JPMorgan Chase (JPM) completed 2,686 short sales and deeds-in-lieu of foreclosure through the Home Affordable Foreclosure Alternatives program, more than any other servicer since the initiative began in April 2010. The Treasury Department launched HAFA to give servicers an incentive to pursue a short sale or DIL on loans that fell out of the Home Affordable Modification Program. Since HAMP launched in March 2009, servicers began more than 1.6 million trials and 731,000 permanent modifications through May, the Treasury said. But the top-10 servicers also canceled nearly 600,000 trials due to insufficient documentation, a redefault or the borrower was deemed ineligible through April. The largest servicers also denied more than 1.5 million borrowers from entering a trial. Of these, servicers participating in HAFA started 17,781 agreements under the program through May and completed 8,541. JPMorgan led in both completing and in entering HAFA transactions with more 6,100 agreements started through May 31. "In working with homeowners, we first try to modify a mortgage," a Chase spokesman said. "If that isn't possible, we seek a short sale or deed-in-lieu to help the customer avoid foreclosure." Wells Fargo (WFC) is close behind with 5,300 HAFA transactions started and 2,400 completed. Bank of America (BAC) started 2,500 HAFA short sales and DILs and completed 1,600, according to the Treasury. Select Portfolio Servicing and Litton Loan Servicing, which Goldman Sachs (GS) sold to Ocwen Financial (OCN) earlier this year, started roughly 1,000 HAFA transactions and completed about 400 each. All other servicers combined started 1,700 and completed roughly 850. But the HAFA numbers fall short of private short sales and DILs. Through April, the top-10 servicers provided more than 113,000 of these transactions through their own programs, nearly 10 times the amount of HAFA. Homeowners and real estate agents complain servicers continually mishandle paperwork and decision making, similar to the early complaints of the parent program HAMP. Servicers say HAFA is overly constrictive, and their own programs give them more room to better determine when a short sale or DIL is more economical over foreclosure. The Treasury relaxed HAFA rules in December in an attempt to boost numbers. Specifically, servicers will not have to verify a borrower's financial information if the monthly mortgage payment exceeds the 31% debt-to-income ratio. Servicers are making changes as well. CitiMortgage, the servicing arm of Citigroup (C) is paying an average of $12,000 to a select group of borrowers as an incentive to stick to the often lengthy short sale process. BofA became more proactive with borrowers it thinks can qualify for HAFA or its own programs. The bank completed more short sales than REO sales every month for the past year and a half. Carol Murin, a real estate agent and short sale specialist with Capital Exchange Realty in San Mateo, Calif., said short sales have a chance to make a dent in the still mounting foreclosure backlog if only these transactions, which can sometimes take up to a year, are completed more swiftly. "I believe that through one transaction at a time, we really can help turn the economy around by working closely with lending institutions, helping distressed borrowers and in the process, rebuild our communities," Murin said. Write to Jon Prior. Follow him on Twitter @JonAPrior.