Consumer groups and legal aid attorneys are urging the Treasury Department to extend the Home Affordable Modification Program for at least another year.

The HAMP program is slated to expire at the end of this year and it continues to provide modifications for around 15,000 struggling homeowners a month.

“The foreclosure crisis is not yet over and we ask that the Treasury Department prevent the HAMP program from ending in just nine months,” according to a joint letter signed by 40 groups.

The letter points out that HAMP modifications provide deeper payment relief and perform better than proprietary modifications. And HAMP mods facilitate principal reductions on non-Fannie Mae and Freddie Mac loans.

In their third quarter, 44% of the non-GSE HAMP modifications featured principal reductions, compared to 20% of proprietary mods.

Fair housing and civil rights groups also signed onto the letter that says an extension is needed, especially for communities hardest hit by the crisis—such as African-American and Latino communities.

“As the housing market begins to recover, it would be shortsighted to conclude that all communities have the same distance to travel and will recover at the same pace. Effective housing policy must recognize that neighborhoods with higher foreclosure rates and deeper foreclosure-related impacts will take more time to recover,” the March 26 letter says.

Separately, Treasury said it is starting a new initiative with NeighborWorks America to help more private-label mortgage borrowers apply for a loan modification.

“Through the new initiative, housing counseling agencies will help struggling homeowners successfully complete and submit application documents to their mortgage company free-of-charge,” according to a “Treasury Notes” posting on the department’s website.

The new initiative starts May 1 and Treasury will fund the Outreach and Borrower Intake Project. “Accordingly, borrowers, servicers and investors are not required to compensate participating housing counseling agencies,” Treasury says in Supplemental Directive 13-01.

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