US mortgage modifications leveled off in August

NEW YORK Oct 2 (Reuters) - U.S. mortgage servicing companies permanently eased terms on about 79,000 home loans in August, slightly less than in July, suggesting the practice aimed at preventing foreclosure may be leveling off, according to data published by an industry group on Thursday.

Servicing companies, which collect payments and distribute the money to investors, modified 78,853 loans in August, down from 80,097 in July, said data from Hope Now, a coalition of mortgage lenders, servicers and counselors. But the level is up from the average monthly pace of 73,442 in the second quarter and less than 50,000 at the end of 2007.

Modifications are increasingly endorsed by lawmakers and regulators since the practice can directly address the crisis of falling home values by reducing principal on loans. The government under a proposed $700 billion plan to remove troubled debt from bank balance sheets would use its power to help more homeowners modify their loans.

Total "workouts," which include new payment plans under existing contracts, for August slipped to 188,931 from 192,220, Hope Now said.

Sales of homes in foreclosure edged lower to 86,594 in August from 91,902 in July, it said. (Reporting by Al Yoon; Editing by Andrea Ricci)