House Hunters

In the midst of a housing crisis, you might think it would be easy to find out how many homes are being lost to foreclosure. It's not always simple. County courthouses usually keep those records, and the logistics of counting can be onerous.

So if you want to know numbers, there's a good chance you will turn to RealtyTrac, a company in Irvine, Calif., that, thanks to its nationwide network of records collectors, has emerged as a go-to source for foreclosure data. Congress calls RealtyTrac. So do Wall Street analysts. The U.S. Treasury, the FDIC, the FBI, a handful of Federal Reserve banks, a dozen states, even some of the lenders who made the loans being defaulted on--they all use the company's data. That means RealtyTrac, a firm that cleared just $40 million in revenue last year, winds up shaping much of the debate about how bad the foreclosure problem is, and not always without controversy.

It's far from what Derek White and Michael Keane imagined when they started digging up the addresses of repossessed houses to sell to Santa Barbara, Calif., real estate agents back in 1996. The idea came from White, an agent who knew the value of listing leads; the methodology, from Keane, a computer programmer, who wanted to use a new thing called the Internet. In 2000, James Saccacio, a onetime corporate banker who had been doing turnaround work, took over as CEO. "What intrigued me about the business were the natural barriers to entry," he says. "I asked people, Could someone do this nationally?"

Yes, but with difficulty. Each state has its own laws about how the three steps of foreclosure--default notice, court judgment and sheriff's sale--are made public, and those rules weren't necessarily written with data aggregation in mind. This summer, Dallas County, Texas, started posting records online, but before that, the only way to get information on foreclosures had been to march down to the courthouse and scan the corkboard where filings were posted. Even that was hit-or-miss--people often ripped down the paper postings instead of jotting down the addresses.

RealtyTrac has about 150 contractors on the ground, collecting data in 2,200 counties, which cover some 90% of households, and the process is just as labor-intensive on the back end. Around 10% of records get tossed each month because the firm's data crunchers can't confirm the addresses. "I chuckle every time I see a new company pop up to provide the definitive answer to how many foreclosures there are," says senior vice president Rick Sharga. "There's as much art to this as science."