The largest servicers participating in the Home Affordable Modification Program have not taken action on 266,136 delinquent mortgages that have either been canceled out of loan modification trials or never qualified for one as of October. This backlog has increased 22% since the 218,246 reported in July. The Treasury Department launched HAMP in March 2009 to provide incentives to servicers for the modification of loans on the verge of foreclosure. Since then, servicers have started 1.4 million trials and converted 549,620 three-month trials into permanent status as of November, according to Treasury data. The program's performance, considered underwhelming to most, has been hampered by a backlog of trials formed during the early months of the program when servicers would hurry borrowers into a trial and gather documentation later. As of November, roughly 50,000 borrowers have been in a trial for more than six months, but servicers have worked that number down from 69,000 in October, and new guidelines were put in place to gather all documentation before the trial stage. But as of October, servicers reported more than 1.5 million canceled trials or loans that never qualified for one, according to the latest Treasury data. Trials are canceled either because the bank never received the documents, the borrower redefaulted or was deemed ineligible for the program. More than one-third of these loans are put through an alternative modification. In fact, nearly a half of the 562,222 canceled trials received a modification through the lenders' own programs. Others go through short sale, deed-in-lieu, an informal payment plan, or foreclosure. Servicers started foreclosures on 208,998, or 13%, of these canceled trials and rejected applications. But every month since July, servicers have added to the backlog of these loans that are still pending action. Bank of America (BAC) still has not taken action on 73,185, the most of any servicer. JPMorgan Chase (JPM) follows with 60,612, and CitiMortgage, the servicing arm of Citigroup (C) holds 60,531. None could be reached for immediate comment. Tim Massad, acting assistant secretary for financial stability at the Treasury, said in a briefing with reporters earlier in December that servicers simply weren't prepared for the scope of the foreclosure crisis, allowing for backlogs to form in understaffed operations. "It's been clear all along that the servicers were not equipped to handle this problem," Massad said. Write to Jon Prior.