Report finds subprime loan servicers practicing forbearance

Long-term benefits of modifying loan terms a matter of debate

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A new report by Standard & Poor’s Ratings Services details steps subprime loan servicers are taking to help borrowers avoid foreclosure, but doesn’t attempt to gauge how successful those efforts will be.

With estimates of more than $500 billion in adjustable-rate mortgages expected to reset to higher interest rates this year, the willingness of lenders to work with debtors to avoid foreclosure could mean the difference between a soft and hard landing for some U.S. housing markets in 2007.