Banks' promise to help troubled homeowners rings hollow

Overhead view of house

If you're one of the unlucky homeowners who has tried to get your mortgage modified, you probably know the drill when it comes to your lender.

First you talk to someone, then you explain your story and send in some paperwork. A few weeks later, you'll talk to someone different, explain your story again and then resubmit the exact same paperwork, which has been lost or misplaced.

Around and around you go.

The recently announced mortgage settlement between most states' attorney generals and five major banks is supposed to put an end to the revolving door.

Forgive me if I'm skeptical.

The $26-billion settlement includes banks' promise that a mortgage customer will have a single point of contact, a real human being at each bank who will walk you through the mortgage refinance or principal-reduction process.

But the banks promised the same thing in April 2011, and since then there has been scant improvement, according to the New York Times.

One California homeowner has been trying to modify the terms of her mortgage since 2009. She was excited last October when her bank sent her a letter telling her that her case been assigned to a single person.

She was less excited when, within weeks, she got three more letters. Each gave her a different person's name as her single point of contact. None of them could help her.

Banks say they've made considerable progress since last April and the bureaucratic nightmares will end -- mostly -- by the end of 2012.

Bank of America says it began converting customers to the single point of contact system in the third quarter of 2011, and JPMorgan Chase says it has reduced customer complaints by 62% since they peaked last year.

Some homeowners have enjoyed bits of success. One customer called her assigned single point of contact 30 times but talked with that person just once.

After complaining up the bank's command chain, the woman filed complaints with regulators and the Consumer Financial Protection Bureau. The bank found her another, more effective contact and conversations ensued, as did a mortgage modification.

Calling that progress seems an example of damning with faint praise.

Bank of America started using single points of contact in the third quarter of 2011? That's nearly four years into the subprime mortgage crisis. The idea never occurred to their managers earlier?

As for JPMorgan Chase, I wonder if customer complaint levels dropped because customers are happier or because customers simply gave up and went away.

Banks say they're running complicated operations and aren't able to change on a dime. I'm sure that's true.

Still, think of all the complicated things banks get right. They're certainly eager to make sure fees get assessed and foreclosures are processed. Mortgage modifications aren't a profit center, and they don't get efficient treatment.

I doubt this is a coincidence.

Even the woman who finally got her promised single point of contact inspires little joy, though, of course, I'm glad she got her mortgage modification.

Her regular efforts over eight months represent a second job. Not everyone has the persistence, savvy or time to complain that consistently or effectively.

Sometime this spring, the federal government will announce new mortgage-servicing standards.

The secretary of the Department of Housing and Urban Development, Shaun Donovan, says these standards will mean "no more lost paperwork, no more excuses, no more runaround."

The new standards, he says, will "force the banks to clean up their acts."

Here's hoping he's right.

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