It is no relief to anyone at risk of losing their home that foreclosure data are regularly misreported.

After all, it must be just as stressful to learn that a lis pendens (lawsuit pending) has been filed against your property as it is to close the front gate for the final time. But for those looking for signs or recovery or otherwise, understanding the numbers is crucial.

Two mistakes are common when interpreting foreclosure data. The first can arise from lumping all the various stages of the foreclosure process into one bucket. For example, the headlines on Thursday screamed that “foreclosure activity” for May is up 18 per cent year on year, and exceeds 300,000 properties for a record three months in a row, based on RealtyTrac data.

Its definition of foreclosures includes default notices, scheduled auctions, as well as completed repossessions. But not all foreclosure notices end up with families actually losing their homes.

Misinterpretations can also occur from double or even triple counting if the data is a tally of the number of filings per property, rather than the number of properties receiving filings. A default letter may land in the letterbox one week, followed by an auction notice a fortnight later. RealtyTrac, for example, gets around this by only counting the last filing received by a single household in any month.

Unfortunately, there is no glossing over Thursday’s woeful report. In recent months default notices were on the rise, but the number of actual repossessions was down. That looked like a positive trend.

In May, however, repossession rose 2 per cent, month on month, as delays and moratoria on foreclosures implemented by various state laws came to an end.

With unemployment still rising and the benefits of tax credits being eaten up by higher fuel costs, that is a worrying sign indeed.

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