The U.S. Treasury said its foreclosure-prevention program has cut mortgage payments for about 947,000 households, at least temporarily.

That was the number of households benefiting from easier loan terms at the end of January through the Obama administration's Home Affordable Modification Program, known as HAMP. The total was up about 11% from a month earlier. The administration estimates that 1.7 million households—about 3% of those with mortgages—are eligible for the program.

HAMP, announced a year ago by President Barack Obama, gives lenders incentives to help struggling borrowers avoid foreclosure by shrinking their payments through a reduction in the interest rate to as low as 2%. In some cases, loan terms are extended to 40 years.

Participants first are given three-month "trial" modifications. If they make payments on time and meet other requirements, including documentation of their income, they are given permanent modifications. As of Jan. 31, about 116,000 borrowers had such permanent fixes, up 75% from a month earlier.

Bloomberg News

A sign advertising foreclosure tours stands outside a home for sale in Las Vegas in August.

On the Rise

Permanent loan modifications granted under the Obama plan.

• September 1,711
• October: 5,181
• November: 31,382
• December: 66,465
• January: 116,297

Source: U.S. Treasury

The Treasury said 60,000 trial modifications have been canceled. Many more are likely to fall out of the program this month because extensions of the time available to verify incomes have run out.

For those who fail to qualify, lenders may proceed with foreclosure or seek other solutions, including short sales, in which homes are sold for less than the loan balance due.

The program's dropout rate is likely to be high, partly because lenders allowed many people into trials without first making sure they qualified. Wells Fargo & Co. said 92,000 of the borrowers it services had made three trial payments by Jan. 31. It expects about half of them to get permanent modifications. Others failed to provide all or some of the required documents or were found to be ineligible after the paperwork was reviewed.

Among loans with permanent modifications, the median monthly savings is about $522, the Treasury said. It said borrowers in trial and permanent modifications have saved more than $2.2 billion so far.

Prodding lenders to saving more borrowers, the Treasury is publishing monthly comparisons of their performance. As of last month, it said Citigroup Inc. had provided modifications to 50% of the estimated number of eligible borrowers. Both J.P. Morgan Chase & Co. and Wells Fargo were at 38%, and Bank of America Corp. was at 22%.

In a statement, Bank of America said it had made stronger gains than rivals last month in providing trial modifications and converting trials into permanent fixes.

If you're selling a car or a house in today's sluggish economy, make sure the price is right.

Americans are constantly buying stuff. But most of us don't do a whole lot of selling — which means we don't have much experience at setting prices.

Want to improve your odds of finding a buyer? As you try to unload your car or your home, consider these four pricing tricks.

Looking slim. We all know that $1.99 is barely less than $2. Yet retailers continue to use this trick, because there's ample evidence it works.

"When we look at prices, we make judgments in a fraction of a second," explains Manoj Thomas, a marketing professor at Cornell University. "We read from left to right. We anchor our judgment on the first thing we see."

For instance, if you're trying to sell your old car that you think is worth $8,000, you might set the price at $7,999. Potential buyers will read the seven first — and have a sense the car is cheaper than it really is.

Alternatively, you might start at $8,222 and then quickly drop the price to $8,111. One study of price comparisons found that, if the left digits are the same, buyers will focus on the right-hand numbers.

At that point, buyers perceive the discount to be larger if those right numbers are declining from, say, two to one rather than from nine to eight. Even though the decline is the same in dollar terms, "people think they're getting a better deal," says one of the study's co-authors, Robin Coulter, a marketing professor at the University of Connecticut.

Stacking up. As buyers check out your car or your house, they'll have in mind a price they are willing to pay. The good news: You can influence that price.

"You should list higher than you're willing to accept," says Alan Cooke, a marketing professor at the University of Florida. "If you ask a high price, people use that as information in setting their reference price. But there's also evidence that, if you set a price that is implausibly high, the impact will be less than if you set a price that's more reasonable."

In addition, you can affect the reference price of buyers by, for instance, telling them your car's book value or sharing the price of competing properties in the neighborhood. The obvious caveat: Pass along this information only if the comparisons are in your favor.

Sending messages. Imagine you're selling your house, which you figure might fetch a little less than $600,000. A round number, such as $595,000, will convey quality, while a precise number, such as $595,385, will indicate a bargain.

The reason: We associate precise numbers with lower-priced goods. A precise number also may signal that you have given a heap of thought to the price and you aren't inclined to negotiate.

Trying to settle on an asking price for your home? "If it's a new development and you're trying to give the impression of prestige, you would want to go for the round number," advises Vicki Morwitz, a marketing professor at New York University. "But if you're going for the quick sale and you want to give the impression of a bargain, you would want to go for the precise number."

Cutting prices. In today's housing market, many homeowners are struggling to find a buyer.

Thinking of dropping your asking price? Suppose that, as in the above example, you initially asked $595,385. If you lower the price to, say, $578,495, potential buyers may perceive the price drop as relatively modest.

"You want to make the computation as easy as possible," Cornell's Thomas says. "If you use digits that make computation difficult, it will lead to a perception of a small difference."

What to do? You might specify the dollar discount — or, alternatively, lower the price from $595,385 to maybe $580,385 or $575,385. That way, it will be easy for buyers to calculate the price drop.

The Obama administration is trying to simplify the paperwork for people seeking lower home-mortgage payments in an effort to avert more foreclosures.

The Treasury outlined new guidelines Thursday aimed at streamlining requirements for mortgage relief under the administration's Home Affordable Modification Program launched a year ago.

The guidelines specify that borrowers must provide three items to loan servicers, the companies that collect mortgage payments: a form requesting a loan modification, authorization for the servicer to seek tax information from the Internal Revenue Service and evidence of income, such as two recent pay stubs. Previously, some servicers have asked borrowers to fax in copies of their tax returns. Borrowers sometimes couldn't find the needed tax forms or complained that servicers repeatedly lost material faxed to them.

The previous documentation requirements were "somewhat overwhelming" for some borrowers, says Morgan McCarty, head of mortgage servicing at Regions Financial Corp., a banking company based in Birmingham, Ala.

The Treasury also said that, effective June 1, servicers must collect the information before starting borrowers on three-month "trial" loan modifications, during which borrowers must show they can make the payments before being granted a permanent reduction in their loan costs. Many servicers have been starting trial modifications based on unverified information provided orally by the borrower, only to find later that the borrower wouldn't or couldn't provide documentation.

As of Dec. 31, about 900,000 borrowers had been given trial modifications but only 66,465 had been converted to a permanent fix. That largely reflects problems getting documentation. The Treasury acknowledged that some of those 900,000 borrowers won't end up qualifying for a loan modification through the program.

As of Sept. 30, about 7.5 million households—about 14% of those with home loans—were behind on payments or in the process of foreclosure, according to data from the Mortgage Bankers Association, a trade group.

Many of those struggling borrowers owe far more to their lenders than the current value of their homes—a condition known as being "underwater"—and wonder whether it is worthwhile to keep paying. Micah Green, a partner at the law firm Patton Boggs in Washington who represents some large investors in mortgages, says the administration should revamp the program to put more stress on reducing principal owed by borrowers who can show that they would be able to stay current on a smaller, refinanced loan. In many cases, that would require the holders of both a first- and a second-lien loan to accept a write-down of the amount owed, a complicated process.

Treasury officials said Thursday they were looking at ways of helping underwater borrowers but haven't found practical means of doing that on a large scale. "There are no simple solutions," Herb Allison, an assistant Treasury secretary, said in a press briefing.

Despite increasing pressure to take more aggressive steps to keep troubled borrowers in their homes, the Obama administration said Wednesday that it had no immediate plans to alter its foreclosure-prevention program by increasing its reliance on reducing loan balances.

The administration's statement came as attorneys general and banking regulators in 14 states warned that policy makers needed to do more to stem the tide of foreclosures.

The Obama program, announced in February as a cornerstone of the administration's efforts to stabilize the housing market, has been running into increasing criticism as delinquencies have mounted. The program has focused on reducing loan payments to affordable levels through interest-rate reductions and other changes in loan terms. But state officials and others say it needs to address falling home prices through principal reductions because many homes are now worth less than their mortgages.

"The failure to reduce principal jeopardizes the sustainability of loan modifications," Mark Pearce, North Carolina's deputy banking commissioner, said at a briefing for reporters.

In a related development, the Treasury Department said the administration next week will issue new guidance for lenders to deal with a looming deadline that is putting many homeowners participating in the program at risk of disqualification because of paperwork problems.

More than 900,000 homeowners have begun trial modifications under the program, but documentation issues are hampering efforts to convert those to permanent fixes. Last month, the administration gave many borrowers in the program an extension until Jan. 31 to provide the documents. But the administration said last week that it doesn't plan to extend the deadline further.

New York State Banking Superintendent Richard Neiman said Wednesday that he believed that about 450,000 homeowners who have made at least three required trial payments "face the prospect of foreclosure on January 31st strictly on account of documentation issues."

Administration officials haven't said how many borrowers in the program would be affected by the approaching deadline. "We expect to issue guidance to servicers next week to expedite conversions of current trial modifications and provide guidance on documentation," Assistant Treasury Secretary Michael Barr said.

Under the program, borrowers must make three trial payments and provide a hardship affidavit and other required documents. On Friday, the administration released a report that said only 7% of the homeowners who received trial modifications on their loans through the plan had received a permanent reduction as of Dec. 31.

Mortgage companies say many borrowers haven't provided some or all of the required paperwork, while borrowers complain they are asked for the same documents multiple times.

State officials on Wednesday called on the administration to loosen documentation requirements and expand the use of principal reductions. A report issued by state attorneys general and state banking regulators found that more than 70% of loan modifications resulted in an increase in the principal amount owed as unpaid interest, fees and other charges were rolled into the loan amount.

The report, by the State Foreclosure Prevention Working Group, said current efforts are failing to keep up with the number of borrowers falling behind on their loans. Only four in 10 borrowers who are at least two months behind on their payments are involved in any sort of loss-mitigation effort. Without more aggressive steps, including a focus on principal write-downs, foreclosures will continue to weigh on the economy, the report warned.

"Despite efforts of servicers, homeowners and the government, the foreclosure crisis continues to worsen. These signs point to more foreclosures in 2010 than in 2009," the report said.

The states' report, based on data from 13 mortgage servicing firms, offered a stark view of the housing market. Through the end of October, there were 1.7 million mortgages at least two months behind on payments, while the number of loans in the process of foreclosure increased by 52% between October 2008 and October 2009, the report said

On Friday, the Federal Housing Administration announced that it will assist borrowers before they become delinquent. All you need do is prove your problems were caused by a reduction of income from a job loss, fewer paid hours, slashed wages or a decline in self-employed business earnings.

"The FHA has always required lenders to establish early contact with delinquent borrowers to discuss the reason for missing a payment and to evaluate reinstatement options," FHA Commissioner David Stevens said in a prepared statement. "Now servicers will have additional options for those borrowers who seek help before they go delinquent, which increases the likelihood that the borrower will be able to retain their home."

The workouts available include forbearance, in which lenders agree to postpone or reduce payments for a specified period. This does not actually forgive the payments, they are just added to balance later in the mortgage term.

In more severe cases, borrowers may qualify for permanent payment reductions. This may be done by increasing the length of the loan, reducing the interest rate or even forgiving principal -- or a combination of any of the three. 

When home shopping -- whether you are a first-time home buyer or veteran -- pay attention to the condition of the siding. It's expensive and time consuming to replace or repair siding, costing anywhere from a few dollars to $30 or more per square foot. The lifespan of various types of siding will depend on the climate where you live. Home siding can require periodic painting or restaining and, in the event of wild temperature swings, some types of siding can crack through expansion and contraction.

Here are four good reasons to replace siding:

• Change the appearance.
  Little spruces up a home and changes its desirability more than new siding.

   

• Increase future resale value.
  New siding offers a benefit to home buyers because it extends the life of an exterior.

   

• Lower utility bills.
  Adding insulation under siding provides a moisture barrier and prevents outside temperatures from disturbing the balance of interior climates.

   

• Decrease maintenance costs.
  The life expectancy of, say, a new paint job is at least five years, and quality paints are touted by manufacturers to last 10 to 20 years. New siding requires little, if any, maintenance.

Brick Exteriors

Brick can last a century. Because it's made from fired clay, brick doesn't burn and is not susceptible to dry rot. If brick is not part of your original structure, then adding brick is typically accomplished by installing a brick veneer, also known as brick face, which are not full complete brick blocks. Maintenance of actual brick involves repointing, that is replacing mortar in between the bricks. Mortar is a mixture of cement, water, lime and sand.

Stucco Exteriors

Stucco can be applied by a variety of methods, but hand-troweled is considered to be the best. It can be smooth, rough or somewhere in between. Stucco needs to be water tight. If water seeps under the stucco, it will separate the material from the home. In a virgin application, stucco is spread over wire mesh, wood slats, paper and sheathing. Like mudding, drying in between coats is recommended. Re-stuccoing is permissible over original stucco.

Vinyl Siding

Vinyl siding is made of PVC or polyvinyl chloride and comes in a variety of colors. The panels are installed from the bottom row up by nailing galvanized roofing nails through the slots in the panel, exposing the nail head so the panels can move. The vinyl expands and contracts in hot and cold weather and must slide freely from side to side. Two main advantages to vinyl are it's inexpensive and never needs painting.

Aluminum Siding

It's hard to tell the differences between aluminum siding and vinyl without touching it as they look similar to each other. Aluminum siding became popular after World War II; however, the color can fade and, unlike vinyl, aluminum can be dented. It also expands and contracts, depending on temperature. Aluminum siding can be painted, and experts recommend oil-based paint over latex.

Wood Siding

Wood siding is manufactured in a variety of types such as shake, clapboard, singles or lap. Panels are applied vertically or horizontally, and finishes range from stains to paint to sealants. Wood siding should be installed over a moisture barrier and some contractors suggest priming the back of the wood and its sides to prevent water from seeping into the wood. Although wood is beautiful, it requires maintenance and can rot.

Log Siding

Covering the exterior of your home with log siding can make it look like a log home without rebuilding the home. Log siding comes in quarter logs and half logs. The finishes are smooth, knotted or, for that authentic log-home appearance, hand-hewn. Some log siding isn't even wood, but resembles wood and is available in vinyl or steel. Common wood choices for log siding are pine or cedar.

Glass Block Exteriors

Glass block walls are non-load bearing. They are laid by installing panel anchors to the jambs, expansion strips around the opening and panel reinforcing wire stabilizers every third or fourth row. Blocks are set into a special mortar made for glass. The maximum recommended size of a glass block wall is about 20 pounds per square foot or 144 square feet. I have a glass block wall in my home, which lets in light, but it does show interior shadows from the street. Routine exterior caulking is suggested.

Composite Siding

Manufactured siding can be created from almost any material and made to resemble natural wood. Some composite siding is made from shredded wood, binders, glue and Portland cement. James Hardie is a well known manufacturer of fiber-cement products -- built to withstand rain, wind, hail and insects -- and this siding is available in a variety of colors, boasting a limited 50-year warranty. Habitat for Humanity builds many homes with HardiBoard.

Stone Siding

Stone has been used for centuries. Today's stone siding products are natural or simulated. Artificial stone faces are lighter and easier to install. Of all the siding options available, stone siding is the most expensive. Most applications support a first layer, which is wall sheathing, covered by water resistant paper on top of which metal lath is secured. Then the stone is set into mortar and laid.