Mortgage servicers completed 36,700 permanent HAMP modifications in July, down from 51,200 in the previous month, according to the Treasury Department.
The new report shows the number of distressed borrowers entering the Home Affordable Modification Program also slowed to 24,600 in July from 38,700 in June.
Treasury officials said the slowdown is due to servicers verifying borrowers' incomes and debt-to-income ratios before allowing them to enter the 90-day HAMP payment trials. Before June, borrowers could start the trials without document verification.
The effort to quickly enroll struggling homeowners when the HAMP program was launched in the spring of 2009 led to a very high number failing to get a permanent modification.
Treasury reported that another 95,750 borrowers dropped off the HAMP payment trials in July and didn't qualify for a permanent mod.
"Servicers reported that more than half of homeowners in cancelled trials received alternative modifications, became current or paid off the loan completely," the July HAMP report says.
Since the start of the HAMP program, 1.3 million homeowners have started the payment trials and nearly half (616,800) have dropped out or were cancelled - mainly due to insufficient documentation, missed payments or mortgage payments already less than 31% of income. (HAMP is designed to reduce mortgage payments to 31% of income.)
HAMP servicers have approved 434,700 permanent modifications and 421,800 are still active as of July 31.
In the June report, Treasury provided HAMP re-default data for the first time. But within a week the promising data had to be corrected.
The corrected June data showed the re-default rate (loans 90-days or more past due) on HAMP modifications completed in the third quarter of 2009 is 9.7% after six months, not 2.3% as originally reported. After nine months, the HAMP re-default rate is 14.9%.
Treasury did not include re-default data in the July report.
