National bank and thrift servicers implemented more than 680,000 home loan modifications and payment plans in the third quarter of 2009, according to a government report released Monday by the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS). The number represents a nearly 69 percent increase in home retention actions compared to the previous quarter.

Mortgage servicers may be ramping up efforts to keep people in their homes, but the regulators say redefaults continue to jeopardize their efforts. The latest OCC and OTS Mortgage Metrics Report shows that more than half of all loans modified in the early part of the year were 60 or more days delinquent or in foreclosure within six months. Modified loans continue to redefault at high rates overall, the regulators said, but the more recent modifications are showing lower early redefault rates, signaling that perhaps servicers have found the formula for more sustainable workouts.

The federal agencies’ Q3 report shows that only 18.7 percent of loans modified in the second quarter were delinquent three months later, down from 30.7 percent of modifications completed in the first quarter. Regulators say the 40 percent drop directly corresponds with an increase in the number of modifications that lowered borrowers’ monthly payments to “affordable” levels. The percentage of payment-reducing mods completed in the second quarter was 78.3 percent, compared to a mere 53.5 percent in the first quarter.

Offering an even more promising premonition, the report said that more than 80 percent of the loan modifications in the third quarter reduced monthly principal and interest payments.

Despite the clear progress being made, servicers are still having a hard time keeping pace with the number of homeowners falling behind. Analysis by the OCC and OTS showed that the percentage of current and performing mortgages dropped for the sixth consecutive quarter to 87 percent of the servicing portfolio.

Serious delinquencies rose to 6.2 percent and foreclosures in process surpassed 1 million mortgages, or about 3.2 percent of the servicing portfolio.

Of particular note was the deterioration among prime mortgages. Serious delinquencies at the end of the third quarter increased to 3.6 percent of prime mortgages, up almost 20 percent from the previous quarter and more than double a year ago.

Servicers implemented almost 274,000 trial plans under the Administration’s Home Affordable Modification Program (HAMP) in the third quarter. They also assisted homeowners by providing more than 406,000 other home retention actions-loan modifications, trial plans, and payment plans-outside of HAMP that required no taxpayer-supported incentives.

Overall, the data demonstrates significant strides in the fight against foreclosure. According to the OCC and OTS, servicers executed nearly twice as many home retention actions as new foreclosures in the third quarter, and for every two homes lost in foreclosure sales, servicers provided opportunities for nine other families to keep their homes.