Don't despair. That's the message from one nonprofit head to borrowers who've been rejected by the federal loan modification programs.

Faith Schwartz, executive director of Hope Now, an alliance of mortgage industry, nonprofit and government players, worries that distressed homeowners are pinning all their hopes on the Home Affordable Modification Program (HAMP).

Lenders, loan servicers and mortgage investors do a lot of loan workouts outside the federal programs, which set specific loan modification changes. Many have their own modification programs and guidelines. For example, while the federal program says monthly payments should be lowered to 31 percent of income, lenders and loan services could lower it less or more and make other changes.

"I do think it's not insignificant to remind people that . . . there are mods being done outside of HAMP so if they don't qualify, not to be discouraged," Schwartz said.

Last month nationwide, 50,000 loan modifications were done under HAMP and 100,000 outside of it, she said.

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Out of the loan workouts done last month outside the federal program, 75 percent had lower principal and interest payments, the Hope Now head said. "What I'm pleased about is a year ago, this would not have been the case," Schwartz added.

A year ago, she said, borrowers' late payments were tacked onto the back of their loans, meaning the homeowners would pay at the end of the mortgage period or when they sold their homes.

It was a fresh start in some sense, but critics said that did little in the long run to help homeowners who needed to have lower payments.

Now, Schwartz said, more and more modified loans feature lower interest rates and monthly payments.