In a rare show of solidarity, federal regulators, lenders and servicers united this week to celebrate an announcement by the Treasury and Department of Housing and Urban Development that 500,000 troubled home loans had been modified under the government’s Home Affordable Modification Program. “This announcement shows the industry is working hard to help borrowers who want to stay in their home and have the means to pay their mortgage, keep their homes,” said David G. Kittle, chairman of the Mortgage Bankers Association. Faith Schwartz, the executive director of HOPE NOW, an advocacy group for servicers, also praised the 500,000 mark as “great news for consumers, homeownership and the economy in general.” The “milestone” — disclosed along with the Treasury’s and HUD’s Monthly MHA Program Report, which tracked servicer performance through Sept. 30 — was praised as a sign that the plan to mitigate foreclosures is finally gaining traction with the public, as well as with lenders and servicers. Under the program, eligible borrowers who are behind in their mortgage payments or in immediate risk of default could apply for a monthly payment reduction.

Those modifications must be paid off on time for a trial period of three months before the mortgage is permanently modified. But a major sticking point for the program has been the willingness of lenders and servicers to make favorable modifications, and the pace of their work. Last July, the Obama administration “pushed servicers to ramp up program implementation and sustain a faster pace of modifications” by mandating a minimum of 500,000 trial mods by Nov. 1. Thursday’s announcement meant that mark had been met a month early. “Trial modifications are now being issued at a faster rate than new homeowners are becoming eligible,” the Treasury said in a statement. But Treasury Secretary Timothy Geithner said the number of homeowners at risk was still “unacceptably large.” “The Administration believes that more can and should be done to assist struggling homeowners and to stabilize the housing market,” the Treasury said. As part of a continued effort to improve program performance, senior Treasury and HUD officials held one of a series of meetings with servicers Thursday afternoon, to discuss ways of improving servicer efficiency and responsiveness to borrowers during the modification process. That meeting also reflected continued concerns that the modifications won’t yield favorable economic results. “Many borrowers who are successfully making trial payments haven’t submitted any of the required documents, or have provided only some of the material,” The Wall Street Journal reported Friday. Schwartz said servicers would work with the government to shore up those concerns, and she already had some suggestions on how to proceed. “HOPE NOW is also pleased that Treasury is taking steps to streamline the HAMP modification process making it easier for consumers and servicers alike,” she said. “A common application form and a reduction in paperwork will help servicer efficiency and create a more positive experience for homeowners.” Kittle, too, said the MBA wanted to work with the government, particularly to help homeowners who didn’t qualify for HAMP modifications. “Nobody benefits from a foreclosure and it has always been in the servicer’s best interest to work with the borrower to find the best solution for their individual situation,” he said.