The 1 millionth Home Affordable Modification Program trial or permanent workout failed in July, according to the latest Treasury Department data released Thursday.

A total of 770,834 borrowers failed to finish either a three-month trial or were determined to not qualify for the program from June 2010 through July 2012.

Another 229,185 permanent modifications redefaulted after making the first three monthly payments during the trial process, according to the report.

Since it launched in March 2009, a total of more than 1 million mortgages made it through the trial stage, but just over 825,000 active permanent modifications remain active today. And the monthly amount of newly reported workouts dropped to just 16,767 in July since average roughly 25,000 per month at the end of last year.

Even with a recent expansion, for which there is no official estimate yet, the amount of total modifications will fall well short of the original 3 million to 4 million originally promised.

More than one-third of the HAMP failed trials and permanent mods end up being modified through another proprietary program. But roughly 16% of the trials end up going through foreclosure, according to the Treasury.

The Special Inspector General for the Troubled Asset Relief Program said less than $3 billion of the $29.9 billion set aside for HAMP was actually spent as of June 30.

Treasury Assistant Secretary for Financial Stability Tim Massad continued to say Thursday that the program established guidelines around which servicers built their own programs. But Mitt Romney has challenged them as part of his presidential campaign and vowed to end “the alphabet soup” when he takes office.

The Treasury also found that more servicers were improving their performance under HAMP. It gave back witheld incentive payments last year to Bank of America ($9.55 0.15%), JPMorgan Chase ($41.57 0.17%), and Wells Fargo ($36.13 0.58%).

In the second quarter, the Treasury disagreed with less than 2% of all participating servicer decisions in HAMP. At the start of last year, some servicers such as Ocwen Financial Corp. ($27.30 -0.13%) and One West Bank had disagreement rates near 7%.

“By shining a spotlight on individual servicer performance in key areas, and requiring improvements through our compliance process, the nation’s largest mortgage servicers are fixing their processes while being held publicly accountable,” Massad said.