Whenever I see an article that uses ONLY percentages to illustrate a dramatic change, I get instantly dubious. So, when I saw the below article, I began digging to see if the percentages are as scary as the reality. After all a 144% increase in foreclosures from 4000 to 9760 homes in the below mentioned counties is a hell of alot worse than a 144% increase from oh, say 78 to 212 in Fairfax or “more than doubling” is a lot more scary that “rising to just” 22 in Fauquier, 82 in Loudoun, and 218 Prince William? Or if we put it another way, an additional 295 more homes in some of the most heavily populated counties in the US are now in foreclosure? Or we could even say that total number is “roughly 1 in every 1500 homes on those counties” OR .0007% additional homes in the area are in foreclosure? We could even compare the increase of ~295 homeowners to the >800,000 homeowners in the areas? Or we could still say that YOY the foreclosure numbers are still DOWN 4.5% in Fairfax, DOWN 21% in Fauquier, DOWN 26% in Loudoun and up just 10% Prince William (the smallest) ……..

As for Maryland, “first time notices more than doubled” to a lofty 175 in Montgomery County (home to >370,000 homeowners) and “tripled” to an apocalyptic 91 in Frederick County (over 90k homeowners). We would note here that the much larger Montgomery County foreclosure numbers are DOWN 30% YOY.

Get the point?

Further, we all know how everyone desperately wants to find something just awful happening out there due to budget cuts/sequester but, are we really thinking that homeowners who were furloughed in June and started missing payments are getting foreclosed on 4 months later? My bet would be these folks were behind on their loans well before any furlough activity sealed their fate. I am sure some are furloughed workers, but not all. For the assumptions in the story to be true we’d have to assume every one of the 295 additional VA homeowners were furloughed workers, stopped paying on their loan before June 1 (before they were furloughed) and none were sub-prime mortgage holders. Absent one of those conditions, the story falls apart (time to foreclose in VA for subprime loans is 5mos and prime in 4mos meaning Oct.1 and Nov.1 earliest foreclosure possibility)

As I said above, I am sure there has been some effect from the sequester cuts but the reality is that it is so small it makes this story stunningly less dramatic.

If we look at the National numbers:

IRVINE, Calif. – Oct. 10, 2013 — RealtyTrac® (www.realtytrac.com), the nation’s leading source for comprehensive housing data, today released its U.S. Foreclosure Market Report™ for September and the third quarter of 2013, which shows foreclosure filings — default notices, scheduled auctions and bank repossessions — were reported on 131,232 U.S. properties in September, a 2 percent increase from the previous month but a 27 percent decrease from a year ago

In other words, the YOY results here in the largest counties in VA and MD on a percentage basis track the national numbers.

This is typical of what drives me crazy with the MSM today. A purely inflammatory article that gives the impression the situation is FAR worse than reality. One can consider this the “law of small numbers” in which a small increase off a small base gives large percentage increases. I equate this to the nightly news finding the 1 in 50 person affect whenever there are gov’t cuts to a program and making it seem like their predicament is pervasive, when it simply isn’t.

I reprinted the article below in full so as to not give readers the impression I may be “cherry picking” quotes from it.

Foreclosures Surge in D.C. Area After Federal Budget Cuts
Oct 10, 2013 3:16 PM ET

Foreclosure starts in the Washington suburbs rose last month following federal budget cuts that may have made it harder for some homeowners to pay their mortgages, even as defaults fell across the country, RealtyTrac said.

Initial foreclosure filings climbed 144 percent from August in Fairfax County, Virginia, and more than doubled in Prince William, Loudoun and Fauquier counties, the real estate research firm said today. Fairfax’s jump was the biggest in the U.S. among counties with populations of 1 million or more.

This year’s across-the-board budget reductions have led to “sequester pain” including work furloughs that began in June, according to the Bipartisan Policy Center. Homeowners may be hurt further by the partial government shutdown as President Barack Obama and House Republicans wrangle over spending, said Brian O’Reilly, president of Collingwood Group LLC.
“There is no question that the sequester has had an impact on the economy in Washington,” O’Reilly, whose Washington-based firm advises financial clients, said in a telephone interview. “And against the backdrop of the current shutdown, I would say it would not be a surprise to anyone to see continued softening in this area.”

In Maryland, where required court approvals for home seizures lengthen the foreclosure process, first-time notices in September more than doubled from a year earlier in Montgomery County, and tripled in Frederick County, Irvine, California-based RealtyTrac said. Maryland’s 230 percent gain statewide ranked second in the U.S., behind a 263 percent surge in Maine.

‘Faster Repossession’
“The timing for this surge in foreclosure activity makes sense and correlates almost exactly to when the sequester began earlier this year,” RealtyTrac Vice President Daren Blomquist said in a phone interview. “The faster repossession timeline in Virginia also allows lenders to liquidate assets more quickly, and in an improving market they would be motivated to do so.”

Washington property values rose 1.4 percent in July, the fifth straight increase on an annual basis, amid low unemployment and historically cheap mortgages, according to the S&P/Case-Shiller index. Values in the D.C. metropolitan area are down 19 percent from their May 2006 peak, compared with a 21 percent decline from the July 2006 high for the 20-city composite measure.

Real Losses
Washington-area households and businesses are nevertheless feeling the sting of reduced government payrolls, according to an assessment by Bipartisan Policy Center authors led by Steve Bell, who worked on the staff of former Republican Senator Pete Domenici and was a managing director at Salomon Brothers.

“While we only have anecdotal evidence thus far of the impact of sequestration on private-sector businesses and workers, we still hold to our belief that real job losses (not just furloughs) in small- and medium-sized businesses have already begun,” Bell wrote in the Aug. 2 report. The center was founded in 2007 by former Senators Bob Dole, Tom Daschle, Howard Baker and George Mitchell.

While foreclosures increased in the Washington area last month, total U.S. filings — default notices, scheduled auctions and bank repossessions — plunged 27 percent from a year earlier to 131,232, the 36th straight decline on an annual basis, according to RealtyTrac. Filings fell in 33 states.

The national numbers “show a housing market that is haltingly returning to health,” Blomquist said in today’s report. “Foreclosures are clearly becoming fewer and farther between in most markets.”

Federal Contracts
The government shutdown that began this month may hurt vendors after

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