The Obama administration said Thursday that it was withholding financial incentives from three home-loan servicers needing to substantially improve their performances in the government's mortgage-modification program.

The three are Bank of America, JPMorgan Chase, and Wells Fargo, according to the Treasury Department, which oversees the Home Affordable Modification Program.

Treasury's review of first-quarter performance by lenders that participate in the voluntary program also cited Ocwen Financial as needing substantial improvement. But Ocwen will continue to receive incentive payments of up to $1,000 for each mortgage modified because it acquired a large servicing portfolio in the testing period, the department said.

Six major lenders require moderate improvement, but they, too, will keep receiving the incentives.

The performance review found that the three servicers had miscalculated mortgage borrowers' income in many cases, resulting in denial of permanent modification or even participation in the program.

After two years of the program's operation, just 608,000 loans had been permanently modified by the end of the first quarter, of the more than 2.6 million mortgages eligible.

Lawmakers have said the results do not justify the money spent on the program. Consumer groups argue that the program should be mandatory, or that it will work only if the principal balance as well as the interest rate is reduced.

Borrowers with permanent mortgage modifications under the program are seeing median savings of about $527 a month, according to the Treasury report.

As efforts to avert foreclosures for millions continue, the Federal Reserve reported Thursday that Americans' equity in their homes had fallen from 61 percent in 2001 to 38 percent in the first quarter of this year.

CoreLogic reported this week that 22.7 percent of U.S. borrowers owed more than their houses were worth.