consumer advocacy group bemoaning the plague of wrongful foreclosures that supposedly devastated communities across the nation.
But how many people are we talking about? The Consumer Financial Protection Bureau cannot mention mortgage servicing without using words like ‘sloppy’ and ‘abusive,’ but the bureau has never given us a statistical snapshot of the exact number of people suffering from this brand of sloppy abuse.
And the U.S. Department of Housing and Urban Development (HUD) is even less helpful. In a recent interview, the Wall Street Journal tried to get a number out of HUD Secretary Shaun Donovan – but he couldn't provide one. When asked what percentage of wrongful foreclosures could be tied to robo-signing, Donovan sheepishly suggested it was probably just a ‘tiny fraction.’
Donovan actually acknowledged something that many mortgage bankers already knew: The papers that were robo-signed belonged mostly to people who should have been foreclosed upon. There has been no correlation between the volume of robo-signed documents and the number of claims of wrongful foreclosure.
However, the mainstream media are mostly playing along with the fantasy that vast numbers of honest and decent homeowners were wrongfully kicked out of their homes. In one of the more outrageous recent examples, this 16-page article from Pulitzer Prize-winning website ProPublica details the tumult in the servicing industry following the 2008 crash.
But when it comes to detailing the question of wrongful foreclosure, the ProPublica article zeroes in on a single homeowner who wound up living in a tent after falling behind on mortgage payments. It is an unusual hard-luck story, to be certain, but it is just one story. The article never mentions how many homeowners were wrongfully foreclosed upon, yet it gives the false impression that it must be a large number by vaguely insisting that the tent-dweller's story is ‘remarkable not because it's unique, but because it isn't.’
Yes, it is easy to find stories of people who got caught up in the foreclosure process when they should never have been targeted. But you may notice that these are strictly one-off stories that usually have some outrageous servicing-related goof-up.
This story from Illinois follows a woman who was foreclosed upon even though her mortgage was paid in full. In journalism school, this type of story is called the ‘man-bites-dog news’ – it gets attention for going against the grain, not for being part of a wider trend.
Still, many media outlet prefer to cloud the subject with provocative language designed to give the impression of vast numbers of wrongfully foreclosed homeowners. This New York Times article's headline is ‘Review Finds Possible Flaws in More Than 138,000 Bank Foreclosures.’ The key word is ‘possible’ because it has not been fully determined if there are flaws. And if 138,000 seems like a large number, consider that Lender Processing Services has determined that there are more than 5.5 million U.S. properties that are 30 or more days delinquent or in foreclosure.
Some folks might have realized that they're overplaying their hand with endless insistence of wrongful foreclosures. For example, Massachusetts Attorney General Martha Coakley announced a new loan modification program last week that is designed to assist homeowners with ‘avoiding unnecessary foreclosures.’
Unnecessary foreclosures? Actually, foreclosures wouldn't be necessary if homeowners who signed home-loan contracts at their own free will fulfilled their obligations and paid their mortgages on time. But, hey, to some people, that kind of thinking is just plain silly.
– Phil Hall, editor, MortgageOrb
(Please address all comments regarding this opinion column to hallp@mortgageorb.com.)
