The bad news is that fewer mortgage loan modifications were granted to financially pressed borrowers in February. The good news is that fewer homeowners needed them.

Both foreclosure starts and mortgage delinquencies fell significantly in February, according to figures released today by the HOPE NOW alliance, along with a decline in permanent loan modifications granted. All three continue trends seen in recent months.

A total of 2.78 million mortgages were reported to be at least 60 days past due in February, down from 2.95 million the month before. Serious delinquencies have been showing significant improvement over the past year, and are down 23 percent from the 3.61 million level reported in the second quarter of 2010.

Foreclosures starts have also tumbled in recent months. Just under 180,000 foreclosures were initiated in February, down from 204,000 in January and 235,000 in December. New procedures implemented to ensure that foreclosure claims are properly documented could be having an effect.

There were 73,000 completed foreclosures in February, essentially unchanged from January, but still significantly ahead of the 58,000 reported for December.

Mortgage servicers approved 87,000 permanent loan modifications in February, down from 100,000 the month before and over 110,000 in December. Most of the decline has been in proprietary modifications, private loan modifications done according to the lender's own rules. Those are down nearly 25 percent in two months, to 61,000 in February, compared to more than 80,000 in December.

Government-backed loan modifications performed under the Home Affordable Modification Program (HAMP) are down as well, though not as steeply. Just over 26,000 HAMP permanent loan modifications were approved in February, a two-month decline of 13 percent compared to 30,000 in December.

Published on April 7, 2011