Although the housing market continues to regain its footing, the Obama Administration said the servicing side of the market still needs help, with distressed borrowers continuing to struggle.

In its latest Housing Scorecard, the Obama administration said all servicers evaluated in the second quarter need moderate improvement when it comes to their overall loan servicing performance.

"The standards set by the Making Home Affordable program have changed the mortgage servicing industry, as have our quarterly assessments of servicer performance," said Treasury assistant secretary for financial stability Tim Massad.  

He added, "While there has been significant progress, there is still more improvement needed in servicer behavior. And while the housing market has recovered substantially, there are still homeowners struggling to avoid foreclosure and it is vital that we continue to try to help them."

The Making Home Affordable Program has helped more than 1.7 homeowners since it began in 2009, including more than 1.2 million permanent modifications via the Home Affordable Modification Program — almost a 40% savings from their previous payment.

The Federal Housing Administration has offered nearly 1.9 million loss mitigation and early delinquency interventions as it continues to encourage improved standards and processes in the servicing industry.

As of July, Hope Now lenders have offered families and individuals more than 3.7 million proprietary mortgage modifications, the Obama Scorecard pointed out.

Servicer assessment data, released on a quarterly basis, revealed that servicers continue to appropriately calculate homeowner income, which is used to determine a borrower’s eligibility and modified payment amount under the program.

In the second quarter of 2013, the average income calculation error rate for top servicers was below 2%.

Additionally, servicers were more effective in evaluating homeowners under program eligibility criteria as evidenced in the ‘second look disagree’ category, reflecting the rate at which the Treasury’s program reviews disagree with a servicer’s decision not to assist a borrower.

In the second quarter of 2013, the Treasury disagreed less than 2% of the time with the servicer's decision.

In July, more than 115,000 second-lien modifications were completed via the Second Lien Modification Program. Also, nearly 200,000 homeowners exited their homes through a short sale or deed-in-lieu of foreclosure with help from the Home Affordable Foreclosure Alternatives Program.

The 15 metropolitan areas with the highest HAMP activity included Los Angeles-Long Beach-Santa Ana, Calif.; New York-Northern New Jersey-Long Island, NY-NJ-PA; Miami-Fort Lauderdale-Pompano Beach, Fla.; and Chicago-Joliet-Naperville, IL-IN-WI.

Since the Making Home Affordable Programs began nearly four years ago, the Treasury has required participating servicers to take specific actions to improve their processes through ongoing reviews.