A progress report released last week by the Treasury Department showed that only 11 percent (about 95,000) of Bank of America’s delinquent borrowers who were potentially eligible for the program had been given a loan modification. That compares with 27 percent, or 117,000, for J.P. Morgan Chase, and 33 percent, or 68,000, at Citigroup, the Treasury reported. The figure for Saxon Mortgage Services, which is owned by Morgan Stanley, is 41 percent, or 32,000.

There are too many conflicting currents here, which is what will ultimately doom this program, as has doomed all the previous ones.

First among them is the simple question: How many of these people who allegedly “qualify” for a modification will wind up with a sustainable mortgage if they get one?

This is a key question, yet one that hasn’t been asked in public, nor have there been public answers tendered. The truth is pretty ugly – without significant principal forgiveness (not “forbearance”) a huge, perhaps even majority percentage of these loans are not sustainable even if modified.

The problem is simply that on any reasonable set of assumptions the income of the household does not support the principal balance. “HAMP” calls for modifications to reduce principal and interest for all outstanding mortgage liens (firsts and seconds, if any) to 31%.

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