HOPE NOW, the private sector alliance of mortgage servicers, counselors, and investors announced last week that they had set a record in October for the number of foreclosures averted.

The alliance said that its mortgage industry members had prevented 225,000 foreclosures during that month, 13,000 more than the record set in September.

HOPE NOW was established in October, 2007 following prompting from the Department of the Treasury.  The alliance is an attempt to streamline and consolidate workout and mitigation procedures used by individual servicers.   The confederation claims that it has assisted approximately 1.7 million homeowners in the first 10 months of this year and anticipates that the total by the end of the year will be 2.2 million, 45 percent more than in 2007 (including foreclosure prevention activities taken by the industry before the organization of HOPE NOW.)

In October mortgage servicers completed 225,000 mortgage workouts.  103,000 of these were modifications of existing mortgages and 122,000 involved new payment plans. 

During the last three months the use of modifications has increased by 24 percent and payment plans by 9 percent.  This increasing reliance on modifications is expected to continue as economic conditions warrant.

According to Faith Schwartz, HOPE NOW's executive director, the growing list of modifications is not accidental.  She stated that, "The U.S. economy is still troubled and that means that changing the terms of a loan is an increasingly appropriate way to keep more homeowners in their homes.  HOPE NOW members are likely to continue to consider them as long as the broader economy continues to struggle."

Holders of prime mortgages are less likely to receive modifications than subprime borrowers.  31 percent of the prime mortgage holders who received workout assistance were given loan modifications compared to 57 percent of subprime homeowners.

HOPE NOW data shows that the number of foreclosures leveled off in October.  Homes went into foreclosure at approximately the same rate in October as in September and this was below the number of foreclosure starts recorded in April through August.

Home loans in the 60-plus days delinquent category now represent 4.3 percent of all outstanding mortgages with prime loans increasing the fastest.  For the fifth month in a row the number of foreclosure starts for prime loans exceeded those for subprime loans.

HOPE NOW has sent out nearly two million letters to homeowners in possible danger of losing their homes and this resulted in a 17 percent response rate.  The number of homeowners who have contacted their servicers after receiving the letters is 6 times the 2-to-3 percent response rate recorded when loan servicers send out their own mailings.

The HOPE Hotline (1-888-995-HOPE) receives an average of more than 6,000 calls a day.