The government’s program to modify mortgage loans has clearly led to foreclosures being postponed in California, but they have not yet been cancelled pending trial period results, according to ForeclosureRadar’s monthly report on California foreclosures. The administration’s Home Affordable Modification Program (HAMP) is designed to reduce mortgage payments for as many as 3 million to 4 million homeowners nationwide. “It is clear at this point, that foreclosures are being HAMPered,” said Sean O’Toole, CEO of ForeclosureRadar. “We can clearly see that this program is postponing an awful lot of foreclosures.”

However, cancellation of foreclosure sales dropped by 7.5 percent in August from July to 9,976, with no signs yet that foreclosures being postponed for HAMP are being cancelled after successful trial periods. HAMP includes a 3-month trial period, during which foreclosures are postponed to see whether or not the homeowner makes the new, reduced payment agreed upon in the loan modification. As a result, the number of scheduled foreclosures that are being postponed at the lender’s request or with their agreement has doubled since details of the program were announced, ForeclosureRadar said. At the end of August, there were 131,300 foreclosures scheduled for sale, compared to 64,177 at the end of February. If the HAMP trials succeed, foreclosures should begin to cancel at record rates, which has yet to happen, the report said. If HAMP trials fail, foreclosure sales should increase, which also has yet to happen. “But don’t expect a wave of foreclosures if it fails,” O’Toole said. “Instead expect further government intervention.” The company’s August report also found that Notices of Default filings, the first step in the foreclosure process, dropped 19.1 percent in August from July, to 36,396 filings. Year-over-year filings dropped by 14.2 percent from August 2008.