The number of permanently modified home mortgages rose by 30 percent in April to about 25 percent of the 1.2 million trial modifications started under the Treasury Department's Home Affordable Modification program begun a year ago.

Treasury officials say many modifications were cancelled because of loan servicers' failure to verify homeowners' income. Beginning June 1, the program requires that all modifications be based on verified income statements.

We expect a much lower rate of cancellations going forward as the percentage of verified income modification increases, said Herbert Allison, assistant Treasury secretary for financial stability.