Only 9% of eligible borrowers have received trial modifications under the Obama administration's ambitious effort to help struggling homeowners, according to data released by the U.S. Treasury Department on Tuesday.

Participating mortgage servicers, which receive hefty government payments for modifying loans, have had "uneven" success at rescuing borrowers, Treasury acknowledged, as a wave of foreclosures continues to pummel the U.S. housing market.

Bank of America Corp. (BAC) and Wells Fargo & Co. (WFC) were among the poorest performers in the program, having started trial modifications for just 4% and 6% of eligible borrowers in their servicing portfolios, respectively.

Meanwhile, J.P. Morgan Chase & Co. (JPM) has started trial modifications for 20% of eligible loans. And CitiMortgage, the mortgage unit of Citigroup Inc. (C), has begun trial modifications on 15% of eligible loans.

"I think it's safe to say we're disappointed in the performance of some of the servicers," Treasury's Assistant Secretary for Financial Institutions Michael Barr said in a conference call with reporters. He insisted, however, that Treasury was encouraged by the program's overall results.

Barr declined to comment on any particular institution's performance, but said Treasury was pushing servicers to step up modifications. "We expect them to do more," he said.

The administration is feeling heat from lawmakers and housing groups as its foreclosure-prevention effort has failed to help as many people as expected. A major component of the plan devotes $75 billion of financial-rescue funds to pay incentives to mortgage servicers, borrowers and investors that agree to modify loans according to certain standards. The administration predicted the program will help as many as 4 million borrowers avoid foreclosure over three years.

Officials say they are still on track to reach that goal. But so far, just 235,247 trial modifications have been started since the program was launched in March. Meanwhile, foreclosures are accelerating amid ongoing weakness in the labor market. U.S. foreclosure activity in the second quarter was up 11%, according to a July RealtyTrac report.

Treasury defines eligible borrowers as those that are 60 or more days behind on their mortgage payments. Out of a current pool of 2.7 million of such borrowers, only 15% have been offered a trial modification and just 9% have accepted. Under the program, borrowers must complete a three-month trial period with the modified loan before any incentives are paid out.

Bruce Dorpalen, ACORN Housing Corp.'s national director of housing counseling, attributed the poor response rate to fear and confusion. "People are scared. People don't know what they are being asked to sign," he said.

Dorpalen said ACORN's housing counselors had intervened to stop 500 foreclosures from happening where the borrower was eligible for the administration's program. In many cases, borrowers were being offered loan modifications that violated the program guidelines - such as interest-only loans or modifications with upfront fees, he said. ACORN is calling for a full halt to foreclosures while servicers review all eligible borrowers for the program.

In a meeting at Treasury last week, participating mortgage servicers committed to bring the total number of trial modifications underway to 500,000. Thirty-eight servicers, representing 85% of the U.S. mortgage market, have agreed to participate in the program.

Two servicing arms of major investment banks - HomeEq Servicing, owned by Barclays PLC (BCS), and Litton Loan Servicing, a unit of Goldman Sachs Group Inc. (GS) - haven't signed onto the program.

To pressure servicers to improve their performance, the administration recently announced that Freddie Mac (FRE) will audit the applications of borrowers turned down from the program to see whether they slipped through the cracks. Meanwhile, Treasury will continue to publicize servicers' performance monthly.

Barr said Treasury will provide more details in the coming weeks on its program to incentivize investors to remove second liens and a separate effort to encourage alternatives to foreclosure, such as deeds in lieu of foreclosure.

Barr acknowledged that the dismal job market was making it even more difficult to help some borrowers. Treasury officials are mulling ways to help borrowers who have lost their jobs. Barr said the current program contained flexibility to provide short-term assistance to such borrowers.

"If there's no income at all to support the home mortgage, it's very hard to see how a loan modification will be long-term successful."

-By Maya Jackson Randall and Jessica Holzer, Dow Jones Newswires; 202-862-9255; maya.jackson-randall@dowjones.com