After multiple enforcement actions, lawsuits and multibillion-dollar settlements, state and federal regulators are making sluggish progress in their efforts to prod banks to help mortgage borrowers.
But they apparently still have a lot of work to do. Just ask Craig Tate.
Like tens of thousands of homeowners trying to lower their monthly payments, Tate, 43, and his wife were thrilled when they got a letter from Bank of America in January confirming that their loan modification had been approved. The new mortgage payment on the Tate's Plano, Texas, home would save them about $250 a month.
So the couple was confused when they started getting collection letters saying they were behind on his payments. When Tate offered to resubmit the paper work, he said, the bank refused and demanded a check for $3,100 to bring his loan current and stop the foreclosure proceeding.
"My wife and I did everything they asked. We filled out all the paperwork they asked for," said Tate, the father of two and a systems administrator. "But the cancellation letter that they sent to us when they kicked us out the modification process said that we elected to leave or we declined their services, which in turn made our modification process unappealable."
A Bank of America representative said that the Tates didn't sign on the right dotted lines, and that because of those delays "the normal time frame allocated for a permanent modification had elapsed and the modification was declined."
After writing his senator, filing a complaint with the Consumer Financial Protection Board and contacting the media, Tate said he got a call this week from Bank of America offering to restart the modification process.
"This process could have been done inside of three, maybe six months—it should never have taken a year," he said.
Five years after state and federal officials set out to head off millions of home foreclosures, the Tates aren't alone in trying to navigate the often inscrutable process of getting a lender to modify their loan.
That's not what 49 attorneys general and several federal agencies were expecting when they signed the $26 billion National Mortgage Settlement over a year ago with Bank of America and four other big mortgage lenders: Wells Fargo, Citibank, JPMorgan Chase and Ally Bank.
The settlement was intended to cure a laundry list of lenders' rogue practices and procedures. They included foreclosing on borrowers who weren't in default, denying modifications for borrowers who qualified, relying on flawed account information and improperly executed documents, misapplying mortgage payments, overcharging fees, shuffling borrowers from one representative to another, foreclosing on a loan when a modification application was underway, and subjecting homeowners to endless delays and repeated requests to resubmit lost paperwork.
(Read More: As Prices Rise, Bank Repossess More Homes)
By all accounts, the settlement has helped many borrowers.
Since it was signed in April 2012, the five banks that agreed to the settlement have made progress in reversing the damage created by a wave of imprudent and fraudulent lending that helped sink the U.S. housing market and sparked a global financial crisis.
Iowa Attorney General Tom Miller, the lead negotiator for the states, said last month that bankers have provided some $50 billion in relief to homeowners.
Of the five banks, only Ally Bank has completed the financial relief commitments set out in the settlement, according to the monitor reviewing banks' compliance. With the largest loan portfolio among the five banks, Bank of America has provided the largest share of relief.
But critics contend that much of that relief represents credit for agreeing to short sales—in which a homeowner denied a new loan gets the bank's permission to sell their house for less than the mortgage balance. That relief also includes the write-down of a second mortgage, which doesn't necessarily stop a foreclosure.
Miller said that $11 billion of relief has gone to writing down mortgage loan balances—twice the level the states expected a year ago.
"Our main concern was principal reduction because that keeps people in their homes," Miller said. "Whatever the critics are saying, that's a huge number."
Another $1.5 billion has been targeted to fund payments of about $1,500 to about a million homeowners who suffered financial harm, said Miller.
But progress has been slower in getting banks to cut through the thicket of red tape and mistakes that have plagued homeowners trying to negotiate new loan terms and save their homes.
Next week, regulators, Congress, borrowers and their attorneys are expected to get the first report card on how well lenders are living up to their promises in that settlement, which assigned a monitor, former North Carolina Banking Commissioner Joseph Smith, to oversee the banks' compliance.
(Read More: Foreclosure Crisis Still Has Millions in Its Grip)
In an interim report in February, Smith said his office had received more than 5,700 complaints from borrowers whose loans were being serviced by one of the five banks.
"Things are better but we aren't there yet," Smith said in an interview last month. "There are still too many examples of situations that are not acceptable."
In the past few weeks, those complaints have gotten louder. After a review of more than 300 complaints that his office fielded in a sixth-month period, New York Attorney General Eric Schneiderman last month said he planned to take Wells Fargo and Bank of America back to court, saying they were not living up to the legal commitment they made to end the processing delays, multiple requests for documents and other practices the settlement was intended to correct.
"They agreed to stop that conduct," he told CNBC. "They have not stopped. We're taking them to court. It's that simple."
A Bank of America spokeswoman said the bank would review the customer service complaints cited by Schneiderman, "which we take seriously and will work quickly to address."
Wells Fargo said it "is committed to complete compliance with the National Mortgage Settlement and its associated standards" and "will continue to provide transparency into the progress we are making to provide relief to consumers."
(Read More: Foreclosure Crisis Still Has Millions in Its Grip)
Other state attorneys general say they have been fielding calls from frustrated borrowers.
Florida Attorney General Pam Bondi last week said her office is reviewing nearly 300 complaints of possible violations of the agreement. In a letter to Bank of America, she cited "troubling patterns that are emerging from our review of complaints, clearly pointing to possible larger systemic problems regarding Bank of American's implementation of the settlements' servicing standards."
Last month, Illinois Attorney General Lisa Madigan said a review by her office found that in some 45 percent of the files reviewed by her office, banks were repeatedly asking for the same documents.
"The new servicing standards were supposed to eliminate headaches for homeowners," Madigan said. "But unfortunately, it seems we're hearing about the same frustrating experiences. Homeowners are getting the runaround, receiving multiple requests for the same information and experiencing continued delays that put them closer to foreclosure."
Housing counselors and attorneys working with homeowners also report widespread practices that the banks agreed to correct under the settlement.
"There are still way more violations of the settlement provision than there should be," said Deborah Goldberg, special project director at the National Fair Housing Alliance, who recently testified before a congressional oversight panel. "Many people are still having a very difficult time working with their [lender] to try and save their home."
In April, the California Reinvestment Coalition, a statewide group of nonprofits helping homeowners avert foreclosure, found widespread violations of the settlement in a survey of housing counselors.
They cited problems reaching a single point of contact, foreclosures that were started while borrowers were negotiating in good faith for a loan modification, and banks failing to meet the timelines they agreed to when responding to an application for a loan modification or replying with a decision.
In April, Sen. Barbara Boxer, D-Calif., wrote to state and federal regulators overseeing the settlement urging them to take stronger enforcement action.
"While the banks have been relieved of that legal uncertainty, struggling homeowners continue to face a seemingly patchwork system that leaves them at risk of losing their homes," she said.
The year-old settlement is not the first time regulators have sanctioned mortgage companies for treating borrowers badly. In April 2011, the nation's four federal bank regulators ordered 14 mortgage-related firms to fix error-prone document systems and procedures. The regulators said the problems were so widespread that they presented "significant risk to the safety and soundness of mortgage activities" and "must be remedied swiftly and comprehensively."
The enforcement action also called for a comprehensive review of more than 4 million loans to confirm widespread reports of lost documents, endless delays and foreclosure notices issued even as loan modifications were in place, among other harms to borrowers.
But in January, regulators canceled the review, saying it was taking too long and costing too much. An April report from the Government Accountability Office said the review did not collect enough data to determine how badly homeowners had been harmed. Nonetheless, regulators agreed to settle their enforcement action after lenders agreed to make payments to homeowners, most of whom received a few hundred dollars.
Beyond curbing the mistreatment of borrowers, the National Mortgage Settlement was supposed to prod lenders to pick up the pace of loan modifications industrywide. In many cases, the solution was as simple as cutting the loan's interest rate to reflect the deep rate cuts engineered by the Federal Reserve in its effort to save the big banks from collapse.
Based on that goal, the settlement has fallen short. In the 12 months after the settlement, lenders modified some 905,000 mortgages—down from 950,000 in the prior 12 months ending in March, and nearly 1.6 million modifications completed in the previous 12 months, according to industry data. (Those numbers also include modifications made by lenders who were not party to the settlement.)
Meanwhile, lenders began foreclosure proceedings against another million homeowners during that period.
Unlike the million homeowners who entered the foreclosure pipeline in the past year, the Tates were able to save their home by dipping into savings they had been accumulating to fix their roof. That's the only thing that kept him from losing the house—after never missing a payment, he said.
"I had to pay them to keep [them] from accelerating the foreclosure proceeding," he said. "We were just lucky that we had the money."
—By CNBC's John W. Schoen. Follow him on Twitter @johnwschoen.