Major trends seen in the July ABX remittance report are that modification rates remain low while prepayments picked up, loss severities remained largely unchanged, and REO buckets are still shrinking, according to a report from Bank of America/Merrill Lynch.

Analysts cited two major reasons for the low loan modification rates. They said that servicers need to ramp up their modification efforts under the Home Affordable Modfication Program (HAMP) by establishing infrastructure and incorporating additional program components, among other things. Any HAMP modification also takes a three-month trial period of success before it's reported. This is why BofA/Merrill analysts don't think that any notable HAMP influences on modification rates are going to reflect until the fall.

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