All Home Affordable Modification Program mortgage servicers began taking applications under the expanded program on June 1, according to the Treasury Department.

But the largest mortgage servicers will still need several months before fully implementing the new guidelines announced in January.

Under the new guidelines, servicers will consider modifications for owners renting properties to tenants and factor in second liens and other obligations into debt-to-income ratio calculations. Before the changes, borrowers who had a monthly income less than 31% of their debt failed to qualify.

The Treasury will also pay investors triple for principal reductions under HAMP beginning when the individual servicer implements the rule change.

"The Administration's programs have established critical standards and accountability for mortgage servicers that have compelled the industry to provide higher quality assistance to struggling homeowners; however, servicers still have more work to do," said Treasury Assistant Secretary for Financial Stability Tim Massad. "This month, expanded eligibility for the Making Home Affordable Program becomes available to help more families benefit from the program's sustainable assistance and homeowner protections."

Treasury obligated nearly $30 billion to HAMP, of which only $2.7 billion has been spent as of March 31, according to the Special Inspector General for the Troubled Asset Relief Program.

Those whose loans are serviced by Bank of America (BAC) will have to wait until October to access the entire new program, the Treasury said Wednesday. JPMorgan Chase (JPM) will fully implement the changes by September.

Both banks account for more than 300,000 active modifications under the program, more than one-third of all active workouts under HAMP.

Other servicers are making quicker progress. Wells Fargo (WFC) told Treasury it will have the program fully implemented by June 22. Ally Financial said it would be done by July 10.

CitiMortgage, the servicing arm of Citigroup (C) said it already installed the program.

Treasury said it imposed new requirements to ensure those borrowers who send in their requests to be considered for the expanded version of HAMP are not impacted by the delay.

Servicers must identify which loans could be eligible for the expanded assistance, stop foreclosure referrals or sales on the borrowers and ensure they are given a single point of contact at the bank.

But keeping servicers in compliance has been a challenge in the past. The Treasury withheld HAMP funding from BofA and Chase for all of 2011 because the two banks were slow to make improvements. The Treasury returned the money earlier this year.

According to the latest HAMP report released Wednesday, no servicer was deemed to need "substantial" improvements. But six still needed to make "moderate" progress including BofA, Chase, Citi, Ally, Ocwen Financial (OCN) and Homeward Residential, formerly American Home Mortgage Services.

Total permanent modifications started since the program launched in March 2009 crossed the 1 million mark in April, according to Treasury data. More than 207,000 have been canceled either due to a lack of documentation or a redefault. Servicers started roughly 15,000 permanent modifications in April, down from 20,000 the month before.

Treasury estimates another 2.2 million delinquent mortgages could be available. But after redefaults and the expanded requirements are factored in, analysts expect the program to keep roughly 1.3 million to 1.5 million borrowers in their homes.