Claims of low foreclosure rates in South Dakota may be as bogus as a promise from a predatory lender.
Widespread media reports, typically based on press releases from California-based RealtyTrac, consistently say South Dakota has the lowest or near lowest foreclosure rate in the country.
But RealtyTrac, which says it maintains the largest and most comprehensive U.S. foreclosure database, only retrieves data from three of South Dakota's 66 counties. RealtyTrac Vice President of Marketing Rick Sharga, when asked if the company's reports accurately reflect the foreclosure situation in South Dakota, said "the short answer is no."
"We've targeted South Dakota as one of the states we're going to improve our coverage in during 2008," Sharga said, "so hopefully we'll be able to provide a more complete picture of foreclosure activity in the state sometime in the not-too-distant future."
Meanwhile, numbers from the Davison County sheriff's office and register of deeds show that local foreclosures are soaring.
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The sheriff's office has auctioned 34 foreclosed properties this year, which is more than the previous three years combined. The number of courthouse "lis pendens" filings -- documents that signal the beginning of a foreclosure proceeding -- rose from a modern high of 40 last year to 47 so far this year.
Kathye Fouberg, the Davison County civil deputy who handles foreclosure proceedings, laughed when told of RealtyTrac reports ranking South Dakota's foreclosure rates among the lowest in the nation.
"I've been doing this almost 10 years, and we've never had a year like this," Fouberg said.
Davison County is not among the three counties included in RealtyTrac's South Dakota data. Those three counties are Brown, Meade and Minnehaha.
RealtyTrac's most recent report said South Dakota had the 49th-lowest foreclosure rate in the nation in October, with only 19 foreclosure filings. That equates to a rate of one filing for every 18,312 households in the state, RealtyTrac said.
But that rate is skewed. RealtyTrac used all of the state's roughly 350,000 households as the basis for the calculation, even though the company's data came from only three counties with a combined 95,000 households.
Sharga, the RealtyTrac executive, blamed the company's skimpy South Dakota data on what he called a lack of "disclosure" laws in the state.
"South Dakota is one of a handful of states -- including your neighbors to the north -- which don't have foreclosure laws requiring 'disclosure,' " Sharga said. " ... Since we gather our filings primarily from public records, this poses a unique challenge."
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Despite Sharga's explanation, there are laws requiring lenders to publish foreclosure notices in South Dakota newspapers. The Daily Republic, for example, regularly prints foreclosure notices in the "Legals" portion of its classifieds. Fouberg, the civil deputy, said the notices come from lenders' lawyers.
Public foreclosure paperwork also is filed at the county register of deeds office.
"It's here for anybody to come and view," said Register of Deeds Deb Young, "but we've never gotten any requests."
South Dakota is not the only state for which RealtyTrac's numbers have been questioned. In Colorado, recent news reports said RealtyTrac may be overstating the foreclosure crisis. RealtyTrac, because of the way it counts foreclosure filings, reported 54,747 in Colorado last year while that state's Division of Housing reported only 28,453.
Fouberg said she doesn't know if RealtyTrac's claims of a low foreclosure rate in South Dakota are trustworthy, but she does know that if Davison County is any indication, South Dakota has a foreclosure problem.
"I suppose if you take the whole population of the state into account, then maybe we are at the low end," Fouberg said. "But to me, this just seems extremely high."
