Foreclosures crept back to the forefront last month as the U.S. Treasury Department announced it would push for loan modifications.

Treasury Secretary Timothy Geithner told mortgage servicers to expand their capacity and improve their loan modification efforts so that President Obama's efforts to help struggling homeowners and stabilize the housing market will be successful.

The government plan, rolled out in February and called the Home Affordable Modification Program (HAMP), will pay mortgage servicing firms to modify mortgages and find other ways to keep people in their homes.

In a letter to 25 servicers, the secretary noted that the industry has made a good start in extending loan modification offers to borrowers and in the number of trial modifications underway.

"However, much more progress is needed," he said. "There appears to be a substantial variation among servicers in performance and borrower experience, as well as inconsistent results in converting trial modification offers into actual trial modifications."

The secretary also said that the Treasury is planning to issue monthly reports starting Aug. 4 that will show each servicer's performance, including the number of completed modifications and the long-term success of those modifications.

In addition, Freddie Mac's role as auditor will be expanded to take a "second look" at borrowers that have been denied modifications to make sure they have not been overlooked or "inadvertently denied a modification," the Treasury secretary's letter said.

Geithner and Department of Housing and Urban Development Secretary Shaun Donovan plan to meet with servicers on July 28 to go over implementation issues and solicit suggestions for improving the president's Home Affordable Modification Program (HAMP).

There is a three-month trial period before a loan modification can be completed under the HAMP. As a result, a number of workouts that will end up being modifications are currently reported only as repayment plans or trial modifications. Many of these trial modifications will result in formal reporting of modifications only after 90 days.

Recovery in the economy as a whole appears likely to continue in the second half of this year, but parts of the U.S. housing market may remain bogged down by roughly 4 million foreclosed or seriously delinquent properties concentrated in certain states, Barclays Capital researchers said as part of a global outlook press briefing in New York.

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