Frustrated with the slow pace of mortgage modifications for struggling homeowners, the Obama Administration is seeking new commitments from mortgage-servicing companies to step up the pace of modifications to prevent more home foreclosures, an Obama aide said. 

Executives from JPMorganChase (JPM), Wells Fargo (WFC), Citigroup (C) and about 20 other banks and financial firms will meet Tuesday with officials from the Treasury Department and the Department of Housing and Urban Development [HUD] to follow up on demands that the companies increase modifications through an administration’s $75 billion Home Affordability Modification Program [HAMP], launched in February. The firms process monthly mortgage payments -- as well as manage foreclosures -- for their own mortgage portfolios and for mortgages held by private investors like pension funds and hedge funds.

At the meeting Tuesday, department officials will request “some form of commitment” from each company to improve participation in the program, the Obama aide said. Government and company representatives are expected to release a joint statement on their talks and any agreements after the meeting, the aide said.

In a recent letter to the companies,  Treasury Secretary Timothy Geithner and Housing Secretary Shaun Donovan told them that “much more progress is needed” under the HAMP program. They demanded firms “devote substantially more resources” to HAMP modifications, including adding staff, call centers and training.

So far, the administration has paid the companies $20 billion to modify mortgages. The funds pay for extra servicing costs, as well as for incentives for companies, mortgage holders and homeowners to participate in HAMP.

Consumer advocates say that foreclosures, driven by rising unemployment, are swamping HAMP and that servicing companies aren’t stepping up.  

“We hope that the Treasury Department will make it clear to servicers that they must comply with all existing HAMP guidelines, including suspending all foreclosure proceedings until they determine whether a homeowner is eligible for a HAMP loan modification,” said Julia Gordon, Senior Policy Counsel for the Center for Responsible Lending.

“Specifically, not only should they review for HAMP eligibility before instituting a foreclosure action, but if such an action is already underway, it should be stopped in its tracks.   Right now, many servicers are operating as if the only thing prohibited before consideration for a modification is the final foreclosure sale -- and, even worse, many foreclosure sales are still going forward while the HAMP review is in process.”   

But the companies say they are implementing their HAMP programs as fast as they can and are struggling to keep up with customer inquiries.

“There is an unprecedented amount of phone calls,” one industry representative said. “All of this takes time to ramp up.”

In its most recent HAMP accounting, the administration reported that HAMP servicers had generated just 160,000 90-day “trial” modifications, out of 325,000 modifications offered to distressed families. The first permanent modifications will kick in in  August, when the initial trials end.

So far this year, lenders have pushed 1.5 million homeowners into the foreclosure process, according to a recent report from RealtyTrac. Government officials predict that up to 6 million homes could be lost to foreclosure in the current economic crisis. The unemployment rate hit 9.5% in June, the highest level in 26 years, fueling the rise in foreclosures.