Servicers participating in the Home Affordable Modification Program converted 33,342 trial modifications into permanent status in August, down 26.7% from the 45,512 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, the participating servicers have provided 468,058 permanent modifications. Borrowers must submit all documents and make three monthly trial payments to receive a permanent modification. The Obama Administration set an early goal for 3 million to 4 million borrowers to receive aid under HAMP. After 17 months, servicers have reached more than 15% of that mark, up from slightly higher than 14% in July. If servicers gain an average of 1 basis point every month, they would not reach 3 million permanent modifications for another 85 months, or another seven years. But HAMP is set to expire at the end of 2012. Servicers have offered more than 1.5 million trials to borrowers who qualify for the program and have started 1.3 million of them, but canceled 46,699 trials in August, 28% more than permanent modifications completed in the same month. According to the Treasury, the most common causes of canceling a trial modification are: insufficient documentation, another default during the trial stage, or the borrower was deemed ineligible, meaning the loan was already at 31% of the household's monthly income. Servicers are working through the backlog of borrowers stuck in trial modifications. In August, the amount of borrowers in a trial for more than six months fell to fewer than 95,000 from 118,000 in July. Richard Simon, a spokesman for Bank of America, which has completed more permanent modifications than any other in the program (see below), said trials are declining as servicers work through that backlog. "This continues the expected decline in trials across the industry as the servicers reach decisions on eligibility for permanent modifications, particularly on aged trials, and the inflow of new trial modifications has slowed, reflecting the change in government guidance requiring full documentation of trial mods," Simon said. Borrowers receiving a permanent modification received an average 36% discount on their monthly payments for an average of more than $500 a month. According to the Treasury, borrowers with a permanent modification are guaranteed lower payments for five years and fixed terms at current market rates for the remaining life of the loan. HomeEq, the former servicing arm of Barclays Capital recently acquired by Ocwen Financial Corp., was the top HAMP servicer for the fifth-consecutive month. It converted 91% of its trial modifications into permanent status, the highest of any servicer. It has converted 4,948 permanent modifications and holds 13,965 HAMP-eligible loans. Wachovia Mortgage FSB converted 80% of its trials into permanent status in August, which makes it the second highest for two months in a row, but the percentage fell from 81% in July. The company has conducted 7,893 permanent modifications and holds 25,937 HAMP-eligible loans. Ocwen moved back into third, converting 71% of its 29,871 HAMP-eligible portfolio into permanent status during the month. It has totaled 17,970 so far. The big-four banks all had slight conversion rate increases in August. CitiMortgage, the servicing arm of Citigroup, led them by converting 33%, totaling 47,236 permanent modifications, up from 44,276 the previous month. JPMorgan Chase converted 31% for a total of 60,932 permanent modifications through August, up from 58,489 in July. Wells Fargo had a 29% conversion rate, totaling 48,830 permanent modifications, up from 46,732 in July. Bank of America held the highest amount of permanent modifications of any participating servicer in August, at 79,859, up from 76,330 in the previous month, a 26% conversion rate. BofA holds 383,482 HAMP-eligible loans, down from 416,879. Write to Jon Prior.