Administration: Mortgage program helping 20 percent of eligible homeowners

The number of homeowners getting help under the government's massive foreclosure program is growing, according to government data released Tuesday, but it is still unclear how many of these borrowers might still lose their home.

Under the effort, known as Making Home Affordable, lenders are paid to lower a borrower's mortgage payments. The program has struggled since being launched in March with lenders applying it unevenly and slowly throughout the industry.

Through October, 650,994 delinquent borrowers have received help under the program, or 20 percent of those potentially eligible, according to Treasury data. That is up from 487,081 through September. Most of them are in states hardest hit by the housing crisis. For example, about 134,609 of those who have seen their loans modified under the program -- typically through an interest rate reduction -- are in California and another 82,614 are in Florida.

In the Washington region, Maryland homeowners have received the most modifications, 21,634. About 16,980 Virginia homeowners have seen their loans modified under the program, as have another 1,177 borrowers in the District.

The performance of major lenders participating in the program remains uneven. Citigroup has modified about 40 percent, or 89,000, of the delinquent borrowers who are potentially eligible, while Bank of America has modified about 14 percent, or 137,000.

"We're reaching borrowers at a larger scale than any other modification program to date, but there is still much more work to be done," Treasury Assistant Secretary Michael S. Barr said in a statement.

The data measure only borrowers who have entered the "trial" phase of the modification process. Before changes to their mortgages become permanent, borrowers must provide significant documentation to verify that they qualify for the program. Initially the administration set up a three-month trial period, but it extended it as lenders complained about the difficulty of getting some borrowers to provide complete information.

Housing advocates are now questioning whether a large number of borrowers given trial modification will ultimately fail to gain a permanent workout. In an October report, the Congressional Oversight Panel, which is monitoring the government's Troubled Assets Relief Program, found that fewer than 2,000 of the nearly 400,000 borrowers in the program at that time had moved into a permanent modification.

The Treasury Department said it would release data on the conversion rate into permanent modifications in the next few weeks.

And even as the administration says the program is building momentum, lingering questions remain about the efficacy of the $75 billion effort. Economists widely expect nearly 2 million borrowers to lose their home to foreclosure this year. Some have questioned how many of the borrowers who receive a modified loan under the program will default later. Also, it is unclear how well suited the plan is in addressing what many now consider the biggest driver of foreclosures: unemployment. With little or no income, borrowers have fewer options to save their home, housing advocates note.

"It's obvious that progress is being made, but I think the administration would agree that they would like to see accelerated impact given the rate of foreclosures," said John Taylor, president of the National Community Reinvestment Coalition, a nonprofit housing group.