The Hope Now alliance of mortgage lenders, servicing companies and counselors, the group coordinating the mortgage industry's response to the tsunami wave of foreclosures, said its members helped work out 1,035,000 mortgage loans between July 1, 2007 and January 31, 2008. The methods ranged from rescheduling borrowers' payments to easing the terms of their loans. A study by the Hope Now alliance said over 1 million homeowners have received workouts.

Most of those workouts -- 73% -- involved repayment plans that allow borrowers to catch up on missed payments or have those missed payments applied to the balance of their loan. About 27% were loan modifications, in which the original terms of the loan contract were changed, usually by reducing the interest rate, forgiving a portion of the principal or extending the maturity of the loan.Mortgage companies say that these loan modifications are more difficult because they involve breaking a contract between borrower and investor.

Loan modifications, which can include freezing interest rates on an adjustable-rate loan, made up almost 50 percent of subprime loan workouts in January, up from 35 percent in the fourth quarter and 19 percent in the third quarter of 2007.

In January, mortgage companies began implementing a program introduced in December 2007 by the mortgage industry and U.S. Treasury Secretary Henry Paulson to freeze interest rates for some subprime borrowers for five years, the alliance said.

Speaking at the Independent Community Bankers of America conference in Orlando, Florida, Federal Reserve Chief Ben Bernanke said the current turmoil in the housing market calls for a "vigorous response." Rising foreclosures threaten to worsen the problems of the housing market and the national economy, which is already in or on the verge of a recession, depending on whom you ask.

"Reducing the rate of preventable foreclosures would promote economic stability for households, neighborhoods and the nation as a whole. Although lenders and services have scaled up their efforts and adopted a wider variety of loss-mitigation techniques, more can, and should, be done."

Although most of the mortgage loan modifications recently have focused on fixing or freezing the interest rate on a borrower's loan, Mr. Bernanke said a reduction in the principal might be more appropriate. Specifically, with many borrowers owing more on their home than the value of their mortgage, "a reduction in principal may increase the expected payoff by reducing the risk of default."