The number of consumers turning to debt consolidation loans to prevent losing their home to foreclosure may finally be leveling off. At least that’s what a new report from RealtyTrac.com, an online provider of housing foreclosure data, would lead you to believe. According to the company, the number of housing foreclosures across the country dropped 2 percent in February when compared to January. This marks the second straight month in which housing foreclosures have fallen. Is it a sign that housing foreclosures are finally leveling off? If so, it may mean a drop in the number of homeowners turning to debt consolidation loans as a way to stave off losing their homes.
According to RealtyTrac, the number of homes taken by banks in repossessions fell to 78,683 during February. That’s down from 87,648 one month earlier. Of course, the news isn’t all good: Even though foreclosures fell in February from one month earlier, they were still higher than in February of 2009. In fact, housing foreclosures were 6 percent higher. Still, the RealtyTrac data does offer hope that the worst of the nation’s housing foreclosure crisis has passed. Last year, U.S. property owners received a record 2.8 million foreclosure filings. The 6-percent jump in February from one year earlier, though, represents the smallest percentage increase since RealtyTrac began figuring year-over-year increases back in January of 2006.
A Dip in Loan Consolidations?
Homeowners have several choices when they’re facing a foreclosure: They can request a loan modification from their mortgage lender or bank. They can simply stop making their monthly mortgage payments and walk away from their home. Or they can take out a debt consolidation loan. When they do this, their debts, including their monthly mortgage payments, are consolidated into one single monthly payment. If they stay current on this payment, they won’t lose their home. The question now facing the owners of loan consolidation companies is this: If the foreclosure rate continues to level off and, even, begin to fall, will they see significant drops in business?
The Prediction Game
Of course, consumers turn to debt consolidation loans for a number of reasons. Preventing foreclosure is just one of them. But you can bet that the debt consolidation business will take at least a small hit if the number of housing foreclosures does fall. After all, many consumers only turn to debt consolidation as an absolute last resort. Consumers who are not worried about losing their homes may find other alternatives to debt consolidation.