Lenders aren't keeping pace with a mounting backlog of applications for federal mortgage aid, placing some borrowers at increasing risk of losing their homes to foreclosure, according to an auditor's report.

Servicers including JPMorgan Chase & Co., Citigroup Inc. and Ocwen Loan Servicing LLC are processing only a fraction of the applications they receive each month for the Home Affordable Modification Program, the Special Inspector General for the Troubled Asset Relief Program said today.

"Without a timely review of their eligibility to even get into a HAMP trial modification, struggling homeowners left in limbo hoping to get help from TARP's HAMP program may not pursue other foreclosure alternatives and, with options narrowing over time, may be at risk for foreclosure," the report said.

The number of borrowers waiting for a response to their requests for HAMP aid rose 65 percent between November and May, to 221,000, which the report called "an alarming trend."

Ocwen, with the largest pool of 61,000 unprocessed applications, "will face significant challenges" processing its "massive backlog," the report said.

The report also singled out JPMorgan, CitiMortgage, and Select Portfolio Servicing Inc. for processing speeds that could keep borrowers waiting for months. Homeowners are supposed to receive a response within a month of submitting their paperwork.

The report was the latest in a series of TARP inspector general audits critical of the HAMP program, which pays banks to modify mortgages and lower borrowers' monthly payments. The program, a centerpiece of President Barack Obama's efforts to stem the housing crisis, was funded under the 2008 TARP program.

Prior audits have questioned the high rate of redefaults by borrowers who've received mortgage modifications through HAMP.

"SIGTARP has reported on many occasions that Treasury can and should do more to hold servicers accountable, and this is just one more example," the report said.

Servicers have given 1.4 million permanent mortgage modifications to borrowers during the five years of the program while rejecting more than 5.5 million applications, the report said.

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