The Federal Housing Finance Agency said in a monthly report that completed loan modifications fell for a second-straight month in May, dropping to 10,400.

The modifications count for nearly half of the agency's May foreclosure prevention efforts.

Meanwhile, foreclosure starts rose 5% to 90,600 as an increasing number of properties ineligible for the Obama administration's foreclosure prevention effort began moving through the process.

The FHFA, which oversees Fannie Mae and Freddie Mac, said both short sales and delinquencies continued rising in the month. Short sales were up 3% to 3,700 — more than three times their level a year earlier. Delinquencies of 60 days or more rose by 80,100 while the total number of loans more than 60 days delinquent was up 7% to 1.3 million in May.

The FHFA said lost income remains the top reason for borrowers to become delinquent on their loans. The percentage of borrowers blaming lost income for their delinquencies rose to 40% in May from 34% at the beginning of the year.

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