As Bank of America (NYSE:BAC) struggles to recover from the financial crisis, CEO Brian Moynihan has made it clear that the big bank plans to get back into the mortgage game. To that end, the bank has taken concrete steps, including hiring hundreds of new mortgage bankers to staff its shiny new branch locations.

But, B of A still has a huge problem regarding the mortgage business: Its reputation in that arena is just terrible. People really seem to hate the big bank, and lawsuits like the one accusing Bank of America of rewarding employees who treated loan customers with scorn and condescension has only tarnished its image even further.

The worst part about this situation is that Bank of America seems dead-set against improving its poor performance in the mortgage servicing department. The latest evidence of its disdain for how others view its mortgage business capabilities comes in the form of Fannie Mae's (NASDAQOTH:FNMA) Servicer Total Achievement and Rewards ratings, which recognizes mortgage servicers that exhibit performance superior to their peers.

Fannie's servicer rating system
Fannie Mae unveiled the STAR program in February 2011 in an effort to "promote transparency, accountability and excellence in mortgage servicing," and to recognize those that were of the most service to customers. Since then, the agency has published the results of its reviews, which is weighted heavily in the area of customer service through the Servicer Performance Scorecard.

Loan servicers are rated according to three benchmarks: the number of loans 90-plus days delinquent that are successfully returned to non-delinquent status, how well servicers help troubled borrowers avoid foreclosure, and how efficiently servicers make alternatives to foreclosure available. The latter can include short sales, as well as other methods of resolving mortgage debt.

Bank of America flunks another test
The servicers are broken up into three peer groups, according to the number of Fannie Mae loans under their jurisdiction. Peer Group One includes the largest servicers, and the winners in that category, according to Fannie's results released on August 27, are big banks Wells Fargo (NYSE:WFC) and PNC Financial(NYSE:PNC), as well as mortgage servicers Nationstar Mortgage (NYSE:NSM) and Ocwen Financial(NYSE:OCN). Notably absent? Bank of America, of course.

This isn't the first time B of A hasn't made the grade on Fannie's scorecard. There have been a total of fiveĀ STAR Scorecards released which feature Peer Group One results, and Bank of America doesn't appear on any of them. Wells, by comparison, makes an appearance on each, and JPMorgan Chase(NYSE:JPM) and Citigroup's(NYSE:C) Citi MortgageĀ have shown up sporadically, though neither made the cut for the 2012 year-end results.

An "F" for effort
Obviously, improving its loan servicing and customer service performance isn't a priority for Bank of America, and that truly is a shame. The bank has been around long enough to know that customer service is a huge component of the mortgage business; even newcomer Nationstar -- which has purchased boatloads of B of A's mortgage servicing rights over the past year or so -- has that part down, it seems. As for Wells Fargo, well, stellar service is apparently part of the reason it commands one-third of the mortgage market. Why can't Bank of America watch, and learn?

Mortgage activity may be down at the moment, but that won't last forever. When competition for mortgage customers heats up, I fear B of A will be left out in the cold. And for that, the big bank must shoulder all of the blame.

Fool contributor Amanda Alix has no position in any stocks mentioned. The Motley Fool recommends Bank of America and Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup, JPMorgan Chase, PNC Financial Services, and Wells Fargo. Try any of our Foolish newsletter services free for 30 days.

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