A top bank regulator continued pressing lenders to rework troubled mortgages as the industry reported it had modified the terms of just 28,000 subprime loans in the third quarter.
"Lawmakers at all levels of government...will look to take additional action if foreclosures keep rising and the economic fallout continues," Federal Deposit Insurance Corp. Chairman Sheila Bair said.
The Mortgage Bankers Association released a study showing that lenders and servicers modified about 54,000 loans -- 28,000 of which were subprime -- in the third quarter and temporarily altered payment plans on an additional 183,000. The changes were made to prevent a further escalation of foreclosures.
Still, foreclosures far outpaced industry efforts in the quarter. The MBA said 29% of the roughly 400,000 new foreclosures in the period involved borrowers who defaulted despite already being put on a repayment plan or having their loan terms changed, while 23% involved borrowers who couldn't be contacted and 18% involved properties not occupied by their owners.
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