Servicers managed to modify 850,034 mortgages in the year 2012 as delinquencies and foreclosure activity declined, according to a new report from Hope Now, an alliance of mortgage servicers, investors, insurers and housing non-profits.

That is down from 1.05 million homeowners who received permanent, loan mods from servicers in 2011.

Of the modifications completed in 2012, 661,362 were proprietary loan modifications and 188,671 were completed through the Home Affordable Modification Program.

Short sales continued to gain in popularity, with 422,605 sales completed throughout the year.

In the past five years, 6.06 million loan modifications have been granted, with only 1.12 million handled through the government’s HAMP program.

Since 2009, 1.15 million short sales have been executed to help borrowers escape from a possible foreclosure.

When combining short sales and loan modifications, about 7.21 million non-foreclosure strategies were deployed in the past four years to save troubled homeowners.

Hope Now noted that foreclosure starts and sales continued to fall in 2012, with 1.923 million starts last year, a 14.8% decline from 2.259 million a year earlier.

In addition, completed foreclosure sales hit 779,220, down from 840,186 in 2011, a 7.3% drop.

The number of loans classified as delinquent for 60 or more days hit 2.52 million in December, down 9.6% from 2.79 million a year earlier, based on data from the Mortgage Bankers Association.

"2012 saw the mortgage industry and its partners continue to make great strides in assisting homeowners nationwide," said Eric Selk, executive director of Hope Now. "For the year, almost 1.3 million people received a permanent alternative to foreclosure, via loan modification or short sale."

Of the loan modifications made by servicers outside of a government program, 90%, or 598,017, included fixed-interest rates of five years or more.

Eighty-two percent included reduced principals with interest monthly payments and 75% had reduced principals and interest payment reductions of more than 10%.

1.05 million homeowners received permanent, affordable loan modifications from mortgage servicers in 2011.