Mortgage servicers completed 88,551 permanent modifications on Fannie Mae and Freddie Mac loans through the Home Affordable Modification Program (HAMP) in the second quarter, a 65% increase from the previous quarter, according to a report from the Federal Housing Finance Agency. Servicers totaled 171,176 modifications on Fannie and Freddie loans in the second quarter, up 24% from the first quarter. The increase was driven mostly by the improved HAMP numbers. The Treasury Department launched HAMP in March 2009 to provide incentives to servicers to modify mortgages on the verge of foreclosure. All servicers participating in the program, not just Fannie and Freddie servicers, have completed more than 434,716 permanent modifications through July. But modifications completed through proprietary programs have more than tripled HAMP. More than half of the modifications done on Fannie and Freddie loans have reduced the monthly payment by more than 30%. As a result, these latest modified loans are seeing fewer redefault rates. According to the FHFA, less than 10% of loans modified in the last two quarters were more than 60 days delinquent three months. Compare that to mortgages modified in the fourth quarter of last year. Roughly 19% of those fell into 60-plus day delinquency three months after the modification. Loans that have fallen behind by 60 days or more for the entire Fannie and Freddie portfolio decreased by 7% in the second quarter to 1.6 million. But foreclosure starts and third-party sales still outnumber modifications. There were 275,100 foreclosure starts in the second quarter a 12% increase from the previous quarter. Third-party sales increased 15% to nearly 112,400 in the second quarter. Write to Jon Prior.