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15,522 borrowers received permanent modifications through the Home Affordable Modification Program in August, up 2.3% from July, lifting the total since the program began to 690,969, the Treasury Department said.

Also in August, the number of troubled homeowners eligible for the program fell below 1 million, with 992,968 borrowers potentially qualified, the Treasury Department said.

A total of 1,902,606 borrowers were in extended temporary trial modifications.

Launched in 2009, the initiative was aimed at helping 3 million to 4 million homeowners avoid foreclosure through 2012. Critics assert that the program is on track to fall below those goals.

Loss of income remains the overwhelming reason that people seek mortgage relief through the program, cited by 61.5% of those receiving a permanent modification.

That compared with 11.2% who said "excessive obligation" was the main reason for seeking help and 2.9% who cited illness of the principal borrower.

The government did not report reasons given for the remaining 24.4% of borrowers.

Last month, the Treasury Department said that Bank of America Corp. and JPMorgan Chase Bank were in "substantial" need of improvement in helping troubled borrowers modify their mortgages and that those two banks would be denied financial incentives for completing modifications until their performance in the program improved.

Wells Fargo & Co. and Ocwen Loan Servicing, after previously being on the list of banks that needed "substantial" improvement, were categorized in the Treasury report as needing only "moderate" improvement, as were American Home Mortgage Servicing Inc., CitiMortgage and Select Portfolio Servicing Inc.

The banks that were in need of minor improvement included GMAC Mortgage, Litton Loan Servicing and OneWest Bank, the government said.

By Alejandro Lazo, Los Angeles Times