The Treasury Department is threatening to deny or even claw back incentive payments to mortgage servicers that are not modifying loans, according to the administration's guidelines.

The department would not say how many servicers have broken the rules, let alone which ones. But consumer advocates say noncompliance is rampant in the Home Affordable Modification Program (HAMP). They have documented cases in which servicers wrongly denied modifications or foreclosed before reviewing a borrower for HAMP.

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