In the midst of this week's market turmoil, Congress was taking testimony about the new FHA refinance program set to start on October 1. The testimony was a study in contrasts.

On the one hand, representatives from major lenders were grumbling about the prospect of mandatory principal writedowns under the FHA program. Most banks stated that they prefer to try their own approaches to loan modifications before resorting to the FHA plan.

On the other hand, the Attorney General of Massachusetts, Martha Coakley, pulled the curtain back to shine some light on what lenders have really been doing - NOTHING.

In her testimony, Coakley detailed how major lenders including Bank of America, Citigroup and Wells Fargo reneged on an agreement to form a loan modification system for Massachusetts homeowners. Her story is sadly typical: banks love to say nice things to get good PR, but refuse to take any meaningful action.

Coakley also testified about reality on the ground: lenders are not voluntarily making meaningful changes that will help homeowners avoid foreclosure.

"Regrettably, this approach has not been successful. Indeed, the voluntary approach to loan modification has failed."

Coakley went on to testify that lenders are approving far too few workouts, and most so-called modifications that lenders currently approve fail to decrease debt or promote affordability for homeowners. The result is that many homeowners who have received bad loan mods will still end up losing their homes.

I can tell everyone from personal experience that, even when you have dirt on a lender (like a TILA violation that allows the borrower to cancel a loan), lenders are extremely difficult to deal with, and it is a long battle to get a lender to act reasonably and fairly.

Just this week, a major lender contacted my client (rather than me) to attempt to trick the client into waiving a TILA rescission. Their method: a purported "Loan Modification" that was really a repayment plan that offered my client no real relief.

If  lenders are willing to flaunt the rules for homeowners with representation, then homeowners going it alone have ZERO CHANCE of getting a fair shake. Lenders, through their arrogant actions, have drawn a line in the sand. For homeowners, the only thing that will force lenders to act fairly is government action. If you are a homeowner who's getting nowhere with your bank, call your Representative in Congress, and your Senators.