Data provider Lender Processing Services Inc. (LPS) will change the way it calculates foreclosures on loans backed by the Federal Housing Administration after FHA said the company’s April report of a spike in home seizures was inaccurate.
LPS reported June 8 that foreclosure starts on mortgages backed by the government insurer rose 74 percent in April, while the FHA’s own numbers instead showed an 11 percent drop. An examination found the difference largely was attributable to a lag between the time when banks take foreclosure actions and the time when they report them to LPS, according to an FHA official who spoke on condition of anonymity because the meetings were private.
LPS described the issue as a difference in methods.
“The analysis conducted has identified differences in the methodologies used to gather the data,” the Jacksonville, Florida-based loan processor said today in an e-mailed statement. “We are working with the FHA to ensure our July report will also account for FHA’s methodology.”
The FHA’s database showed foreclosure starts fell in April to 18,975. LPS originally reported that banks began action to seize 63,126 homes in April, up from 36,311 a month earlier.
FHA officials said they expect an uptick in foreclosures because legal disputes between state and federal officials and mortgage servicers over faulty foreclosures were resolved with a $25 billion settlement in February. Foreclosures had been slowed while the parties were negotiating.
“While we do anticipate elevated levels of foreclosure starts for our portfolio in the coming months, the very large increase reported by LPS for the month of April was not accurate,” the agency said in an e-mailed statement.
To contact the reporter on this story: Clea Benson in Washington at firstname.lastname@example.org