First Federal Bank of California is reporting that the bank saved more than 2,000 homes from foreclosure by modifying $957m in loans beginning in December of 2007. By offering borrowers a fixed interest rate through 2014, which keep payments low for the next five years, four out of every five modified loans are current and performing.  First Federal, which is owned by First Federal Financial Corporation, credits their ability to reach borrowers before they fall behind on their monthly payments for the success of the program. “We contacted borrowers before they were delinquent,” explains Babette Heimbuch, chairman and chief executive officer of FirstFed Financial. “When you haven’t ruined your credit, you don’t want to ruin your credit. So, they are more willing to come in and re-work their loan.” The national average for a 30-day delinquency rate on modified loans is 63.3%, whereas First Federal is 29.8% on loans adjusted in the Q108. Delinquency rates are improving on the new loans, not just nationally – 59.5% for loans adjusted in the third quarter of 2008 – but for First Federal as well. Only 15.6% of their modified loans made in that quarter have gone delinquent. First Federal started with an older mortgage portfolio and began to cut back in 2005. Staying selective kept their delinquency rate down as foreclosures mounted across the country, Heimbuch said. Through May, 2,014 families are still in their homes because First Federal has modified one-third of its mortgage portfolio. First Federal is shooting for another $800m in modified loans for the coming months. Write to Jon Prior.