As of July, only 9 percent of eligible borrowers had seen their mortgage payments reduced. And a progress report on the plan Tuesday showed that 10 lenders had not changed a single loan.
Both Bank of America Corp. and Wells Fargo & Co. -- which have received billions in federal bailout money -- were below average.
BofA, which did not immediately comment, modified 4 percent of eligible loans, and Wells Fargo 6 percent. And Wachovia Corp., which was taken over by Wells Fargo last December, modified just 2 percent.
"We know we've fallen short of our customer service goals in some cases," Mike Heid, co-president of Wells Fargo's mortgage unit, said in a statement. The company aims to sign up most borrowers for the Obama plan with one phone call and plans to send customers a trial offer within two days.
Foreclosures, meanwhile, continue to rise. About 1.5 million households received at least one foreclosure-related notice in the first half of this year, according to RealtyTrac Inc.
"There are certainly more foreclosures going on in the country then there are modifications -- by a long shot," said Bruce Dorpalen, director of housing counseling at Acorn Housing, a nonprofit housing group. He said his group has intervened to prevent about 500 foreclosure sales in cases where borrowers wanted to be considered for the Obama plan.
There are 38 companies participating in the program, and some noticeable holdouts that control 15 percent of outstanding mortgages. Litton Loan Servicing, owned by Goldman Sachs and HomEq Servicing, owned by Barclays PLC, have yet to join.
So far, more than 400,000 offers have been extended to 2.7 million eligible borrowers who are more than two months behind on their payments. More than 235,000 of those borrowers have enrolled in three-month trials.
"We think they could have ramped up better, faster, more consistently and done a better job serving borrowers and bringing stabilization to the broader mortgage markets and economy," said Michael Barr, the Treasury Department's assistant secretary for financial institutions. "We expect them to do more."
But the government is partly to blame for the languid start. The administration rolled out the guidelines gradually this year. Much of the program was not finished until mid-May, and the guidelines were updated again in early July.
The administration maintains it is still on track to meet its goal of helping up to 4 million homeowners by 2012, and last week extracted a verbal promise from the mortgage industry to reach 500,000 borrowers by Nov. 1.
American Home Mortgage Servicing and PNC Financial Services Group Inc. were among the companies that had a zero next to their names on Tuesday's report.
David M. Friedman, the president and CEO of American Home Mortgage Servicing, explained that his company started the program on July 22, and expects to help 60,000, or about 40 percent of its borrowers.
PNC, which owns National City Bank, was up and running in early July, and the company said, "there are loan modifications in the process."
The best results among the large loan services came from Saxon Mortgage Servicers Inc. One in four of Saxon's eligible borrowers has a trial loan modification with a lower monthly payment to help the homeowner avoid foreclosure. Aurora Loan Services LLC, GMAC Mortgage Inc. and JPMorgan Chase all had one in five qualified borrowers in a trial loan.
For each homeowner who makes regular payments for three months, the loan servicer collects $1,000 from the government. The company is paid thousand of dollars more if the borrower stays current for three years.
Housing advocates cite numerous cases in which companies haven't followed the program's rules. And when borrowers are denied, they often aren't told why. In response to such complaints, the Treasury Department says Freddie Mac will be doing random audits to see if borrowers are being improperly rejected.