Monthly Report on the Home Affordable Modification Program(HAMP)

The U.S. Treasury said on Friday that “nearly half of homeowners getting help through the Obama administration's premier housing rescue program have dropped out through July as many failed to document their eligibility.”

According to the Treasury  48.1 percent of 1.3 million homeowners who started a mortgage modification through July have been dropped from the program.

That was up from a 41.2 percent dropout rate through June and underlined the continuing distress felt by homeowners who face falling prices and rising foreclosure rates.

The Treasury launched the mortgage modification program in April 2009 to cut mortgage payments for struggling homeowners who were at risk of foreclosure. Home Affordable Modification Program(HAMP)gives taxpayer-funded incentives to mortgage servicing firms to reduce payments to 31 percent of a qualifying homeowner's income.

But the modification trials offered in the program prior to June 1 did not require up-front documentation of income or eligibility, and many trials are now being canceled. Treasury cited job loss as a significant problem for participants.

Overall, the Treasury said HAMP has lowered payments for a total of 1.3 million homeowners that received trial modifications since the program was launched.