Loan Mod Companies Still Busier Than Ever: Does This Mean More Foreclosures in 2013?

[Corey Dutton]

Borrowers in pre-foreclosure stages may have talked to their bankers to no avail. Once this fails, many borrowers will approach loan modification companies that will negotiate with the bank on behalf of the borrowers. Depending on who you talk to, this approach has yielded both good and bad results for borrowers.

The loan mod business was booming back in 2008 to 2010, but is it still booming? I met the owner of a loan modification company recently and I started to ask him about his business. “Busier than ever,” he proudly reported. This prompted me to drill him further regarding his company’s business and it’s clients.

Sometimes borrowers will approach a loan mod company before they have even missed a payment. The volume of inquiries and client engagements is a telling factor about potential foreclosures on the horizon. Although Realtytrac.com reports the number of actual foreclosure starts, year over year, many of these loan mod companies are seeing clients before they even get to the ‘foreclosure start’ stage. This particular loan mod company is based in Utah, and the owner told me that business has increased steadily in 2012. What does this indicator mean for foreclosures in Utah in 2013 and in other States? And how successful are those who try to get a loan modification?

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