WASHINGTON—The federal government's foreclosure-prevention effort continued to sputter, as the number of homeowners leaving the program exceeded those who received new loan modifications for the second straight month.

More than 91,000 homeowners cancelled their government loan modifications in June, while just 38,728 received new modifications, according to data released Tuesday.

Almost 530,000 of the nearly 1.3 million government modifications have been cancelled since the program began last March. Dropouts climbed as homeowners missed payments on their modified loans or failed to turn in required paperwork.

Nearly half of the homeowners who cancelled their trial modifications have found mortgage relief outside the program, the administration said, while less than 2% of cancellations have resulted in foreclosure.

The Obama administration said the effort would help up to 4 million people hold onto their homes. But critics say the program isn't on track to meeting its goals as foreclosures continue to mount.

Under the program, homeowners who qualify can have their mortgage payments cut to 31% of their monthly income by extending their loan term to 40 years or slashing their interest rate to as low as 2% for five years. Participants must make three monthly payments during a trial period before they receive a permanent modification.

Write to Jessica Holzer at jessica.holzer@dowjones.com