Loan modifications by Fannie Mae and Freddie Mac increased slightly in September, the month the companies were taken over by the government, their conservator said Tuesday.

There were also fewer completed foreclosures as a proportion of all actions, including workout plans, than in August, the Federal Housing Finance Agency said in its September foreclosure prevention report.

For all of the third quarter the number of modifications completed by the government-sponsored enterprises dropped 13%. Meanwhile, Fannie's use of the HomeSaver Advance program, in which a servicer lends a delinquent borrower enough money to bring the mortgage current and then sells the new, unsecured loan to the GSE, increased by nearly two-thirds for the quarter. (Fannie detailed its growing use of HomeSaver Advance in its third-quarter financial report last month.)

Use of the HomeSaver program grew from August to September but fell from a peak in June and July, the FHFA said. For both the GSEs, the number of chargeoffs in lieu of foreclosures was the highest for the year.

Though the number of delinquent loans continued to rise, foreclosure starts fell from highs in July and August. There were still more foreclosure starts in the third quarter, however, than at any other time in 2008.

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