The Mortgage Bankers Association (MBA) released information Thursday on the role the mortgage industry is playing in the current drive to help homeowners who are delinquent on or struggling with their mortgages.

According to MBA's data, during the third quarter of 2007 the mortgage industry worked with borrowers to modify approximately 54,000 loans and established formal repayment plans with an additional 183,000 borrowers. However, foreclosure actions were started on an estimated 384,000 loans.

The report stated, however, that 63 percent of the foreclosure actions were in cases where the borrower did not live in the home, did not respond to repeated attempts by the lender to reach them, or were defaulting on a previously existing loan modification or repayment plan.

Subprime ARMs also accounted for about 166,000 of the foreclosure actions but 18 percent of these were on investor-owned homes. In 21 percent of the actions the borrower failed to respond to contacts by the lender. 40 percent of the subprime borrowers who became subject to foreclosure already had a repayment plan or loan modification in place but were not performing as agreed.

Across the board investor-owned homes represented a significant part of the problem, at least in the third quarter. They accounted for 28 percent of subprime fixed-rate foreclosure actions, 18 percent of prime ARM foreclosure starts and 14 percent of new prime fixed-rate foreclosure actions.

Anyone who works in any type of financial recovery operation will tell you that borrowers tend to panic when they get in trouble with payments. And panic frequently leads to avoidance. Troubled debtors don't answer the phone or screen calls, refuse to return calls from creditors, even hang up when contact is made. That is borne out by the MBA figures. Cases where the borrower could not be located or would not respond to attempts by the mortgage servicer to contact them accounted for 21 percent of subprime ARM foreclosure starts, 21 percent of subprime fixed-rate foreclosure starts, 17 percent of prime ARM foreclosure starts and 33 percent of the prime fixed-rate foreclosures started.

Jay Brinkmann, MBA's Vice President of Research said, "The mortgage industry took major steps during the third quarter to help those borrowers who could be helped. The numbers of loan modifications, negotiated repayment plans established, and other actions to help borrowers are large and compare favorably with the number of foreclosure actions started, particularly when those foreclosures are adjusted to remove the borrowers who clearly could not be helped.

"It is likely that the number of loan modifications for subprime ARMs will continue to grow through the outreach efforts of the industry," Brinkmann continued "Particularly through the HopeNOW Alliance that includes counselors, mortgage market participants and mortgage servicers working together to try and help avoid foreclosures whenever possible. The U.S. Treasury Department has played a crucial role in bringing the lending community together to develop approaches to deal with the current problems."

The MBA report is based on responses from mortgage servicers covering about 33 million mortgage loans, or approximately 62 percent of the loans outstanding. The numbers are grossed up to reflect the partial coverage of the market.