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A report issued Wednesday by the California Reinvestment Coalition says lenders are doing too little, too late to help distressed borrowers avoid foreclosure.“The backdrop for all of this is the predatory lending practices of the last few years,” said Kevin Stein, associate director of the San Francisco-based coalition. “Too many borrowers in California were victimized by bad lending practices and today … loan servicers are not working with them to keep them in their homes.” 

In the survey of 42 nonprofit loan counseling and legal services offices statewide, 90 percent of those polled said it was “very common” for their clients to have received adjustable-rate loans that they couldn’t afford.

Many borrowers lacked the income to avoid foreclosures once low, introductory interest rates expired, Stein said. Weak underwriting practices enabled lenders to continue issuing home loans after housing prices had risen well beyond the economic reach of middle-wage earners.

Federal Reserve Chairman Ben Bernanke has urged lenders and investors in mortgage-backed securities to modify loans and write down some debt rather than go through the costly process of evicting residents and reselling their homes.

Responding to the coalition report, Bank of America Wednesday said it is working to address the problem. The lender recently completed its acquisition of troubled Countrywide Financial Corp., which is being sued by Illinois and California in connection with widespread home loan defaults.

“Bank of America is working closely with leading counseling organizations to devise innovative and creative solutions that will address the nation’s continuing foreclosure crisis,” officials said in a statement. “We recognize that today’s housing crisis is truly unprecedented and is putting pressure on many communities during a time of economic distress.”

Help may be on the way, but for now loan servicers “continue to turn to foreclosure as their most common response to borrowers in distress,” the coalition survey found. Foreclosures in San Diego County hit a record 1,556 properties in May, while lenders started foreclosure proceedings by issuing notices of default on 3,139 dwellings.

Sixty-eight percent of those who took the April coalition survey said foreclosures are a very common outcome for their clients. Only 9 agencies, less than a fourth of those responding, said loan modifications were a “very common” outcome.

Only 30 percent of those surveyed said the lending industry as a whole was conducting outreach to borrowers before their rates adjust upward.

The report said HOPE NOW, the lending industry’s national outreach program for troubled borrowers, hasn’t come close to meeting the need for loan modifications, despite increased outreach efforts.

HOPE NOW Executive Director Faith Schwartz said she strongly disagreed with the conclusion that the lending industry isn’t trying hard enough to help borrowers. She said her group is on track to help about 520,000 borrowers in the second quarter, the highest number in any quarter since the program began last year.

To help borrowers, the coalition report contained several recommendations. In part, it called on lenders to reduce interest rates, convert adjustable-rate loans to fixed-rate loans, and write down more debt.

Vincent J. Barnes, a senior counsel for the American Bankers Association, said pressuring lenders to write down debt could lead to tighter credit, cutting off loans to lower-income areas hit hard by foreclosures.

“When we wake up after the deals have been struck . . . we want to make sure there is still a situation where capital is flowing into these communities,” he said.