Mario Tama / Getty Images

Brittany Brewer fixes her gown on April 21 as she prepares for the Owsley County High School prom next to a wood stove in the home where she lives with her grandmother in Booneville, Ky.

Mario Tama / Getty Images

Volunteers help restore the Noble Pioneer Museum which contains artifacts of local Appalachian pioneer life. The site contains original pioneer cabins and is currently closed but volunteers hope they will be able to re-open it soon.

Daniel Boone once camped in the Appalachian mountain hamlet of Owsley County which remains mostly populated by descendants of settlers to this day.

The 2010 U.S. Census listed Owsley County as having the lowest median household income in the country outside of Puerto Rico, with 41.5 percent of residents living below the poverty line. Familial and community bonds run deep, with a people who share a collective historical and cultural legacy uncommon in most parts of the country.

However, the community of 5,000 struggles with unemployment because of the decline in coal, tobacco and timber industries. Health issues include drug addiction without effective treatment.

--Getty Images

Mario Tama / Getty Images

Riders pass an abandoned car during the Owsley County Saddle Club trail ride on April 20 in Booneville, Ky. The trail ride attracts riders from outside the county who contribute much needed revenue.

Mario Tama / Getty Images

Paul Neace, 72, sits in his home in Owsley County on April 20 in Booneville, Ky.

Mario Tama / Getty Images

James Moore plays the guitar as Robert Go sings while revelers hug at Joe's Meat Market #2 in Owsley County on April 20 in Booneville, Ky.

Mario Tama / Getty Images

A man reads a newspaper in a restaurant in Booneville, Ky.

Mario Tama / Getty Images

Mose Noble and Lowell Morris sit while taking a break from cleaning a cemetery in Owsley County in Booneville, Kentucky. Morris' grandfather killed Noble's grandfather during a time in Appalachia when blood family feuds still existed. The county contains hundreds of centuries-old graveyards. Morris is paid $8 per hour to do the work while Noble volunteers.

Mario Tama / Getty Images

Mose Noble's nephew Johnny Noble, 9, sits in Mose's trailer during a visit on April 21 in Owsley County, Ky. Johnny visits his uncle from time to time. Noble's trailer has no electricity or running water but he receives governmental and neighborly assistance.

Mario Tama / Getty Images

An abandoned building in Owsley County, Ky.

Mario Tama / Getty Images

The Taylor family waits to attend the start of the Owsley County High School prom on on April 21 in Booneville, Ky.

Mario Tama / Getty Images

Married students Travis and Starr Lewis with their daughter Ariel, 3 weeks, attend the Owsley County High School prom on April 21.

Follow @msnbc_pictures

•Sign up for the msnbc.com Photos Newsletter

Chris Keane / Reuters

Republican presidential candidate and former Governor of Massachusetts Mitt Romney speaks to supporters in Charlotte, North Carolina April 18, 2012.

CHARLOTTE, NC -- Mitt Romney delivered a blistering attack on President Obama's economic record just footsteps from the site where the president will accept his re-election nomination this summer.

On a rooftop a few hundred yards away from the Bank of America stadium, Romney offered his own alternative version of what North Carolinians could expect to hear from the president in his acceptance speech, as well as what they would not.

"What you won’t hear at that convention is that for the last 38 months, unemployment has been above 8 percent, that we’ve had 24 million Americans that are out of work, stopped looking for work, or underemployed," Romney said.

"You won’t hear that, since he gave that speech and became president, that there have been 50,000 more job losses here in North Carolina, more than twice as many as would fit in that stadium," Romney continued, referring to the nearby stadium, the home of the NFL's Carolina Panthers, where the president will speak on the final night of the Democratic convention.

The empty stadium was meant to serve as the backdrop for Romney's speech today -- a visual bracketing of the president -- but was ultimately thwarted by rain that forced the remarks indoors.

Romney focused not just on Obama's planned 2012 convention speech, but also his 2008 remarks, reading aloud from a portion at one point and substituting then nominee-Obama's rebuke of the Bush economy, with his own criticism for the Obama economy, urging the president to take ownership of the economy.

"He can’t continue to try and deflect blame elsewhere," Romney said. "At some point he’s got to acknowledge this is his economy –- that what’s happened is the result of his policies –- not of his predecessors, not of Congress."

He even cracked a joke at the expense of the optics of Obama's acceptance speech, in which the president stood amidst towering Greek columns on the floor of Denver's Invesco field.

"You're not going to see President Obama standing alongside Greek columns. He's not going to want to remind anybody of Greece," Romney said.

The former Massachusetts governor also said the economy may yet improve before Election Day, but that the president would deserve no credit if it did so.

"Upon being elected president he said if we let him borrow $787 billion he would hold unemployment below eight percent, and it has not been below eight percent since," Romney said. "Now its going to get below 8 percent someday. Our economy always come back, comes back -- but it's no thanks to the policies of Barack Obama."

The presumptive GOP nominee also predicted that, despite the presence of the Democratic convention in the state, and the president's current organizational edge here, Romney would return the Tarheel State to the Republican column in 2012.

"The president’s going to do everything he can to get North Carolina in his column, and that will not be enough because we’re gonna win North Carolina in November," Romney said, to cheers.

In a nod to recent polling that continues to show Obama's personal favorability ratings greatly outpacing his own, Romney also argued that liking the president alone was not reason enough to vote for him.

"Even if you like Barack Obama, we can't afford Barack Obama," Romney said.

You’ve filed your tax return. Now comes the happy anticipation of wondering how quickly your refund will show up – and grousing when it isn’t in your bank account quickly.

The IRS has for years faced intense pressure to make the painful process of paying taxes more palatable by at least providing a zippy tax refund. But such service may be coming at a price as the Internal Revenue Service faces a surge of identity theft tax fraud, as well as the usual tax cheats.

Some victims complain that much of the fraud could have been avoided if the Internal Revenue Service had more carefully screened the fake return in the first place.

“From a publicity point of view you’re trying to be the nice bad guy,” said Roberton Williams, senior fellow with the Tax Policy Center.

That is a tough balance, he pointed out.

"(They are) supposed to process returns very quickly and worry about the fraud aspect, and at the same time Congress is saying, 'Do it with less money,'" Williams said.

The IRS has struggled with its image for decades, wrangling with a dual role of helping taxpayers file their returns and enforcing against tax cheats.

The agency, once known as the Bureau of Internal Revenue, changed its name to the Internal Revenue Service in 1953 in an early effort to appear more customer-centric, said Joseph Thorndike, director of the Tax History Project for Tax Analysts.

But hatred is not too strong a word to express how some people feel about the agency. In 2010 a tax protester crashed his plane into an IRS office in Austin, Texas, killing himself and an agency employee. At the time a Treasury official said there were more than 1,000 threats a year against IRS employees, a figure that had been climbing.

The IRS also struggles with funding. Last year President Barack Obama sought to boost the agency's $12.1 billion budget by more than $1 billion, so it could hire more workers. Instead Republicans led a successful effort to trim the budget to $11.8 billion. 

Pressure to speed the refunds can be be intense in a soft economy, when individuals – and the economy in general – could use that money.

The IRS processed about 145 million returns last year, and three-fourths of those taxpayers got refunds. The average refund was about $3,000.

But the IRS has stepped up screening efforts to try to stop fraud. Spokesman Terry Lemons said IRS officials have identified about 2 million individual returns for review so far this tax season, out of about 84 million that have been received. That’s about the same number of returns that it reviewed in all of last year.

When the IRS does flag a return for such a fraud screen, Lemons said the delay in sending out a refund will vary widely depending on what agents find.

The IRS also has gradually increased the number of returns that get audited over the past decade or so, following a drop-off in 1998, when the IRS went through a major overhaul to focus more on customer service. It currently audits about 1 percent of all returns, Lemons said.

He concedes it’s tricky.

“On the one hand you have millions and millions of taxpayers who have worked hard and are entitled to refunds, and they should be able to get that as quickly as possible,” Lemons said. On the other hand, he said, the IRS has an obligation to taxpayers to make sure returns are checked thoroughly for potential fraud.

In testimony to a Congressional subcommittee last month, Nina Olson, the taxpayer advocate, said that although taxpayers who are victims of fraud need to be protected, so do the majority of legitimate taxpayers who rely on their refund checks.

“With the introduction of e-filing, combined with the increasing number of refundable credits run through the tax code, our tax system has shifted, for better or worse, to one of instant gratification,” Olson said in the written testimony.

Still, she noted, “The benefit of enjoying such a tax system is somewhat offset by the increased ability of perpetrators to defraud the government.”

Over the years, he said, the IRS has seemed to sway back and forth depending on the political mood and other factors, said Thorndike, the tax historian. Now is one of those times when Thorndike thinks sympathies are more with helping the taxpayer.

“This is the age of the Tea Party, at least sort of, still, and that makes people even more unsympathetic to the federal tax collector,” Thorndike said. “So it’s not a great time for the IRS to be doing anything other than emphasizing customer service.”

Is the IRS striking the right balance? Tell us on our Facebook page.

NEW YORK/WASHINGTON -- Gary Feeman has been searching for a job for 16 months. He's not ready to give up just yet, but the 60-year-old worries he is running out of options.

Feeman is among the more than 5 million Americans who have been out of work for more than six months and who represent the heart of the crisis in the labor market.

Their plight also poses a warning that U.S. unemployment may not drop back to its pre-recession levels and could be stuck higher than many policymakers expect.

Feeman, from Lancaster County, Pennsylvania, has sent out as many as 100 resumes. But the former maintenance director at a small amusement park in the area, has had only one interview in person. That was in January.

"I have tried everything under the sun," he said. "The frustrating thing to me is that when you apply for a job, employers do not respond either way."

One of the biggest challenges facing U.S. Federal Reserve Chairman Ben Bernanke and his colleagues is to understand whether people like Feeman will eventually find work once the economy gathers enough speed.

Bernanke appears to think they will and he has suggested more stimulus by the Fed might be needed to kick-start demand, and job creation, into a higher gear.

But if he's wrong, the central bank risks pumping too much money into the economy in an effort to help people who have become unemployable. Rather than bringing down the jobless rate, the Fed could eventually fuel higher inflation.

"We're living through a juncture in U.S. policy history in which we're making major decisions about what type of society we're likely to be," said Steven Davis, an economist at the University of Chicago. "Those decisions will affect things for a generation."

Some 40 percent of the nation's unemployed have been out of work for more than six months. That's over twice the rate of long-term unemployment just before the 2007-2009 recession.

Bernanke mostly pins long-term joblessness on weak demand from American consumers and companies. In late March, he pointed to data showing that, compared to before the recession, the short-term unemployed also are taking much longer to find work.

This, he argued, justifies the Fed's policy of keeping interest rates low to help the economy. Persistent long-term unemployment is a risk because it might someday make people unemployable, he said.

"If progress in reducing unemployment is too slow, the long-term unemployed will see their skills and labor force attachment atrophy further, possibly converting a cyclical problem into a structural one," Bernanke told a conference of economists.

Long-term unemployment has other costs for the economy. A paper for the Brookings Institution, a Washington think-tank, finds that men who lose their job when the unemployment rate is above 8 percent forfeit twice as much in future earnings than if had they lost their job when the rate was below 6 percent.

Still, a number of private economists argue there are signs the structural unemployment problem is already larger than Bernanke would acknowledge.

Wall Street more gloomy than the Fed
Most Fed policymakers think the jobless rate could fall to somewhere between 5.2 and 6 percent before the economy heats up enough to fuel inflation. That's a higher "natural" unemployment rate than the roughly 5 percent rate estimated by most Fed policymakers three years ago.

Many private sector economists have shifted their estimate of the natural rate even higher. Credit Suisse pegs it at around 6.5 percent, and UBS at near 7 percent.

"If that is the case the Fed will run out of effectiveness much sooner than they realize," said Adolfo Laurenti, deputy chief economist at Mesirow Financial, in Chicago. He estimates the natural rate at between 6.5 and 7 percent.

Some economists see signs of an increase in the natural jobless rate in the widespread mismatch between job openings and the qualifications of those seeking work.

In U.S. manufacturing, for example, more than 600,000 jobs are unfilled because of a lack of skilled applicants, according to a study by Deloitte and the Manufacturing Institute.

Many of the companies that are hiring are turning increasingly to younger workers with more up-to-date skills training, rather than taking a chance on people who have been out of work for a long time.

In Kentucky, a construction firm responded to the recession like most of its rivals: from 2008 to 2010, Gray Construction cut 51 of its total of 245 employees. As signs of growth returned to the economy, it started hiring again, with a focus on college graduates with specialized degrees.

"There has to be a very compelling reason to take somebody who was not in the industry, who has changed over to the industry, versus somebody who graduated with an engineering degree or construction management degree," said president and chief executive Stephen Gray.

Another possible source of a run-up in the natural jobless rate is that firms are relying more and more on automation technology. Workers untrained in using that technology could struggle to get jobs.

Some economists think long-term unemployment is also kept high because many workers can't move to find work because they owe more on their mortgages than their homes are worth.

"I don't think people have fully appreciated how deep the hole is," said Michael Greenstone, an economist at MIT university and former chief economist at the White House's Council of Economic Advisers. "The Great Recession is going to be living in our collective homes for many more years to come."

The Fed has bought $2.3 trillion in securities and kept interest rates near zero for over three years to aid the economy and fight the sharpest jump in unemployment since World War Two.

So far it has helped to bring the jobless rate down from 10 percent in 2009 to 8.2 percent in March, although many of the unemployed have become so demoralized that they have left the formal labor force.

If some economists are right to believe the natural unemployment rate is as high as 7 percent, then the Fed could hit a wall before long and need to tighten monetary policy.

Minneapolis Fed President Narayana Kocherlakota -- one of the policymakers at the Fed who suggests rates will have to rise sooner than later -- thinks last year's rise in inflation was a sign the Fed is approaching that wall.

"There's a point at which it gets to be very costly in terms of how much inflation you'd have to generate in order to get a reduction in unemployment," Kocherlakota said last month.

Such predictions are grim for construction workers like Mfthel, 36, who most days sits on a plastic crate at an intersection in Brooklyn, New York, waiting for casual work -- as he has done most days since the recession hammered his industry.

Mfthel, who declined to give his family name, and some of the other dozen men waiting on the street corner with tools and steel-toe boots said they had permanent jobs before the construction boom ended. Now they can expect $7 to $10 an hour for repairing buildings, moving furniture and paving driveways.

"Now they don't come or they don't pay enough," he said. "You can't do much with 20 bucks."

Discuss this story on Facebook.

Andrew Burton / Getty Images

A "Pink Slip" protest in New York last month aimed to keep the focus firmly on the problem of unemployment. The economy has been adding about 200,000 jobs a month -- not enough to make a serious dent in long-term unemployment.

Something in Friday’s employment data won't add up.

For the past 50 years, it’s been widely assumed that the jobless rate can’t fall much unless the economy expands faster than its normal pace. Anything less only creates enough jobs to keep up with the growth of the labor force -- not absorb the millions left unemployed by the latest downturn.

But over the past six months, the U.S. unemployment rate has surprised economists by rapidly falling to 8.3 percent from 9.1 percent even as the economy has yet to get back up to pre-recession speed. According to the textbooks, that’s not supposed to happen.

The unexplained drop has touched off a debate among dismal scientists, who have gone back to their chalkboards to try to figure out what is happening.

Federal Reserve Chairman Ben Bernanke recently sought to reassure his fellow forecasters that their textbooks weren’t out of date. In a widely followed speech, Bernanke argued that the unexpected, sudden drop in the jobless rate may simply represent the flip side of an equally extraordinary surge in layoffs in 2008 and 2009, as employers hunkered down after the worst financial collapse since the Great Depression.

“Employers reduced their workforces at an unusually rapid rate near the business cycle trough,” Bernanke told a meeting of the National Association for Business Economics, “perhaps because they feared an even more severe contraction to come or, with credit availability sharply curtailed, they were trying to conserve available cash.”

Now that the worst of the crisis has passed, Bernanke suggested, employers have quickly reversed course and brought some of those workers back onto their payrolls. The result, in effect, is a short-term surge in hiring that doesn’t represent the longer-term pace of job creation.

Private economists have considered other theories.

Some argue the economy may be growing faster than the official numbers suggest. That view has been supported by recent data on consumer spending, including a strong rebound in car sales and early signs that the housing market is beginning to find a bottom. Several surveys also point to improved confidence among consumers and business managers.

Here's where it gets a bit technical.

Most analysts look at gross domestic product as the best measure of how fast the economy is growing (or shrinking during times of recession). Some argue it might be better to look at gross domestic income, which tracks changes in wages and profits rather than  the value of goods and services produced.

“That measure showed more than 4 percent growth in the fourth quarter compared to GDP growth of 3 percent,” said Goldman Sachs economist Andrew Tilton. “So one piece of the explanation may be that the recent GDP growth data may have slightly understated the rate of recent economic growth.”

Unseasonal adjustment
Another explanation may be that the sharp drop in the unemployment rate this winter painted a brighter picture of the job market than it should have.

Like many economic statistics, the government’s employment data is adjusted to try to factor out recurring seasonal trends, such as the surge in temporary hiring by retailers and the postal service during the holiday season. The purpose is to get a better idea of underlying, longer-lasting trends.

Some economists suspect that a statistical quirk in seasonal adjustments may have overstated the rebound in the job market. Because the 2007-09 recession was unusually deep, and the depth of it came in the winter months, the seasonal comparisons may now be skewed, according to Wells Fargo economist Joe Seydl.

The sharp drop in the employment rate also comes as many would-be job seekers have given up looking for work, which tends to lower the total percentage of those who are officially defined as unemployed. The labor participation rate been fallen steadily since the recession began in 2007 and has continued to fall since the economy began recovering in 2009.

Some of those who have given up are older workers who have been forced to retire earlier than they’d like. The biggest drop, though, has come from younger workers who have gone back to school, moved back home or cashed in their savings to travel the world before settling into a life of mortgage payments and retirement planning.

“Those two forces were pointing to lower labor force participation over the last few years, but now they’re pointing in opposite directions,” said Tilton. “That would mean that the number of people looking for jobs would be rising more quickly.”

As more people return to the labor force, the pace of job creation will have to pick up even further to keep the unemployment rate falling.

Some economists –- including Bernanke –- don’t think that will happen unless the economy picks up a substantial head of steam from its current growth pace. The more likely outcome is that the jobless rate levels off or falls much more slowly than it has over the past 12 months.

“Further significant improvements in the unemployment rate will likely require a more-rapid expansion of production and demand from consumers and businesses,” Bernanke said.

Private economists concur. NABE’s latest forecast of 45 leading business economists calls for the jobless rate this year to average 8.3 percent, its current level, and drop only slightly to 7.8 percent next year, based on expected slow economic growth.

Doubts about the official jobless rate have prompted some economists to turn to an alternate measure: the employment-to-population ratio, which paints a more sobering picture of the employment outlook.

After peaking at the end of 2006 at 63.4 percent, the portion of the 16-and-over population holding a job (excluding those in prison, the military, or long-term care) fell to 58.2 percent by the end of 2009. Since then, the ratio has barely budged - rising by less than half a percentage point.

Getty Images stock

Among young adults, 61 percent said they have friends or family members who have moved back in with their parents because of economic conditions

You would think young adults stuck living at home with their parents would be sending texts of despair to friends about their lot in life.

Think again. Most Gen Yers think it's gr8.

Three out of ten adults, ages 25 to 34, are living with their folks and of those 78 percent said they’re happy with it, according to a Pew Research survey released Thursday and titled “The Boomerang Generation: Feeling OK about Living with Mom and Dad.”

Even more surprising is that 77 percent of those still under their parent’s roof have high hopes for their economic futures.

The Pew survey is based on telephone interviews with about 2,000 young adults around the country in December.

It’s becoming like an episode of “All in the Family” out there.

“The share of Americans living in multi-generational family households is the highest it has been since the 1950s, having increased significantly in the past five years,” according to additional Pew research that looked at U.S. Census data, and the 24 to 35 crowd are among the most likely to be living in such arrangements.

One reason Gen Yers might be happy with the new family order is because so many of them are doing it, the researchers surmised.

• Among young adults, 61 percent said they have friends or family members who have moved back in with their parents over the past few years because of economic conditions.
• And 29 percent of parents of adult children report that a child of theirs has moved back in with them in the past few years because of the economy.

Indeed, the unemployment rate for this group, which on the decline, is still 8.7 percent, above the national average in February of 8.3 percent, according to the Bureau of Labor Statistics.

“Adults in their late 20s and early 30s have fared somewhat better in the labor market, but they have felt the sting of tough economic times in other areas of their lives,” the report stated. “Many have had to settle for jobs they didn’t really want just to make ends meet. Fully a third have gone back to school, and an equal share (34 percent) have postponed either marriage, parenthood or both.”

The economic turbulence, Pew reported, “appears to be giving rise to a protracted set of economic ties between parents and their adult children.”

Having the kids return home isn’t all bad for the parents either, especially when it comes to finances.

• 48 percent of young adults report that they have paid rent to their parents.
• And 89 percent said they helped with household expenses.

This might be why many young adults reported not feeling footloose and fancy free, even though they’re not burdened by paying their own way. “Nearly eight-in-ten of these 25- to 34-year-olds say they don’t currently have enough money to lead the kind of life they want,” Pew results found, “compared with 55 percent of their same-aged peers who aren’t living with their parents.”

Are you over 20 and still living at home with your parents? Let us know on Facebook.

Jason Cohn / Reuters

First year apprentice ironworker George Vacheresse pauses during a class at Ironworkers Local 539 in Wheeling, West Virginia. Vacheresse was a steelworker for 17 years but decided to retrain after watching layoffs erode the workforce at his machinist shop over 17 years. He hopes his new skills will lead to a much higher-paying job.

Jason Cohn / Reuters

The town of Wheeling, West Virginia is emblematic of the economically struggling region it sits in, and could get a big boost from a new Shell chemical plant planned for the area. Real estate agents, restaurants, banks and others report a business jump that they expect to be made permanent by the arrival of chemical plants.

Reuters reports from Wheeling, West Virginia — In George Vacheresse's lifetime, Appalachia has fallen from its prime when steel mills and coal mines anchored middle-class communities and offered hope there always would be enough work to go around.

In this historically poor region nestled in the misty mountains of the eastern United States, most steel mills shut down long ago and the coal workforce has shrunk by 90 percent in the past 40 years.

Now Vacheresse and other residents are counting on cheap natural gas from the massive reserves in the Marcellus and Utica shale rock formations to reinvigorate the region's economy.

In the Northern Appalachia area alone, where West Virginia, Ohio and Pennsylvania converge, billions of dollars of investment is planned by major companies, including most recently Royal Dutch Shell, to recover the gas and build new chemical plants.

"I hope it gives us jobs for everybody," said Vacheresse, 39, who last fall joined an apprentice scheme at a Wheeling, iron workers' labor union to learn how to work in steel construction. He made the move after watching layoffs erode the workforce at his machinist shop over 17 years. He expects his new skills will lead to a much higher-paying job building Shell's planned new $2 billion cracker, industry slang for a chemical plant.

"Something like this could carry our region for years and years," he said. Read the full story.

Jason Cohn / Reuters

Charles Comas, owner of Comas Family Barber Shop on Main Street in Wheeling, West Virginia, finishes giving a hair cut to regular customer John Oliver on March 6, 2012. Oliver, who has lived in Wheeling his whole life, remembers when the now sparsely occupied downtown was so packed with people "you couldn't walk down the street without bumping into someone." He is skeptical that the burgeoning shale gas industry or the rumoured Shell cracker plant will help the city.

Jason Cohn / Reuters

A community garden is seen in a vacant lot left over from one of few demolished buildings on Main Street in Wheeling, West Virginia. The city is struggling to find creative ways to deal with their down economy while waiting for new investment.

Jason Cohn / Reuters

First year Ironworker apprentices (left-right) Ian Welshhans, Daniel Truax and Jason Taylor practice their welding skills during a class at the Ironworkers Local 549 training facility in Wheeling, West Virginia on March 6, 2012.

Jason Cohn / Reuters

An old Ohio Edison electric plant, rumored to be the site for the first new U.S. chemical cracker plant in more than 20 years, is seen across the Ohio river from Moundsville, West Virginia.

Follow @msnbc_pictures

Steven Bridges for msnbc.com

Jewel and Jack Miser stand in front of their home in Sweetwater, Tenn. After trying for more than a year to modify their loan, they won a settlement in court that cut their monthly payment by about 15 percent.

Revenge can be sweet. It can be even sweeter when you use your enemy’s own weapons to extract vengeance.

Six years into the worst wave of foreclosures since the Great Depression, shoddy underwriting and legal shortcuts are coming back to haunt mortgage lenders. Homeowners, sick of being pushed around by the banks, are fighting back, sometimes with David and Goliath results.

In 2008, Jewel Miser and her husband Jack began trying to get Bank of America to modify their mortgage when Jack lost his job after a local auto parts factory closed.

“We were just a month behind then,” said Jewel. “But I tried every way in the world. And they just put me off and gave me excuses.”

After more than a year of dead ends and red tape, the Sweetwater, Tenn., couple found a lawyer who successfully challenged the shaky paper trail on which the lender relied on to prove it owned the Miser's note. In the resulting settlement, the bank agreed to new loan terms that cut the Miser’s monthly payments by roughly 15 percent, paid their legal fees and stopped the foreclosure.

"I did not want to lose my home," Jewel said. "We had done so much work to it. When you find a home and know it's your home you don't want to lose it. I tried every way in the world."

The Misers and other homeowners who are fighting back in court are using the legal quagmire created by the mortgage lending industry to win loan modifications that lenders have been unwilling or unable to extend voluntarily.

When these homeowners get to court, they find a laundry list of shoddy practices that undercut lenders’ legal claim to foreclose, say consumer attorneys who have pursued these cases. Many cases are tainted by “robo-signers” who failed to properly review files, despite swearing under oath they had done so. Other title claims are undone by improper accounting, including unwarranted fees, and payments that were not credited.

Consumer attorneys also are attacking lenders’ effort to paper over missing links in the chain of documents required to prove that a bank owns a loan and has the right to foreclose. Some of those defective paper trails date to the sloppy underwriting that accompanied the frenzy of mortgage lending in the 2000s, when hundreds of now-defunct lenders churned out a blizzard of notes that were instantly offloaded to investors.

“There are more (homeowner) claims because lenders operated in flagrant disregard of the law,” said Diana Thompson, a veteran consumer attorney with the National Consumer Law Center. “You only have a claim against the lender if the lender didn't do what they were supposed to do.”

Lenders' disregard for the law is still rampant, according to consumer advocates and regulators. Last month, a survey of 260 consumer attorneys in 45 states by the NCLC found that thousands of homeowners were improperly foreclosed on in just the past year. In more than 80 percent of the cases, the lender scheduled a foreclosure sale while processing a loan modification. In four out of five cases, the attorneys reported, lenders failed to properly credit payments or wrongly claimed homeowners owed bogus fees.

An audit by the San Francisco assessor’s office last month found lenders routinely broke the law in some 400 foreclosure cases over the past three years. Last April, the nation's top two bank regulators, the Federal Reserve and the Office of the Controller of the Currency, reviewed the foreclosure and loan modification practices and found a litany of "deficiencies and weaknesses" that "represent unsafe or unsound practices and violations of applicable law."

Though 49 state attorneys general have settled a sweeping complaint covering a long list of fraudulent and deceptive foreclosure practices, a handful of states are pursuing lawsuits against the mortgage industry. New York Attorney General Eric Schneiderman, named to a federal task force to investigate mortgage fraud, has charged lenders with deceptive and fraudulent foreclosure filings based on a national mortgage electronic registry system, known as MERS. The lawsuit claims that Bank of America, J.P. Morgan Chase and Wells Fargo, “have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have.”

Regulators how vowed to crack down on these practices. Lenders say they are correcting them. 

"In 2010, we reviewed our processes and procedures and put in place a number of improvements and worked with our regulators," said Jumana Bauwens, a Bank of America spokeswoman. "And we continue to improve our processes and procedures."

But lenders still have more work to do, according to consumer attorneys, judges and mortgage industry professionals. Until reforms are widely adopted, it has fallen to homeowners and their attorneys to try to see that the law is enforced.

Loan modification
Borrowers have been taking their disputes with lenders to court for decades. The latest efforts, though, have been sparked by rising frustration with other means of trying to get a loan modified, say consumer attorneys. Early in the mortgage crisis, millions of homeowners, encouraged by the industry, tried working directly with lenders.

A succession of government-sponsored programs aimed at providing mortgage relief to millions of borrowers have fallen far short of promises.

"They (lenders) advertised all the time: 'If you want get your mortgage modified all you have to do is call,'” said Jewel Miser. "I called about 100 times. Each time they would tell me different things or that it was 'in process' - but they weren't doing anything."

In its review, the OCC also cited widespread failings of lenders’ "voluntary" mortgage relief efforts. The government’s highly-touted Home Affordable Modification Program (HAMP) has badly underperformed expectations, according to housing advocates and counselors working with homeowners, largely because the decision to modify a loan still rests entirely with the lender.

Bauwens, the Bank of America spokeswoman, said that since the Misers applied for their loan modification, the process has been streamlined and reviews and decisions are now made much more quickly. 

"We are in a very much better position to be able to respond to customers modifications in a much more timely manner," she said.

But consumer attorneys said that, in some cases, homeowners are being denied modifications that should have been made under government guidelines.

“Because of the government’s failure to enforce HAMP and failure to hold (lenders) accountable, in many cases in order to get a HAMP modification for which they are complete qualified, homeowners have to hire an attorney and sue their lender,” said Thompson of the NCLC.

That often means a trip to bankruptcy court for a Chapter 13 proceeding, which allows people with a regular income to adjust their debt. Once in court, a foreclosure is typically halted automatically, placing the burden on the lender to have the process re-instated. That forces the lender to prove it owns the mortgage and to account fully for any disputed back payments. When the lender is unable to do so, consumer lawyers say, it is more likely to agree to settle by modifying the loan terms, often by simply lowering the interest charged to current market rates.

Lenders rarely forgive principal, even on homes that are deep underwater, say consumer attorneys. But while bankruptcy law prevents a judge from writing down the primary mortgage on residential property, other loans don’t enjoy that protection.

That means judges often are able to force lenders to take deep losses on second and third mortgages, said Raffi Tal, who advises homeowners facing foreclosure at Los Angeles-based Peak Corporate Network. “That by itself is a great advantage to borrowers who can afford to make the first mortgage payment - just by canceling the second (mortgage).”

Some bankruptcy courts, including the Southern District of New York, have established special procedures to speed loan modification negotiations between homeowners and lenders.

But it hasn’t been easy.

Consumer attorneys often are outgunned by big banks. Though more than six million households are either delinquent or in foreclosure, there are fewer than 500 consumer attorneys nationwide who specialize in suing to stop foreclosures, according to the NCLC’s Thompson. As demand for legal help has risen, more lawyers have shifted the focus of their practice to fighting foreclosures. That can include attending seminars focused on the legal arguments used to successfully challenge lenders in court.

For the past six year, Max Gardner has been running "boot camps" out of his Shelby, N.C., farmhouse, training consumer attorneys from across the country in the finer points of turning the mortgage mess to their clients’ advantage. More recently, Gardner has been taking these seminars on the road.

On a recent visit to New York, Gardner summoned several dozen lawyers, mortgage industry veterans and a handful of reporters to an intensive weekend crash course in a grab bag of legal strategies. It included a tour deep into the weeds of the Uniform Commercial Code, a subject that has been known to put law students to sleep. Once trained, the more than 200 boot camp alumni in 39 states communicate via listserv, swapping tips and sharing legal opinions that help them build arguments to stop the next foreclosure.

Though they’ve won case-by-case victories for individual homeowners, consumer attorneys such as Gardner say regulators continue to turn a blind eye to improper and illegal foreclosures. The industry has been able to keep regulators at bay, he said, by effectively managing public opinion about its role in the foreclosure crisis.

“I think they've done pretty good job - on the other side - of getting across the message that these are just a bunch of deadbeats trying to get a free home,” he said. “And that these (wrongful foreclosures) are just the result of technical problems.”

“So let’s just forget about the system of justice, due process and the rules of evidence and everything else. They’re just glitches. They don't mean much,” he said sarcastically.

For borrowers, those glitches can mean the difference between homelessness and holding onto their house. For lenders, the process of fixing those errors can prove costly. Once challenged in court, some lenders decide it's cheaper to settle the case and move on to the next foreclosure waiting in the pipeline.

“I have quite a few cases where the banks just walked away from the foreclosure litigation and either dismissed the action formally or just abandoned the litigation,” said April Charney, a staff attorney with Jacksonville Area Legal Aid, who has defended hundreds of Florida homeowners facing foreclosure since the market crashed in 2006.   

Homeowner victories in court go largely unreported, however. In some cases, lenders demand borrowers keep quiet as a condition of stopping the foreclosure and settling the case. Other borrowers feel intimidated, say consumer lawyers, fearing the lender could find a reason to restart the foreclosure process again.

“Unless the loan is paid off, there’s always the risk of further fighting,” said Thompson. “And you just don't want to have the (lender) have a reason to be looking over your client’s payment records with a fine tooth comb.”