An Obama administration program to help struggling homeowners modify their mortgages has more than one million active borrowers, though fewer than 10 percent have obtained permanent loan modifications, according to a Treasury Department report released on Friday.

The report said there were 1,003,902 active loan modifications through February and 168,708 of those have been made permanent. That was up from 946,735 active loan modifications and 116,297 permanent loan modifications through January.

Just 9.4 percent of the 1.8 million eligible borrowers -- those with loans delinquent more than 60 days -- have had their loan modifications made permanent, according to the Treasury.

The Treasury said it still hopes to help 3 to 4 million homeowners by 2012 under the $75 billion program. There are roughly 6.0 million borrowers more than 60 days behind on their payments but not all of them are eligible for the Home Affordable Modification Program (HAMP). Treasury said it expects the number of eligible borrowers to increase.

Most loan modifications result in lower monthly payments, although some lead to reduced principal on mortgages. Trial modifications were initially for three months, but the Treasury added 60 days, effectively making them last five months.

California and Florida, which have each seen dramatic declines in home prices, topped the list of total active modifications at 205,606 and 123,144 respectively.

The report comes as pressure is building on the largest providers of U.S. mortgages to write down second mortgages to prevent a deepening crisis in the U.S. housing market.

House Financial Services Committee Chairman Barney Frank earlier this month urged the chief executives of Citigroup Inc, Wells Fargo & Co, Bank of America Corp and JPMorgan Chase & Co to take losses on second mortgages in order to allow modifications of the first mortgages.

At issue are so-called second lien mortgages, which theoretically are worth nothing in cases when a house's value is less than the amount owed on the first loan.

But banks that hold the second liens want to be able to collect at least something from the homeowner. And if they do not mark the loan as a loss on their books, the first lien holders are unwilling to negotiate principal write-downs with the homeowners.

U.S. mortgage foreclosure filings dropped for a second straight month in February and notched the smallest annual increase in four years as housing-rescue efforts contained foreclosure activity, a report released on Thursday showed.

Foreclosure filings -- including mortgage default notices, house auctions and home repossessions by banks -- were reported on 308,524 properties in February, down 2 percent from January, but still up 6 percent from the year-ago month, real estate data firm RealtyTrac said.

(Reporting by Corbett B. Daly; Editing by Padraic Cassidy)

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