Gaming the Data: Realtors Fudging the Numbers

Friday, June 29, 2007 | 06:18 AM

As if the NAR data wasn't gamed, massaged and otherwise manipulated by the reportage of local realtors themselves: It turns out to be even worse than I imagined.

From a South Florida paper, we learn that local realtors are refusing to submit ALL THE DATA to their regional Board of Realtors, because doing so would dilute the nicer parts of town with lower-priced and worse-performing neighbors:

"The Naples Area Board of Realtors has long wanted to report that city's results undiluted by lower-priced and worse-performing neighbors.

In fact, for the past few months, the board has refused to submit its sales and price numbers to the Florida Association of Realtors for its comprehensive monthly reports.

Marla Martin, an FAR spokeswoman, said the Naples board -- representing the wealthiest median home sales prices in Florida -- had raised issues with the state association relating to the presentation of the board's sales and price data."

Can't have those crappy neighborhoods affecting our overall sales data, can we?

Statistics published in the trade association's "Sarasota Realtor" magazine had this footnote: Data may "include some listings in Manatee, Englewood, Venice and other areas." For shame . . .

THis  is merely one of the many different ways that Realtors have been playing with their data: First, a slow selling house can get pulled off of Multiple Listing, and then relisted with a different MLS number and at a lower price. That makes the overall time-to-sell appear much better than it really is. The mulligan can take months or even years of time-on-the-market-to-sell.

This game also improves the "Percentage of asking price recieved" number. A $600k house that sold for $450k is 75% of ask, versus the same home relisted and asking $500k -- and getting the same $450k; that's selling for 90% of asking price.

Defaults_20070629 Of course, all of this is irrelevant to the rising tide of Foreclosures:  while several private and state efforts have been made to reduce the increases, the bottom line is that there are presently millions of homes occupied by people who cannot afford them. Changing an ARM to a 30 year fixed isn't going to alter that.

And, as the nearby chart reveals, its not just "Sub-prime" mortgages -- "Alt A"s are seeing a nice spike in late payments (60 days overdue) and defaults too . . .


Realtor groups may quit statewide reports
Herald-Tribune, June 26. 2007 4:49AM

Subprime: Point to Where It Hurts
Steps to Modify Loans And Avert Foreclosures Has Investors Clashing
WSJ, June 29, 2007; Page C1

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S&P, Moody's Hide Rising Risk on $200 Billion of Mortgage Bonds :June 29 (Bloomberg) --

Standard & Poor's, Moody's Investors Service and Fitch Ratings are masking burgeoning losses in the market for subprime mortgage bonds by failing to cut the credit ratings on about $200 billion of securities backed by home loans....

``You'll see massive losses from banks, insurance companies and pension managers,'' said Joshua Rosner, a managing director at investment research firm Graham Fisher & Co. in New York and co-author of a study last month that said S&P, Moody's and Fitch understate the risks of subprime mortgage bonds. ``The longer they wait, the worse it's going to be.''....

Of the 300 bonds in ABX indexes, the benchmarks for the subprime mortgage debt market, 190 fail to meet the credit support standard, according to data released in May by trustees responsible for funneling interest payments to debt investors.

Most of those, representing about $200 billion, are rated below AAA. Some contain so many defaulted loans that the credit support is outweighed by potential losses. Fifty of the 60 A rated bonds fail the criteria, as do 22 of the 60 AA rated bonds and three of the 60 AAA bonds.

All but five of 120 securities in BBB or BBB- rated portions of the mortgage-backed securities would have failed S&P's criteria, according to data compiled by Bloomberg....

``Don't misunderstand me: I'm not saying these others are performing great,'' Robert Pollsen, a director in S&P's residential mortgage surveillance in New York, said in an interview last month. ``And they certainly might warrant our attention several months from now, which obviously we're going to do.''....

`That's like saying these trees are just fine as there's a forest fire on the other side of the hill,'' said James Melcher, president of money-management firm Balestra Capital Ltd. in New York, who runs a $105 million hedge fund.

Posted by: Neal | Jun 29, 2007 7:52:27 AM

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