A slight rise in July mortgage delinquencies underscores ongoing fragility in the nation's housing market, the Obama administration said Thursday in its August Housing Scorecard Report. The Treasury Department said economic data is mixed with the Standard & Poor's/Case-Shiller Home Price Index rising for a third consecutive month in July, while mortgage delinquencies grew slightly, suggesting a weak foundation for significant growth. During July, 404,000 distressed borrowers received some type of counseling, with 10.9 million borrowers underwater, or owing more than the property is worth, nationwide, according to August scorecard. Furthermore, the government cited statistics showing prime mortgages have a delinquency rate of 4.5%, compared to 33.2% among subprime loans and 12.2% for FHA loans. About 3.65 million existing homes were on the sales block. Mortgage rates during the period averaged 4.22%, down from 4.36% a year earlier. While mortgage aid programs pushed the number of foreclosure starts and completions down, the administration's housing scorecard said declining foreclosure activity is partly tied to lender processing issues slowing the default process down. The report said while federal efforts have improved the performances of mortgage servicers, the administration recognizes a need to keep pressure on servicers to reach solutions for troubled borrowers. "These assessments provide an unprecedented level of information about servicer performance and are designed to help more eligible homeowners walk away from this process with better results," said Tim Massad, assistant secretary for financial stability at the Treasury. In July, more than 28,000 homeowners received a permanent loan modification through the government's Home Affordable Modification Program. To date, about 790,000 homeowners have received a HAMP modification with the medium payment reduction in the range of 37%. Write to: Kerri Panchuk.