Also, the Government Accountability Office said Thursday the Treasury Department must develop better procedures to ensure loan servicers are equipped to participate in the $75 billion program and adhere to its rules.
The report comes as the pressure mounts on the administration to address growing complaints about the program, including that some servicers are violating the rules.
The GAO stressed that it is "critically important" to implement effective controls since Treasury is using $50 billion from the Troubled Asset Relief Program to fund the effort. The remaining $25 billion is coming from Fannie Mae (FNM, Fortune 500), Freddie Mac (FRE, Fortune 500) and the Department of Housing and Urban Development.
When it announced its loan modification plan in February, the administration said it could help up to four million troubled borrowers. The program allows eligible borrowers who are in or at risk of default to lower their monthly payments to no more than 31% of their pre-tax income through a loan modification. The adjustments are made permanent after the homeowner makes three on-time payments. Homeowners, servicers and mortgage investors receive incentive payments in hopes of increasing