A multi-state coalition of attorneys general and banking regulators say they've seen improvements in programs designed to help homeowners. But they're concerned that foreclosures continue to outpace loan modifications, and note that most modifications increase the loan balance.

According to a report issued today by the State Foreclosure Prevention Working Group, recent loan modifications are performing better. Modifications can include reduced interest rates and other changes to terms that result in smaller payments and, in some cases, lower outstanding balances.

"Some analysts have predicted redefault rates as high as 75 percent but today's report paints a brighter picture of the future," Washington Attorney General Rob McKenna said. "The newer modifications are holding up better, with fewer borrowers redefaulting."

The report tracks loan modifications made by nine mortgage companies who were servicing 4.6 million loans as of March 2010. Banks, which are regulated by federal agencies, are not included. Compared to loans modified in 2008, borrowers whose loans were modified in 2009 were 40 percent to 50 percent less likely to be seriously delinquent six months later.

The Office of Thrift Supervision and the Office of the Comptroller of Currency reported a similar reduction in redefault rates in their Mortgage Metrics Report for the first quarter of 2010. The agencies reported that of the 590,000 modifications made in 2009, nearly 52 percent were current at the end of the first quarter of 2010. Only 27 percent of the modifications implemented during 2008 were current.
 
Washington residents facing foreclosure can call The Washington State Homeownership Information Hotline at (877) 894-4663.