Try harder.That was the message Attorney General Martha Coakley and her counterparts in 36 other states put out to the mortgage industry earlier this month, in a report they said showed “much more” needs to be done to help distressed borrowers catch up on their loans.

The report, prepared by the State Foreclosure Prevention Working Group, is an analysis of data submitted to the attorneys general and the Conference of State Bank Supervisors by 13 of the nation’s top 20 residential subprime mortgage servicers. It covered activity during October 2007 and approximately 58 percent of the subprime loan servicing market, including Alt-A loans, a mortgage grade that falls between prime and subprime.

It concluded that even though servicers – those who collect debt on behalf of lenders – have increased efforts to modify loan terms, 70 percent of seriously delinquent borrowers have had no help catching up with payments.

“The report Â… confirms our view that, while many lenders and servicers are talking about pursuing loan modifications, not enough is being done,” Coakley said, adding that she expects to use the findings as a basis for making suggestions to servicers on how to help borrowers and “demanding policies which favor loan modification over foreclosure.” The working group also is continuing to collect monthly data.

A representative from one loan servicer that provided data for the recent study, Florida-based Ocwen Financial Corp., said it presents “a fair and balanced representation and analysis of the data” his company provided.

But much has changed since October, he said.

The results achieved by HOPE NOW, a national foreclosure prevention effort in which high-volume loan servicers, including Ocwen, play a key role, paints a better picture of what’s going on today, said Ocwen Vice President and Chief Risk Officer William Rinehart.

“I think the desire of all servicers is to come up with solutions that are going to help homeowners on a long-term basis,” Rinehart said. Servicers lose money – the one-half of 1 percent of the loan principal balance they usually get paid, per year, on each outstanding loan – when a loan forecloses, he said.

HOPE NOW, a coalition of credit and homeowners’ counselors, major loan servicers and mortgage market participants, was announced on Oct. 10 by U.S. Treasury Secretary Henry Paulson and Housing Secretary Alphonse Jackson. The coalition recently announced that because of its efforts, loan modifications are up more than 125 percent and foreclosure sales up just 12 percent. On Feb. 6, it said that approximately 545,000 subprime and 324,000 prime mortgage holders had gotten restructured repayment plans or loan modifications as a direct result of its efforts.

A spokesman for Wells Fargo Home Mortgage, a founder of HOPE NOW and probable participant in the recent attorney generals’ report (Coakley’s office would not release the names of participants, but Wells Fargo is among the top 20 nationwide), said in an e-mail that the HOPE NOW coalition members “are already beginning to prove that when the industry, government, capital markets and consumer groups come together and mobilize to help consumers, we can have great impact.”

He cited Project Lifeline, a new program involving targeted outreach to homeowners 90 days or more in arrears on their mortgage payments, as one example (see related article). National low-income advocacy group ACORN announced an agreement with the nation’s largest subprime servicer, Countrywide Financial, on Feb. 11, describing it as one that will help far more borrowers than HOPE NOW has to date, in part because seriously delinquent borrowers are also eligible for loan modifications.

According to a Feb. 13 Wall Street Journal report, the HOPE NOW hotline has recommended workouts for just 9,975 borrowers nationally since December. It told an additional 4,410 people to “seriously consider selling their home” and referred another 12,113 to in-person counseling and services such as job-placement help, the report said.

Case-by-Case Struggle

Such results mesh with what Massachusetts Affordable Housing Alliance Executive Director Thomas Callahan and Massachusetts Mortgage Bankers Association Executive Director Kevin Cuff have observed locally.

“I read the press reports out of HOPE NOW and I ask the question, ‘In Massachusetts, who are these people?'” Cuff said. “There aren’t that many consumers who either qualify or are seeking assistance.”

“I wouldn’t say there has been any dramatic change” since HOPE NOW was introduced, said Callahan. “There have definitely been a number of efforts – the governor, the mayor [of Boston] and other folks have tried to get the attention of servicers and they have won success Â… but it still seems to be a real case-by-case struggle.”

But according to Rinehart, since October, Ocwen and other HOPE NOW participants have “dramatically” increased loan modifications. In fact, he said, Ocwen historically has helped about 80 percent of seriously delinquent homeowners avoid foreclosure, either through forbearance – an arrangement that helps the borrower who has temporarily fallen behind – or permanent loan modifications, which help people with bigger payment problems.

Ocwen has the latitude to make modifications without restriction on about 280 of the 400 pooling and servicing contracts it has with lenders, he said.

It is not clear how many of Wells Fargo’s delinquent borrowers have been helped by HOPE NOW.

Rinehart said he doesn’t think the report’s finding that 70 percent of subprime borrowers are not on track to catch up holds true today. But he does agree with the finding that adjustable loans resetting to higher rates haven’t yet been a driving force in foreclosures.

The report found instead that “weak underwriting or fraud” caused more loan delinquencies than rate resets.

Researchers also found that for most troubled borrowers, the option to refinance has “nearly evaporated,” because credit standards have tightened and home prices are declining.

Cuff found the report’s finding about resets more “alarming” than any other piece.

“I think it’s going to be those payment-option ARMs that, once they reset, will add significantly to the foreclosure wave,” he said.

Still, he said, it may be time to stop analyzing the data, admit that the system failed some people, let existing and newly developed regulations and programs “follow their course,” and take stock of the results as they come in.