The amount of borrowers underwater improved significantly during the tail end of last year, with the government-sponsored enterprises doing their best to prevent foreclosures.

However, regional challenges remain, as some states are still deeply delinquent.

Fannie Mae and Freddie Mac completed 130,000 foreclosure prevention actions in the fourth quarter of 2012 and more than 540,000 prevention actions last year, bringing the total to nearly 2.7 million since the start of conservatorship in 2008. 

More than 2.2 million of these actions assisted distressed borrowers, including more than 1.3 million permanent loan modifications, according the Federal Housing Finance Agency’s latest report.

Approximately 892,800 actions have been other forms of assistance, allowing troubled borrowers to save their homes. Additionally, about 446,100 of the actions were short sales and deeds-in-lieu, resulting in borrowers leaving their homes without going through the foreclosure process.

The number of  delinquent borrowers with GSE loans declined 14% last year as mortgage delinquencies dropped in every state with the exception of New Jersey and New York.

Additionally, foreclosures continued their downward trend with foreclosure starts in 4Q falling to the lowest level since the third quarter of 2008, the FHFA noted.

About 46% of distressed borrowers that received loan mods in 4Q had their monthly payments reduced by more than 30%.

Meanwhile, more than one-third of loan mods completed in 4Q included principal forbearance. Also, more than 32,600 short sales and deeds-in-lieu were completed during the quarter, bringing the total to 141,500 for the year, the report said.

Real estate-owned inventory also declined as property dispositions outpaced acquisitions during the quarter.

As of Dec. 31, fewer than 15% of loans modified in the first quarter of 2012 had missed two or more payments, according to the FHFA. 

Furthermore, more than one million homeowners were offered a Home Affordable Modification Program trail since the program started in April 2009. More than half of these homeowners were granted permanent modifications, the report said.

About 17,500 homeowners received permanent mods in 4Q, bringing the total number of mods started to nearly 568,500. Also, roughly 25,800 homeowners were in a HAMP-trial period at the end of the quarter, the agency said.

Regionally, Florida continues to have the highest number of borrowers that are deeply delinquent – 365 plus days.

As of Dec. 31, about 54% of the GSEs’ serious delinquent borrowers had missed more than one year of mortgage payments. In Florida, the number of borrowers that were delinquent for one year or more exceeded the total number of delinquent borrowers in each state, the report explained.