After rating the performance of its top 10 Home Affordable Modification Program (HAMP) servicers, the U.S. Treasury Department said JPMorgan Chase, and Bank of America need to make further improvements before they receive incentive payments from the government.

"For the third quarter of 2011, only JP Morgan Chase was found to be in need of substantial improvement" under the HAMP, Treasury said.

Treasury ranks servicers based on several factors, including their ability to move borrowers through the HAMP payment trials and into a permanent loan modification. In the third quarter, Chase had a 72% conversion rate, which Treasury called its "worst" rate. BofA had a 76% conversion rate.

"We are disappointed with our rating, and will continue to work hard to improve our processes and controls," a Chase spokesman said.

Treasury said BofA is making "progress" in remedying previously identified areas, but "moderate improvement" is still needed.

The HAMP report released on Wednesday shows that 82% of borrowers who entered a HAMP trial since June 2010 received a permanent trial modification. The average length of the payment trial period was 3.5 months.

In October, servicers placed nearly 21,450 struggling borrowers into HAMP payment trials and completed 26,100 permanent modifications. But they couldn't keep pace with September's results when 40,150 permanent HAMP modifications were completed and 26,000 borrowers entered payment trials.

Overall, servicers have completed nearly 883,100 HAMP modifications since Treasury launched the program in April 2009 with roughly 735,500 of those loans considered active.

Mid-week, the Hope Now servicer alliance reported that its members completed 53,400 propertiary modifications in October in addition to the HAMP mods. Hope Now servicers evaluate borrowers for the HAMP program first before placing them into a proprietary mod.

During the first 10 months of this year, servicers have completed 885,400 modifications, including 303,400 that met HAMP speciations.

"With almost a million loan mods completed this year, it is clear that the industry and its partners continue to invest a tremendous amount of resources into assisting homeowners across the country," said Faith Schwartz, executive director of Hope Now.

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