When the Obama administration was bailing out the financial industry last year, it also offered relief to strapped homeowners trying to stave off foreclosure. It said the Making Home Affordable program would help up to 4 million borrowers reduce their monthly house payments.

The initiative attracted lots of interest but has been a major disappointment, including in our region. And it's outrageous that some of the main culprits in the program's difficulties are the banks and mortgage firms whose excesses helped cause the housing crisis in the first place.

The finance companies are participating in the program, but they are not doing enough to make it work. In case after case, homeowners have to navigate a prolonged, nightmarish bureaucratic maze to try to take advantage of the assistance. Only a fraction of applicants have obtained permanent loan modifications.

"The biggest issue is that the banks aren't working it efficiently with the housing counselors [who advise homeowners] to move the process forward," said Chad Williams, executive director of the Coalition for Homeownership Preservation in Prince George's County.

Williams noted that the situation was different when the financial industry was peddling mortgages rather than renegotiating them. "Before the crisis, when counselors were working with people to get them into homes, the process went much smoother," he said.

The plan involves a straightforward trade-off. The government asks lenders to cut mortgage payments for eligible applicants by lowering their interest rates or extending the life of their loans. In return, the Treasury reimburses lenders for some of their costs.

But fewer than 200,000 applicants nationwide -- 2,446 in our area -- have succeeded in getting a long-term payment cut, as opposed to just a temporary one. Pressures on homeowners are rising, with foreclosure activity up 70 percent in Maryland from the first half to second half of last year.

Diana and Tim Moore, who own a five-bedroom colonial in Charles County, are potential casualties. They said they applied for relief under the plan in the spring. Their lender, Wells Fargo, said they were eligible. It granted them a temporary reduction in their mortgage payment from May through August, saving them a total of about $10,000.

Then it all went sour. The lender said the Moores weren't eligible after all and threatened to foreclose if they didn't repay the $10,000. When they protested, the bank said it would look again.

In January, Wells Fargo told them again that they were "pre-approved" and asked them to resubmit all their documents. They did so twice and received confirmation Feb. 5 that the paperwork had been received ahead of the deadline. But eight days later, the Moores were told that the modification was denied because the material wasn't sent in a timely manner. Now the foreclosure is scheduled for the end of March, and several of their credit cards have been canceled partly because they are listed as delinquent on the mortgage.

"What really burns us the most is we had not missed one payment in four years" before trying to take advantage of the federal plan, Diana Moore said. The couple originally sought the modification after their combined annual income fell by nearly $12,000 in recent years as they lost bonuses and overtime in their communications industry jobs.

In response to my query about the case, Wells Fargo said the Moores are "no longer eligible" for the program, without explanation. The bank assigned the loan to a new team leader to try a different approach. It said "the modification process is complex and, at times, results in confusion or poor communication."

The Moores' problems are entirely typical. Homeowners and counselors deal constantly with unreturned phone calls, lost documents and shifting guidance from lenders and service firms.

"It's taking four to six months to get answers to simple questions like: Is my client eligible? and, Do you have their paperwork?" said Carol Gilbert, assistant secretary of the Maryland Department of Housing and Community Development.

In part, the mortgage industry wasn't prepared for the avalanche of extra work created by the foreclosure crisis. It didn't have enough experienced staff members to deal with the problem.

"There's insufficient capacity in the industry to handle the volumes in a way that would make a material difference in the program," said Paul Koches, executive vice president of Ocwen Financial, an independent loan servicer.

The program has other difficulties. It isn't well suited to help certain kinds of borrowers, such as people who are unemployed or whose houses are worth less than their mortgages. For their part, banks and mortgage firms complain about homeowners who don't provide correct documentation or think they're eligible when they aren't.

The administration needs to look again at the project. Some in Congress are recommending fines or other punishments for lenders, or they want to completely revamp the program.

In any case, the banks and mortgage companies have to step up. We taxpayers bailed out the financial industry even though its binges helped cause the worst recession in seven decades. We have a right to demand that it properly train and deploy enough workers to answer the phones, keep track of faxes and give people a reasonable chance to save their homes

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