If the government does not improve and fix the nation's loan modification process, more than 11 million consumers – representing 20% of all outstanding home mortgages in the U.S. – could lose their homes, according to a new report from Amherst Mortgage Securities.

In the report, the research firm warns that loan modifications are being "flagged" as current but with no actual cash flow coming from the borrower.

Amherst's prediction, to date, is one of the most dire and is predicated on the loan modification process not improving, with more mortgages going into redefault.  

The research firm is imploring the government to use "successful medication" to improve loan workouts, including a plan that requires a reduction in the amount of principal owed by the borrower.

Analyst Laurie Goodman and her team writes that the government needs to "re-equify" troubled borrowers.

According to its calculations, not only are 20% of all home mortgages at risk, but 9% are "seriously" delinquent and 5% of all mortgages are underwater with negative equity of 20% or more.

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