Homeowners Favor Repayment Plans to Mods: No one likes reporting, but currently it is critical to avoid unnecessary foreclosures.

Washington -- Hope Now servicers are starting to provide data on their loan workout efforts and the first report shows that troubled subprime ARM borrowers in the third quarter were seven times more likely to end up in a repayment plan than getting relief through a loan modification.

The report compiled by the Mortgage Bankers Association shows that 90,520 borrowers with adjustable-rate subprime mortgages agreed to repayment plans while servicers reduced the interest rate or principal amount for only 12,740 borrowers.

The MBA report highlights that loan modifications are the exception not the rule.

But Bush administration officials and banking regulators are desperately trying to get servicers to adopt aggressive loan modification strategies to deal with an increasing volume of resets on subprime ARMs. Two million subprime ARMs are slated to reset in 2008 and 2009.

In December, the Hope Now servicers agreed to fast-track certain subprime borrowers into loan modifications or refinancings.

Treasury secretary Henry Paulson said the first report shows that the servicers have the potential to help more homeowners stay in their homes and prevent a market failure.

"I look forward to seeing regular progress reports from the organization in the coming months, as servicers implement the streamlined modification and refinancing plan announced in December," he said.