Reports of lenders repossessing the wrong home are further tarnishing the banking industry's image, already bruised by bailouts and bonuses.

The mix-ups have been perpetuated by the sheer number of foreclosures being processed today as well as the various layers of communication involved. Addresses and other information passed from one department to another, or from a contractor to a subcontractor, can get garbled along the way.

"It's what you call a new weakness," said Joe Bada, chief executive of Five Brothers Mortgage Co. Services and Securing Inc., a Warren, Mich., company that inspects and manages foreclosed properties for lenders. "There's just so much happening at the same time. The means of communicating haven't been refined. Information is not moving fast enough from one department to the other."

Though such gaffes are rare, they have happened enough times to lead at least one major servicer to rethink and retool its default-management process. Bank of America Corp., the nation's largest servicer, is updating its contractor-training tools and adding a step when securing a property to ensure that the right home receives the repossession notice.

B of A "re-keys" — changes the locks — on about 16,000 properties a month, said Rebecca Mairone, the Charlotte company's head of servicing. In the last seven months, B of A is aware of just 11 mistakes. That gives it an accuracy rate of about 99.99%.

Still, B of A has been burned. Many of the more recent stories in the news about foreclosure mistakes have involved the company.

There's the case of Alan Schroit, for example, who filed a lawsuit against B of A in January claiming the lender mistakenly seized his Galveston, Texas, vacation home. According to the suit, Schroit did not have a mortgage with B of A, or any other lender. His case in federal court in Texas is still pending. Similar incidents involving B of A have been reported in Spring Hill, Fla., in January and Trenton, N.J., in December.

Overall, B of A admits there was room for improvement.

"There were big mistakes that happened in the past," Mairone said. "As a result of that, we really tightened our process."

B of A "took a deep dive" on the 11 cases to understand what went wrong and how to improve on the process, she said. Most of the mistakes, the company discovered, happened at the contractor level and usually involved the field service representative being dispatched to the wrong property.

B of A works with "hundreds and hundreds" of contractors around the country, Mairone said. And most of those contractors hire their own subcontractors, so as in a game of telephone, it's easy for the instructions to get jumbled.

B of A is not the only company to blunder in this area.

In July 2008, a story surfaced about an Austin family whose possessions were given away to thrift stores after a JPMorgan Chase & Co. contractor, Field Asset Services Inc., seized their home and emptied their house. The home had been headed to foreclosure, but the proceedings were never stopped after the family bought the home. "The foreclosure attorney did not communicate to the client that the property had been sold to a third party," said Dale McPherson, the president and CEO of Field Asset Services in Austin. "So the client then communicated to us that they needed to get it ready for resale." JPMorgan spokesman Tom Kelly said the company has since reached "an amicable settlement" with the family.

The reported mistakes made during the foreclosure process are statistically minuscule considering that there were 315,716 foreclosure filings on homes around the country in January alone, according to the latest data from RealtyTrac Inc. "The likelihood of securing the wrong property on a normal inspection probably happens less than one out of a thousand times," said Marty Foster, senior vice president of loan servicing at PHH Corp., a top-10 mortgage servicer. "And a wrongful-eviction process is probably one out of every 10,000 times."

But "it's such a bad perception problem for [banks]," said Glenn Selig, founder of Publicity Agency in Tampa. "It's such a great example for the consumer that it's 'a big bank against the little guy.' "

Cheryl Lang, the president of Integrated Mortgage Solutions, a default management company in Houston, said the problem often comes down to using inexperienced or newly hired contractors who are not familiar with a lender's guidelines. "It sounds like it might be an easy thing, but experience plays a big role in making things right," she said.

B of A has updated the checklist its contractors use when seizing properties. The list now includes a detailed description of the property in addition to the address.

By April, B of A also will require the contractor to call the servicer and describe the home to a representative to ensure the descriptions match. "Before, they just dispatched with the orders, and there was no handshake back," Mairone said. Now, "the rep on the phone … walks through the process with the vendor. They're standing at the property when they're doing this."

Once B of A confirms the contractor has the right home, it gives him or her an authorization number. That number is also included on the sticker that is placed on the front door, with a toll-free number that the homeowner can call.

B of A has also assigned about 50 employees, some of them new hires, to a new 24-hour hot line for homeowners and contractors.

Outdated loan information can also lead to mistakes. "The status of the loan can literally change daily," said Alan Jaffa, chief operating officer of Safeguard Properties Inc., a Valley View, Ohio, company that lenders hire to manage foreclosed properties.

Safeguard, which works for some of the country's largest servicers, has access to its clients' databases, so it can check the status of the loan right up to the point of securing the property.

"It's possible that even if we found the property vacant on a Friday, on Monday, they could have had conversations with their servicer," Jaffa said. "We would never have known that if we hadn't looked in the system."

Determining whether a home is vacant can be tricky. The homeowner may be away on an extended vacation, or in the process of moving and still have possessions in the home. To address this issue, PHH implemented a control about a year and a half ago that requires its field service contractor to give a homeowner a three-day notice before securing a property. "The notice is really a precaution," Foster said.

McPherson at Field Asset Services said photo evidence is especially important when determining whether a property is vacant. He said his contractors take about 120 photos per job. If there is personal property in the home and it appears to be worth more than $500, his company submits the photos to the client, which makes the final decision on whether the property is removed. "You can't be too careful," he said. "And you can't have too much documentation."

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