Loan modifications picking way up.

As we have reported earlier (scroll throungh entries under “mortgage” category for all the details), modifying loans with lower interest rates or fixed interest rates can be a “win-win” for lenders and borrowers alike. Foreclosure is expensive. (it’s estimated that lenders lose an average of $50,000 on any foreclosure). Lowering the interest rate can cost a lot less than $50,000 and allow the borrower to keep their home.

Countrywide, which has been the largest mortage company in America, reported today that it modified more than 80,000 loans last year and plans to modify even more in 2008. Rates have gone as low as 3%.

In 7,900 other cases, Countrywide agreed to “short sales” under which the owner turns the house over to the lender to avoid the costs of foreclosure and the lender agrees not to pursue the borrower for any balance due after the house is sold.

Countrywide has done a lot of this work through an agreement with Neighborhood Assistance Corporation of America, based in Boston:

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