refinancing and modifications to avoid foreclosure

From the AP (hat tip: C-J)...

With interest rates lower, you'd think refinancing would be a good alternative-- for those who have a reasonable risk associated with their borrowing.

A record number of Indiana residents are trying to save their homes from foreclosure by modifying their mortgages in deals that lower or delay their monthly payments.

During the third quarter of 2008, there were 5,000 mortgage modifications statewide — about four times more than in the same period of the previous year, according to the Homeowners Preservation Foundation, which tracks the mortgage crisis nationally....

For lenders, "mods" make financial sense because the average home foreclosure results in the loss of 55 percent of the balance for the owner of the mortgage, according to a 2008 study by Alan White, an assistant professor at the Valparaiso University School of Law.

But homeowners often have mixed results. Nearly half of the "mods" result in higher mortgage payments, and some end up back in default....

Lenders lose money on foreclosures because of court fees and other associated costs, charges to fix up the house for resale and foregone mortgage payments....